Trudeau called out for missing 'crystal clear' business case for LNG exports

·3 min read

The CEO of a Quebec-based oil and gas company is calling out Prime Minister Justin Trudeau's claim that there has "never been a strong business case" for liquefied natural gas exports from Canada's East Coast to Europe.

Mario Lévesque, chief executive of Utica Resources, says the rationale for exporting natural gas from Quebec is "crystal clear," and would generate "tens of billions in royalties and taxes" for Ottawa.

Lévesque's comments follow an energy-focused tour of Canada by German Chancellor Olaf Scholz, who was accompanied by a delegation of business leaders from Europe's largest economy. The three-day trip saw the two nations reach agreements on hydrogen and electric vehicle battery minerals.

However, a plan for Canada to ease the soaring cost of natural gas in Germany did not come to pass, despite Scholz's call for Canadian LNG to play a "major role" in the nation's transition from Russian supply.

Speaking in a joint press conference with Scholz on Monday in Montreal, Trudeau said "there has never been a strong business case" for a number of projects on Canada's East Coast, noting distance and transportation challenges.

"We are looking right now and companies are looking at whether or not the new context makes it a worthwhile business case to make those investments," Trudeau said, adding that the federal government would be willing to ease regulatory hurdles to assist its allies. "But there needs to be a business case."

Germany's Chancellor Olaf Scholz and Canada's Prime Minister Justin Trudeau speak to the media outside the Montreal Science Centre, in Montreal, Quebec, Canada August 22, 2022. REUTERS/Christinne Muschi
Germany's Chancellor Olaf Scholz and Canada's Prime Minister Justin Trudeau speak to the media outside the Montreal Science Centre, in Montreal, Quebec, Canada August 22, 2022. REUTERS/Christinne Muschi

"The business case for Quebec gas is crystal clear," Lévesque stated in a press release on Thursday. "Quebec has enormous quantities of natural gas, about 20 per cent of Canada's total recoverable gas, enough to replace all Russian imports into Germany for 20 to 40 years. As Mr. Trudeau well knows, several buyers in Germany and elsewhere in Europe are looking at options to secure natural gas."

This is not the first time Lévesque has clashed with government officials in defence of fossil fuels. Utica Resources filed a lawsuit in late June seeking to invalidate the Quebec government's ban on hydrocarbon exploration and exploitation, or obtain billions of dollars in compensation for what it claims is an expropriation.

Lévesque is not alone in criticizing Trudeau's business case assessment. Kevin Krausert is CEO and co-founder of Avatar Innovations, a Calgary-based venture capital firm and startup accelerator that pairs entrepreneurs with the biggest companies in Canada's energy patch. He says the business case is "a lot stronger and a lot faster than our Prime Minister suggests."

"Today, you have an existing, operating LNG import terminal in New Brunswick operated by Repsol, the Spanish super major, that could be turned around quickly," he told Yahoo Finance Canada's Editor's Edition. "There's a lot of gas on the East Coast that (we) wouldn't have to transport that far."

Jeff Lagerquist is a senior reporter at Yahoo Finance Canada. Follow him on Twitter @jefflagerquist.

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