(EnergyAsia, September 29 2014, Monday) — The breakthrough announcement that Canada had secured its first liquefied natural gas (LNG) sales memorandum to Asia last week was completely overshadowed by the somewhat expected threat by the CEO of Malaysia’s state energy firm Petronas to call off its proposed C$9-to-$11 billion export terminal in British Columbia (BC) province. (US$1=C$1.1).

Woodfibre LNG Export Private Limited, a subsidiary of Singapore’s Pacific Oil & Gas, announced last Thursday that it had signed a memorandum of understanding (MOU) for the annual sale of one million tonnes of LNG to Guangzhou Gas Group Company Limited of China’s Guangdong province for 25 years starting 2017. This was a watershed agreement as it is the first to be signed by any developer of the more than 15 proposed projects to produce and export LNG from Canada to Asia.

But its announcement and significance was overlooked by the mainstream media which focused instead on Petronas CEO Shamsul Abbas’s threat to cancel its proposed initial six-million-tonnes/year LNG terminal on Lelu Island near Prince Rupert. In an interview with the Financial Times, he blamed the BC government’s failure to provide “appropriate incentives and assurance of legal and fiscal stability” and the US shale gas boom for holding back the development of a Canadian LNG industry

Mr Shamsul’s comments were deemed more newsworthy than the Woodfibre deal as Petronas’s total proposed C$36-billion investment in Canada that includes the Prince Rupert terminal is the largest of more than 15 LNG projects being considered in BC. A Petronas pullout would be a blow to BC Premier Christy Clark’s plan to develop a $1-trillion economy built largely on LNG as it would cast doubt on the viability of some of the other projects.

On the other hand, the Woodfibre terminal in Squamish located north of Vancouver city has attracted less attention as it is estimated to cost a “mere” C$1.7 billion with an initial annual LNG export capacity of 2.1 million tonnes, a third of the Petronas project size. Woodfibre’s memorandum to sell half its production to Guangzhou Gas at this early stage enhances its credibility, putting the project well on course to achieve final investment decision (FID) by the targeted early 2015 deadline and export start-up by 2017.

Barring a defeat at the hands of environmental and citizen groups opposed to the project, Woodfibre will likely sell the rest of its production before the terminal’s completion.

The two companies signed the sales memorandum in Vancouver last week on the occasion of a three-day visit to BC by Guangdong’s Governor Zhu Xiaodan who also announced the opening of a trade office — the province’s first in Canada — at 1400 Robson Street.

Premier Clark described the new trade office as “another milestone” in the rich history and increasing cultural, economic and trade ties between the two ‘sister’ provinces.

She and Mr Zhu also opened the Richmond office of Guangzhou-based GF Securities Co Ltd, the first Chinese securities brokerage to establish a branch in North America. GF is China’s fourth largest securities company in terms of size of assets and profits.

With the Woodfibre project on schedule, Premier Clark was in a position to downplay Mr Shamsul’s threat as posturing ahead of his September 29 and 30 visit to Vancouver for talks to improve tax and fiscal terms.

His comment to the Financial Times that “Canada has to buck up real fast” to become a global LNG player” is likely to have ruffled a few feathers of his host without strengthening his bargaining position.

Back in Malaysia, Mr Shamsul is under pressure from powerful politicians to curtail Petronas’s increasingly costly overseas expansion in favour of domestic projects, namely in Johor and Sabah states. Amid rising business cost and the weak outlook on oil and natural gas prices, Petronas and Canada’s other LNG prospectors will need more than tax holidays and financial breaks to justify their multi-billion dollar investments.