VANCOUVER -- Three LNG projects have emerged as leaders in reaching so-called project development agreements under negotiation by the B.C. government.

On the list is the large Petronas-led Pacific NorthWest LNG and two smaller projects, Woodfibre LNG and AltaGas-led Douglas Channel LNG, says the province.

Two large projects not on the negotiation list — for the moment at least — are Kitimat LNG led by Chevron and Canada LNG led by Shell.

The agreements, unprecedented in B.C. and more common in countries with unstable political climates, are meant to provide long-term certainty around items such as tax rates, gas royalties and possibly greenhouse gas emissions.

But if the public is hoping to learn any details about the agreements before they are signed, they will be disappointed.

The B.C. government will reveal little and the companies even less.

However, there is agreement among industry observers that a future B.C. government could have different values and priorities, which opens the possibility the province could be constructing a deal where companies would be compensated if the tax or royalty structure was changed.

University of Calgary professor Nigel Bankes, chair of natural resources law, said he doesn’t believe that “constitutionally” a current government can bind a subsequent government from making changes.

“But I think the point here is that were a subsequent government to unravel this deal, I would say the combination of this deal combined with any applicable foreign investment treaty would make it pretty clear that a subsequent government would have to pay,” said Bankes.

He pointed to the North American Free Trade Agreement and recent agreements negotiated with China as examples of bilateral investment treaties.

The public should be concerned about the LNG agreements, particularly the potential for a “sweetheart” deal, observed Bankes.

Barry Munro, Ernst and Young’s Canadian oil and gas leader, said effectively the project development agreements would act like a contract.

“So, it doesn’t stop the government from changing the contract, it’s just a defined cost,” he said.

“It’s almost similar to signing a lease. If you want to change the terms of the lease or vacate your property, people understand the consequences.”

Munro lauded B.C.’s move to create the agreements, saying they will help offset growing global cost and price risks, which will help companies reach investment decisions.

Bankes said the agreements are more typical to countries of high political risk, where the fiscal system might change dramatically, but noted B.C. has experience in compensating companies when an agreement is changed.

He observed that when the NDP government pulled the plug on the Kemano Completion hydroelectric project in 1995 over environmental concerns (then-owner Alcan had water rights through a 1950s agreement), it paid compensation of $500 million.

Natural Gas Development Minister Rich Coleman agreed that future governments cannot be bound by a current government’s decisions.

But he said it was important to provide companies some certainty around items such as the newly introduced LNG income tax, which the government cut in half last fall from its initial proposal.