Pipeline developers demand $20B US payout from Canada after Quebec projects rejected

The liquified natural gas companies behind GNL Qubec and Gazoduq are claiming $20 billion USin compensation from the government of Canada for pulling the plug on their natural gas liquefaction terminal and gas pipeline projects in Saguenay, Que.

The goal of the $14 billion project was to build a terminal to export liquified natural gas imported by pipeline from Western Canada by boat on the Saguenay River. It also would haveseen the construction of a 780-kilometrepipeline connecting the port of Saguenay to north-eastern Ontario.

The American companyRuby River Capital LLCfiled a request for arbitration against the government on Thursday before the International Center for Settlement of Investment Disputes (ICSID), an organizationbelongingto the World Bank Group.

Ruby River Capital invoked the North American Free Trade Agreement (NAFTA) and the Canada-United States-Mexico Agreement (CUSMA) in its claim. NAFTA servedto reduceor eliminatetariffs on imports and exports between the three participating countries andincrease trade between the them.

The company is owned by Freestone and Breyer Capital, both of which are linked to Jim Illich.Illich is the founder and CEO of Freestone as well as the founder and current chairman of Breyer Capital. Both Freestone and Breyer Capital are behind GNL Qubec, renamed Symbio Infrastructure in 2021.

Turned down by Ottawa and Quebec

The nergie Saguenay terminal was first turned down by the Quebec government in 2021 following a critical report by the province's environmental review agency, the Bureau d'audiences publiques sur l'environnement(BAPE).

Canada's Ministry of Environment and Climate Change also turned down the liquefaction terminal project in February 2022. Minister Steven Guilbeaultsaid he based his decision on the findings of an environmental assessment report by the Impact Assessment Agency of Canada (IAEC).

The project would have caused an increase in greenhouse gas emissions and negatively impacted the cultural heritage of Innu First Nations as well as marine animals like the St. Lawrence beluga whales, the IAEC concluded.

Despite the report, nergie Saguenay argued the project would have reduced greenhouse gas emissions overall by replacing fuels like coal and that the liquefaction plant would have been powered by hydroelectricity.

In June 2022, Symbio Infrastructure announcedit had reached an agreement with the Ukrainian state company Naftogaz to supply Ukraine, then already at war, with liquified natural gas and hydrogen.

Last September, Illich held discussions with Guilbeault and theminister of innovation, science and industry,Franois-Philippe Champagne.

Although the proposed terminal has been turned down, the Canadian government is still conducting an environmental assessment of the pipeline.

The news was first reported by Investment Arbitration Reporter, a news and analysis service tracking international arbitrations between foreign investors and sovereign governments. It says the complainant claims Ottawa based its decision based on politics and is against the spirit of free trade agreements.