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British Columbia rolls out tax breaks for Shell-led LNG project

British Columbia's government is offering tax breaks and other incentives as one of the province's last proposed LNG projects nears a final investment decision.

The province is offering LNG projects relief from British Columbia's sales tax, electricity rates in line with other industrial users and elimination of an LNG income tax introduced by a previous government, according to a March 22 statement. While the fiscal framework would be consistent for all LNG facilities, Royal Dutch Shell PLC's LNG Canada would be the first project under the new regime.

British Columbia has seen more than a dozen proposed LNG projects for its northern coast dwindle to a handful as global prices for the fuel slumped. While the province's proximity to Asia-Pacific markets and abundant supplies of low-cost natural gas make it attractive, development would require building a gas pipeline across the mountainous province and reaching agreements with Aboriginal groups.

LNG Canada, a venture of Shell, PetroChina Co. Ltd., South Korea's Korea Gas Corp. and Japan's Mitsubishi Corp., was expected to reach a final investment decision on its project in 2016. The government statement said it anticipates LNG Canada will make a final investment decision by the end of 2018.

"The LNG Canada proposal has the potential to earn tens of billions of dollars and create thousands of jobs for British Columbians over the life of the project," Premier John Horgan said in the statement. "It's a private-sector investment that could benefit our province for decades to come, but not at any price — we need to make sure the values British Columbians believe in come first."

Under the government's new plan, all projects would have to provide a fair return for the province's natural gas resources, guarantee jobs and training for residents, provide partnerships for First Nations and meet British Columbia's climate change-mitigation commitments.