Petronas Hoping To Buy First Nations Tribes’ Support For $1 Billion
Petronas is willing to pony up nearly $1 billion to secure the support of First Nations tribes in western Canada for its natural gas export project. The Malaysian state-owned oil company is offering C$1.15 billion (USD$950 million) to the Lax Kw’alaams tribe in order to build an LNG export facility at the Prince Rupert port.
The offer would consist of annual payments over 40 years. For example, Petronas would pay over $12 million in the first year, with payments rising by 1 to 5 percent annually (depending on production), culminating in a $50 million payment in the 40th year. Also, tribe members would have a sort of preferred status for open jobs at the Petronas’ Pacific Northwest LNG facility. The offeramounts to about $320,000 per person. The Lax Kw’alaams tribe will vote on the offer in May.
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The tribes argue the price is hardly exorbitant. When one considers it will be spread over 40 years and the project will result in large land use impacts on local communities, the $1 billion is a fair price. “This will be a real game-changer for many First Nations in terms of how they can build their future,” John Rustad, the Aboriginal Relations and Reconciliation Minister in British Columbia, told the Globe and Mail in an interview on April 30.
Interestingly, it could create a new benchmark for major fossil fuel projects on indigenous lands. For other projects to move forward, affected tribes could use the pending offer for the Lax Kw’alaams as leverage.
The big offer from Petronas is somewhat of an afterthought for the C$36 billion proposal. That steep price tag has forced a rethink within the Malaysian company. In December 2014, Petronas decided to put off a final investment decision, hesitating to commit that much money to an LNG export project during a period in which LNG markets are not doing so well.
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