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Berkshire Hathaway not to invest in Quebec LNG project
QUEBEC
WARREN Buffett’s Berkshire Hathaway has dropped plans to invest CAD4bn ($2.9bn) into an LNG project proposed for Saguenay, Quebec.
The Energie Saguenay project is being developed by GNL Quebec, which confirmed last week that it had lost a significant potential investor, without giving any names. Montre- al-based La Presse reported that the investor in question was Berkshire Hathaway, citing unnamed sources, and this was later confirmed by Saguenay deputy mayor Michel Potvin to the Montreal Gazette.
“We did not need this, especially at this stage of the project,” Potvin said. “We’re not going to find $4bn tomorrow morning, and we sure aren’t going to find it in the region. So we have to roll up our sleeves.”
The LNG terminal is expected to cost CAD9.5bn ($6.9bn), and would be built roughly 230 km north-east of Quebec City. It would export 11mn tonnes per year (tpy) of LNG, and would source its feedstock from Western Can- ada. Start-up is currently targeted for 2025, but the loss of such a large investment throws this into question.
Berkshire Hathaway’s pullback from the project comes after a number of large oil com- panies have also pulled out of Canada in recent years, largely as a result of unfavourable project economics in the low price environment. Sup- porters of Canadian energy development have responded to Berkshire Hathaway’s move by criticising the federal government for not doing more to attract – and retain – investors.
Conservative Members of Parliament (MPs) were among those to hit out at the Liberal gov- ernment, against a backdrop of ongoing rail blockades and protests in solidarity with hered- itary chiefs of a British Columbia First Nation that is opposing the construction of the Coastal
GasLink pipeline. That pipeline would supply the LNG Canada export terminal, which is cur- rently under construction on the BC coast. The protests have highlighted the difficulties infra- structure operators face in bringing both oil and gas pipelines – among other projects – to com- pletion in Canada.
Conservative MPs have claimed that Ottawa allowed the blockades to go on long enough to scare off future investors. The Lib- erals insist that GNL Quebec’s project is not dead, and an environmental review will go ahead as the company searches for other inves- tors. However, finding an investor willing to put in billions of dollars at such a challenging time for Canada’s energy industry – and while global LNG demand languishes amid a glut that is being exacerbated by the coronavirus pandemic – will not be easy.
A GNL Quebec spokesperson also told media
that the “current Canadian political context” was
to blame for Berkshire Hathaway’s move. that Ottawa
It has also been noted that Buffett may be especially sensitive to rail blockades, as Berkshire Hathaway owns Burlington Northern Santa Fe (BNSF) Railway.
“I cannot say where our new investor will come from,” Fortin said, adding that publicly los- ing a strategic institutional investor would make it more difficult to find new ones.
However, she maintained that the compa- ny’s timeline for Energie Saguenay had not been compromised, and that GNL Quebec was plan- ning to make a final investment decision (FID) on the project at the end of 2021.™
allowed the blockades to go on long enough to
A GNL Quebec spokesperson, Stephanie
Fortin, told the Financial Post that her company
was already looking for a new investor. The com- scare off future pany still has 15 other unnamed investors, she
noted.
Conservative MPs have claimed
investors.
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w w w . N E W S B A S E . c o m Week 10 12•March•2020