Pipeline developers are demanding a $20 billion payout from Canada after projects in Quebec were turned down

A ship sails through the Saguenay Fjord near Baie-Sainte-Marguerite - a place frequented by Belugas.  (Kim Garritty/CBC - photo credit)

A ship sails through the Saguenay Fjord near Baie-Sainte-Marguerite – a place frequented by Belugas. (Kim Garritty/CBC – photo credit)

The liquefied natural gas companies behind GNL Québec and Gazoduq are seeking $20 billion in compensation from the Canadian government 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 liquefied natural gas imported by pipeline from western Canada by boat on the Saguenay River. It would also have seen the construction of a 780-kilometer pipeline connecting the Port of Saguenay to northeastern Ontario.

The US company Ruby River Capital LLC filed a request for arbitration against the government with the International Center for Settlement of Investment Disputes (ICSID), an organization of the World Bank Group, on Thursday.

Ruby River Capital relied on the North American Free Trade Agreement (NAFTA) and the Canada-United States-Mexico (CUSMA) Agreement in its lawsuit. NAFTA served to reduce or eliminate tariffs on imports and exports between the three participating countries and to increase trade between them.

The company is owned by Freestone and Breyer Capital, both affiliated with Jim Illich. Illich is the founder and CEO of Freestone and the founder and current chairman of Breyer Capital. Both Freestone and Breyer Capital are behind GNL Québec, which was renamed Symbio Infrastructure in 2021.

Rejected by Ottawa and Quebec

The Énergie Saguenay terminal was first rejected by the Quebec government in 2021 after a critical report from the province’s environmental assessment board Bureau d’audiences publiques sur l’environnement (BAP).

Canada’s Department of Environment and Climate Change also rejected the liquefaction terminal project in February 2022. Minister Steven Guilbeault said he based his decision on the findings of an environmental assessment report from the Impact Assessment Agency of Canada (IAEC).

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

Despite the report, Énergie Saguenay argued the project would have reduced overall greenhouse gas emissions by replacing fuels such as coal and that the liquefaction plant would have been hydroelectric.

In June 2022, Symbio Infrastructure announced that it had reached an agreement with the Ukrainian state-owned company Naftogaz to supply liquefied natural gas and hydrogen to Ukraine, which was already at war at the time.

Last September, Illich held talks with Guilbeault and the Minister for Innovation, Science and Industry, François-Philippe Champagne.

Although the proposed terminal was rejected, 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 that tracks international arbitrations between foreign investors and sovereign governments. It states that the complainant alleges that Ottawa based its decision on politics and is against the spirit of free trade agreements.


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