Kitimat Refinery Project Demands Transparency
David Black's gambit is turning into a big election issue, but what do we know about its financial backers?
It is big news. An astounding $25 billion has been raised to build pipelines, tankers and one of the biggest refineries in the world at Kitimat, British Columbia. David Black, owner of the Black Media chain, first announced the proposed project last summer. Since then, Black, through his company Kitimat Clean, has hired the Swiss-based firm, Oppenheimer Investments Group to assemble the financing and see the project through "from start to finish."
According to news reports, Richard Cooke, a senior managing director for Oppenheimer Investments Group, says that his firm has "arranged and [has] the funding committed to do this whole project." This is quite a feat, of course, considering that the $25 billion amounts to more than half the annual budget revenue for the entire province of British Columbia. And that the oil industry itself has not invested in new refinery creation in Canada since the 1980s because of low profit margins and refinery overcapacity.
Premier Christy Clark was particularly enthralled by this new development. In the B.C. legislature, she enthusiastically claimed that "this is a credible proposal from a credible B.C. businessman" and pledged to use every tool at the government's disposal "to move the project forward."
All of this news comes at a critical time for the Clark government as an election looms less than two months away. And like the proposed LNG plants, the refinery promises "jobs, jobs, jobs" for the Kitimat region and tax revenue for the province. It also, of course, provides another argument to support the building of a bitumen pipeline across northern B.C.
In light of the ecstatic support from the B.C. government for this project, perhaps it is a good idea to take a more sober look at it, especially because a multi-billion dollar mega-project can be a double-edged sword for the reputation of a province or country.
Perusing a thin website
It is well-known that David Black's experience lies mainly in the newspaper business. That is one of the reasons why, according to news reports, his refinery plan "has been met with skepticism" in the oil patch.
So, what about Oppenheimer Investments Group which will be raising the $25 billion in debt financing? What is its track record with such large projects? Senior managing director Richard Cooke says that the group "has financed airports around the world and a new city in the Middle East."
Which projects and where? That information should be on the company's website. However, a visit to the website provides little in specifics about its multi-billion dollar projects.
For example, under the section titled "Project master-planning" are 11 futuristic photos/graphics of cities and buildings. No airport projects appear to be present, although strangely, one graphic looks like a nuclear power plant of some kind.
A major problem with all of these photos/graphics on the website is that there is almost no accompanying text to identify the location of these projects or the names of the clients. Two of the drawings have some text but the lettering is so small most is impossible to read even when blown up (one drawing appears to depict an aerial view of a site somewhere on the coast of Albania). Leaving the website, readers and prospective investors could be excused for feeling downright mystified.
The "Media" section of the website is no better. Instead of press releases or news reports, all that is posted is an email address for a contact person (an email was sent to this address on March 13 requesting an interview but so far there has been no reply). The website has no names, street addresses or phone numbers for company officers or branches, nor any history of the firm.
Black vague on financer's past projects
In a March 11 interview with this reporter, David Black was asked about the track record of Oppenheimer Investments Group. Black said that he had conducted his own research into the firm and was satisfied with their credentials, although he did not provide the names of any specific airport projects the group claims to have worked on.
One thing is clear. Oppenheimer Investments Group has no affiliation whatsoever with the investment bank Oppenheimer & Co, which is headquartered in New York and has 3,500 employees.
In regards to other projects, Richard Cooke has said that Oppenheimer Investments Group worked on a "new city" in the Middle East. This is probably the Blue City project in Oman, although it is not mentioned on the website. In any case, a company associated with the group, i.e. Oppenheimer Investments AG, was financial adviser and fundraiser for the project.
This much hyped endeavour aimed at creating a brand new city of 200,000 people on the Omani coast at a cost of $20 billion, and included five star hotels, hospitals, schools, golf courses, and so on.
A sum of $925 million was raised in a bond sale, but the project quickly ran into financial trouble, eventually verging on collapse. Most recently, the Omani government had to step in and buy up $250 million of the project's steeply devalued bonds, in order to block foreign lenders from seizing control of prized Omani land.
More information, please
It follows from all of the above that Oppenheimer Investments Group and David Black should provide more specific information to British Columbians about the group's track record in master-planning and financing mega-projects, and about the company itself.
Of course, being a private company, the Oppenheimer Investments Group has no obligation to do so. Nor does Black. But the fact remains that the refinery issue has been inserted into the provincial election and involves the transportation of bitumen across northern B.C. Transparency is demanded. It is in the public interest.