The BC Government has signed a letter of intent (LOI) with Petronas, the major partner in the proposed Pacific Northwest LNG project in Prince Rupert. The LOI outlines a framework designed to allow Petronas to reach a final investment decision by the end of 2014. Under the agreement, Petronas and the provincial government agree to prepare terms for a project development agreement to be finalized by June 30.The Premier then went on to Singapore to sign a similar agreement with the proponents of the smaller Woodfibre LNG project, Pacific Oil & Gas Group. Many believe that should it proceed, this latter could be the first LNG project out of the gate in BC.
In a related development, the Gas Exporting Countries Forum (the LNG and natural gas industry version of OPEC) will meet next week with the Japanese government to discuss LNG pricing. Asian countries are challenging the direct link between oil and LNG pricing which in their view does not reflect true market value. For example, the current LNG cost is about $4.60 per million British thermal units in the U.S. and about $7.80 per MMBtu in Europe whereas the imported cost to Japan last year averaged $16.10 per MMBtu.