Warren Buffett's company bails on Saguenay LNG project because of 'Canadian political context,' promoter says

Warren Buffett's investment company Berkshire Hathaway has decided not to invest $4 billion in aliquefiednatural gas (LNG) plant by the Saguenay port.

The marine terminal to ship LNGto overseas markets is slated to be builtroughly 230 kilometresnortheast of Quebec City, at a cost of $9.5 billion.

The decision by Berkshire Hathaway, which represents a major blow to the project, was first reported by La Presse Thursday and later confirmed by Radio-Canada.

Stphanie Fortin, head of communications for the company behind the project, GNL Qubec, said the company had lost a significant potential investor, but did not want to say who it is.

She did say, however, that the company lost the investor because of the "current Canadian political context."

She said with "instability" in the last few weeks, such as ongoing rail blockades, foreign investors are getting nervous.

This won't keep the project from progressing, Fortin said, nor will it mean job losses in the immediate future.

She said the loss won't be without animpact, though.

Gazoduq, the company behindthe pipeline, says in a Thursday statement thatit is now looking for "other potential investors."

Louis Bergeron,Gazoduq's president, said the project's 10 original investors, whohave been onboard since 2014 and have so far invested more than $130 million, are not backing out.

He also declined to name the investor who quit, but said the decision was not based on the pipeline'sfinancial viability. The investor was concerned that the project could still be nixed asGNL Qubec seeks the needed permits and government approval.

"Even if you succeed in obtaining all these permits, it doesn't mean you will be able to execute your project," Bergeron said. "So an investor will take that into account."

The final investment decision, slated to be made by the end of 2021, hinges on attracting "at least one major investor to be able to support the construction and operation of the project."

Berkshire Hathaway did not return a request for comment.

The LNG projectalso involves the construction of a pipeline across a 782-kilometre stretch of the province from northern Ontario to Saguenay to transport natural gas from Western Canada.

That pipeline is slated to cost $4.5 billion, bringing the total value of the project to $14 billion.

The goal is to export 11 million tonnes of LNGper year.

Michel Potvin, deputy mayorof Saguenay, told Radio-Canada's Tout un matinthat this represents a real setback for the project.

"It'sconcerning when we talk about an investor putting in $4 billionof $9 billion. It's clear that Mr. Buffet has good reasons. We're seeing the rail crisis that's surely one of the reasons."

He said he understands, given the current discussion around theCoastal GasLink pipeline in B.C.

In Quebec, the LNGprojecthas also stirred opposition from members of Innu communities. The proposed pipeline wouldgo through theirancestral territory.

"It takes the acceptance of Indigenous people," Potvin said. "In our head, here in Saguenay, we thought we had it. We thought it was accepted by the people. What we're seeing is that actually nothing is certain."

Confidence must be restored, says business group

The Quebec Federation of Chambers of Commerce released a statement Thursday calling on the provincial and federal governments to reassure potential investors.

"This climate of uncertainty is deplorable and needs to be reversed," said PresidentCharles Milliard in the news release.

The federation, which represents 130 chambers of commerce across the province, says the country is facing "an image crisis" on the international stage.

"The governments of Quebec and of Canada need to fix this significant damage in order to support businesses impacted by the rail blockades,"Milliard said.

The federation is asking for "concrete measures" to restore confidence and encourage foreign investment in Quebec.

Politicians react

Prime Minister Justin Trudeau said measures are in place to strike a balance between the environment and economy.

"With climate change, with the environmental awareness of so many consumers and investors, we need to do more to demonstrate that the jobs that we are creating, that the investments we are attracting, will be able to succeed in a world where the reality of climate change is hitting harder and harder," he told reporters on Thursday.

Conservative MP Richard Martel, who represents Quebec'sChicoutimiLe Fjord riding, said Quebecers risk losing a $4-billion energy project that would bring jobs and other opportunities to the Saguenayregion"because of Justin Trudeau's weak leadership."

"Over the last month, a clear signal has been sent to businesses across Canada that the rule of law will not be upheld and that major projects cannot get built," said Martel.

Quebec opposition parties were skeptical of the purported reasons for the investment company's withdrawal.

"Honestly, I think they are putting a lot on the back of Indigenous Nations," said Sylvain Gaudreault, the Parti Qubcois MNAfor the borough of Jonquire in Saguenay.

Gaudreaultsaid he thinks it has more to do with economic and environmental concerns, and the unpopularity of what he calls "20th-century" development compared with renewable energy projects.

Gaudreaulthas never been a supporter of the project and said, if anything, this news "sends a message that these types of projects are more and more difficult to finance."

He described the loss of a potential investor for GNL Qubec as one that will be hard to replace.

"Financing is a bit like a house of cards. If you take one away, the house collapses," he said. "The house of cards is in the process of falling."

QubecSolidaire, another opposition party critical of the project, said Berkshire Hathaway's decision should serve as noticeto the Legault government that green energy projects should be a priority for the province going forward.

Environmentalists question the impact

GNL Qubechas saidtransforming the gas to liquid with hydroelectricity would make the project clean but many environmental groups have been critical of those claims.

In June 2019, more than 150 scientists published an open letter seeking to debunk claims by promoters that the project will benefit the environment.

Concerns have also been raised about the impact onendangered beluga whales in theSt. Lawrence Estuarybecauseof noise pollution andincreased tanker traffic in the Saguenay River.

Quebec's environmental review agency, the BAPE, will begin public hearings on the project later this month in theSaguenay.

At the end of the process, theBAPE will produce a report for the Environment Ministry, which may contain recommendations.

The Quebec government will get the final say on whether the project can go ahead.