Canada’s energy minister is touting global demand for the nation’s products, after revealing a deal that could send millions of tonnes of liquefied natural gas to Europe over two decades.
“We’re in a world where our allies are begging us, are begging us to produce our resources,” Tim Hodgson, Canada’s minister of energy and natural resources, told reporters in Vancouver.
Hodgson said Germany’s state-owned energy company, Securing Energy for Europe, has agreed to buy up to one million metric tonnes of LNG per year from the Ksi Lisims export project in northwest B.C., just south of the Alaska border.
“This contract represents the first agreement that we see long-term, low-carbon LNG from Canada being shipped to our allies in Europe,” Hodgson said. “This is one of the largest buyers of natural gas in Europe.”
The joint venture partners behind Ksi Lisims LNG, which the federal government has earmarked for fast-tracking under the major projects list, have yet to reach a final investment decision or begin construction.
However, some First Nations oppose Ksi Lisims, including the Gitanyow, Gitxsan and Wet’suwet’en nations, whose territory the pipeline would cross for part of its route. Also opposed is a consortium of environmental groups.
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Officials said Thursday the deal — which includes an agreement for up to 20 years of deliveries, beginning in 2030 — represents an important step towards a final investment decision on the $17-billion facility.
Ksi Lisims received regulatory approval last September and could be operational as early as 2029. It would carry up to 12 million tonnes of LNG per year over its 40-year lifespan.
The latest deal means five of the proposed facility’s 12 million tonnes of capacity are spoken for. French oil company TotalEnergies has committed to two million tonnes over 20 years and global gas giant Shell has committed to buying two million tonnes annually.
It’s unclear at what point a final investment decision would be made on Ksi Lisims.
Deal a long-term commitment, says energy minister
Located just south of the Alaska border, the project sits on well-established shipping lanes — North America’s shortest marine route to energy-hungry Asian markets.
For Europe, smaller shipments may flow through the Panama Canal, while larger vessels would go around South America or Africa, Hodgson said. In some cases, he added that SEFE could “swap” cargo with other buyers to reduce distances travelled.
“That’s a common practice in global energy markets,” he said. “That makes production off of B.C. even more valuable, because it’s not just valuable for people buying in Asia, but it makes it more and more attractive to people in Europe.”
Hodgson pitched Thursday’s deal as a means of supporting global energy security and reducing reliance on what he called “coercive” actors like Russia.
Even if conflicts stabilize in the Middle East and Eastern Europe, Hodgson said the contract will hold up.
“Typically, you build LNG with long-term contracts in place, so once the contract is signed, there’s a commitment to fill it,” Hodgson said.
The Ksi Lisims LNG concept of a floating LNG liquefaction plant.
If it moves forward, Ksi Lisims would be built on a site owned by the Nisga’a Nation, a proponent of the project.
The facility will be led by Western LNG and Rockies LNG Partners, a group of mostly Canadian independent gas producers, which sets it apart from LNG Canada, an existing liquefied natural gas project in B.C.
Despite its name, LNG Canada is owned by global or state-owned Asian energy companies, including Shell plc, Petronas, PetroChina, Mitsubishi Corp. and Korea Gas Corp.
For LNG Canada, most of the benefits will flow first to its equity partners, which are based outside the country. Ksi Lisims, meanwhile, is backed by Canadian producers that could fetch premium prices for their gas in Asia — and now Europe.