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“They’re just playing poker, right?” asked an investor friend of mine who knows how to make a dollar. “Guys like Petronas, Shell and Chevron have already put a bazillion or two on the table,” he said with his furrowed face. “Aren’t their investments to date far too large to just walk away from their British Columbian LNG projects?”
I paused before answering. Petronas had just publicly announced that they were unhappy with Canada. It was a tap of the Malaysian company’s closely held cards signalling they might be willing to pack up their B.C. drill bits and go home in the absence of better liquefied natural gas investing odds.
It’s easy to believe that Petronas’s verbal shots in the public arena were a poker-faced “take-it-or-leave-it” bluff to get better terms on the eve of the B.C. government’s anticipated LNG tax announcement. But Canadians with a stake in the multibillion-dollar LNG business – for example, investors, governments and suppliers – should be cautious about interpreting such statements as hollow bravado.
Deferring to the wisdom of country singer Kenny Rogers, I replied to my friend, “Surely you know the lyrics to The Gambler?”
You’ve got to know when to hold ’em
Know when to fold ’em
Know when to walk away
And know when to run.
If the house doesn’t deal the right cards, any or all of the 17 LNG consortia will fold ’em (delay), walk away (shelve plans indefinitely) or even run away (cash in their chips and leave the country). Those who think otherwise are sniffing too much LNG.
A few hundred million dollars, or even a billion, is not a big ante to corporations with global reach. Multinationals such as Shell, Woodside and Exxon Mobil have a demonstrated track record of running away from megaprojects, forfeiting their bet and the pot. Somèe recent examples over the past two years, are listed in Table 1. Canada is not exempt from the list.
Surely the precedent of Apache Corp., the American independent that left Chevron’s Kitimat LNG consortium this summer, hasn’t been forgotten? Cancellations routinely happen upstream and downstream around the world, so why would anyone think Canada’s LNG projects are secure?
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