The challenge of competing internationally while delivering social value locally

I have delivered energy projects all over the world, and frankly, I hope LNG Canada and its Joint Venture Participants are getting close to delivering one more in British Columbia, Canada. The challenge energy projects face today, and have for a long time, is to be internationally competitive, while delivering social value locally.

Closer to the beginning of my career, I was involved in the electrification of homes in urban and rural South Africa, my country of birth, which, over time, transformed the lives of millions of South Africans. More recently, I led the development of the Sakhalin II LNG project in Russia, which transformed the nature of society on a formerly remote, disconnected island.

My career in the energy sector has taught me that companies cannot simply take without giving something in return; something that is important to the communities in which the company wishes to build and operate. This is a delicate balance given that each community’s needs and wants are different from the next. As a result, it is not an easy calculation to determine how much to give back and still remain competitive with other projects around the world.

The overall cost of the LNG Canada project – from the cost of gas, the pipeline, the plant, shipping, taxes at all levels of government, community benefits and impact benefit agreements – needs to be competitive against the cost of supply from new and existing projects in 19+ other countries that are also seeking to supply gas to the same customers in Asia, as well as to other world markets.

In the absence of global benchmarks or even national, provincial or local benchmarks, projects like ours are left on their own to determine how to share value and how much value to share. While I don’t for a moment suggest benchmarks should exist – because each location is unique – it does create a challenge for proponents to know how much is enough, versus how much is too much and can make a project uncompetitive.  

That said, shared value doesn’t come down to just economics. At LNG Canada, we believe it is also the right thing to do: To ensure the communities that experience some of the impacts, also receive some of the benefits.

Which is why LNG Canada has committed to providing impact benefits payments, employment, training, business opportunities and sponsorships – even if these benefits add costs to the project. We are at the point in the development of our project where we are sharpening our pencils and looking for cost savings at every turn. But we consider the promises we’ve made to the community as set in stone, because at the end of the day, being competitive only gives us the right to sell. Sharing value with the community earns us the right to produce.