Saguenay LNG project financing in doubt as Buffett pulls out – The Province

Warren Buffett's Berkshire Hathaway Inc. reportedly cited the current business and political climate in Canada as the reason it has pulled out of Quebec LNG project.Scott Morgan / REUTERS

An ambitious $9-billion liquefied natural gas project in northern Quebec is looking for a new lead investor after Warren Buffetts Berkshire Hathaway Inc. pulled out because of the current business and political climate in Canada.

Developer GNL Qubec said Thursday an unidentified investor has chosen not to proceed with a significant financial commitment to the nergie Saguenay project. Though GNL Qubec wouldnt name the firm, Saguenay deputy mayor Michel Potvin identified it as Berkshire.

Potvin, who heads the local investment agency known as Promotion Saguenay, said Berkshire which is run by Buffett, the legendary U.S. investor would have invested about $4 billion.

We did not need this, especially at this stage of the project, Potvin told the Montreal Gazette in a telephone interview. Were not going to find $4 billion tomorrow morning, and we sure arent going to find it in the region. So we have to roll up our sleeves.

The decision is based on the political context that weve seen in Canada over the past month, said Stephanie Fortin, head of community relations for GNL Qubec. Its too early to assess how the pullout will affect the project, she added.

News of the Berkshire pullout comes with Canadas economy still reeling from weeks of solidarity protests over the proposed Coastal Gas Link pipeline in British Columbia. Last month, Teck Resources withdrew its application to build the Frontier oilsands mine in Alberta, citing a growing debate over resource development and climate change that placed the project squarely at the nexus of much broader issues that need to be resolved.

Its a regrettable decision, but it doesnt change anything to the fundamentals of our project, Fortin in a telephone interview. We have a good project, a unique hydro-powered facility that will emit fewer greenhouse gases.

Asked if hes concerned about the fate of the project, Potvin said: Were asking ourselves some questions.

Marc Hamburg, a Berkshire spokesperson in Omaha, Nebraska, didnt immediately return a message Thursday.

GNL Qubec expects to make a final decision on whether to proceed next year. nergie Saguenay would begin operations in 2025.

The project would entail the construction of a natural gas liquefaction complex at Port Saguenay, with a view to exporting about 11 million tonnes of liquefied natural gas annually. It would also require the construction of a 750-kilometre pipeline to carry western Canadian gas, though GNL Qubec wouldnt be involved in its construction or its operation.

About 15 private investors from Canada, the U.S. and Asia have so far committed to nergie Saguenay, Fortin said. They include former Bechtel Corp. general manager James Illich and U.S. venture capitalist Jim Breyer, an early investor in Facebook.

Environmental hearings on nergie Saguenay are scheduled to begin March 16.

A group of 40 Quebec economists expressed serious doubts last fall over nergie Saguenays proposed economic and environmental benefits. Far from reducing pollution, they said, the project would increase emissions while replacing cleaner, conventional natural gas or renewable source electricity.

The economists also questioned the pledge that 6,000 jobs would be created directly or indirectly by the construction of the project and of 1,100 more once the processing plant is operational.

Environmental group Equiterre has said the project could potentially cancel out most of Quebecs emissions reductions since 1990 in a single year.

Some doctors are also worried. In an open letter published this week, 250 physicians and health professionals urged Premier Franois Legault not to forget the health of Quebecers while his government evaluates the project.

With files from Canadian Press

ftomesco@postmedia.com

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Saguenay LNG project financing in doubt as Buffett pulls out - The Province