Caught in political web
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Canadian cabinet committee reported to have turned down fiscal package
Gary Park For Petroleum News
Backers of the Mackenzie Gas Project now seem to be getting dragged deeper into a Canadian government quagmire.
Political insiders have told Petroleum News there could be growing differences over the project at the highest federal levels, compounding protracted delays in the regulatory process, unease over the long-term need for northern gas and uncertainty over the status of negotiations on a fiscal agreement.
The latest round of speculation was triggered Oct. 27 when the National Post, quoting unnamed sources, said a cabinet committee (believed to be Planning and Priorities) rejected a fiscal package brought forward by Environment Minister Jim Prentice, the cabinet point man for the MGP.
Prentice’s initial comment was that “no decision” had been made.
However, if the “sources” are right that the rejection came from the Planning and Priorities Committee, that could indicate Prentice and Prime Minister Stephen Harper are at odds over the MGP.
Prentice has consistently been touted as a leader-in-waiting for the governing Conservative Party if ever Harper resigns or is defeated and Harper is known to have little tolerance for rivals, real or imagined. (Just to muddy the waters, Prentice ranks high on the list of possible contenders to succeed Ed Stelmach should the Alberta premier get an effective no-confidence vote at his party’s annual general meeting on Nov. 7).
Reluctance to provide aid Further complicating matters — regardless of how much Harper has identified northern resource development as a vital part of Canada’s Arctic sovereignty claims — is the probable reluctance of the Harper administration to provide financial aid for some of the world’s largest oil companies (Imperial Oil, ExxonMobil Canada, Royal Dutch Shell and ConocoPhillips Canada) when the national budget deficit is soaring and the petroleum industry is so widely out of favor.
If it’s true that the Planning and Priorities Committee has either rejected a submission by Prentice, or sent it back for reworking, that could be a damaging blow.
The committee, which is usually chaired by Harper, effectively controls the government agenda and occasionally acts for the whole cabinet.
Hint of wavering It might also explain a hint of wavering by Prentice, who said in early October that a deal between the government and the MGP partners “has never been closer.”
He was less emphatic when he spoke to reporters in Ottawa on Oct. 27.
Although refusing to discuss progress on a financial package, which had been presented to the MGP partners in January, he emphasized that the project is a “private sector investment that needs to make sense on an economic basis under market principles.”
“That’s what I’ve said repeatedly and that continues to be the case,” Prentice said.
For now, he said the proponents are evaluating the government’s fiscal framework and weighing the merits of the project.
Pius Rolheiser, a spokesman for Imperial, the MGP’s lead partner, has told reporters that discussions continue with the government to see a fiscal agreement.
Otherwise “we haven’t heard anything” from the government, he said.
Northwest Territories Industry Minister Bob McLeod told the National Post there is no chance of the MGP going ahead unless Canada is prepared to at least match Washington’s pledge of at least US$18 billion in loan guarantees for an Alaska natural gas pipeline.
“If there is no fiscal arrangement in place (for the MGP) … it won’t go ahead,” he said.
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