European buyers, including Germany’s Uniper, are considering importing LNG from Canada’s Pacific coast via the Panama Canal to diversify supply, a plan accelerated by the Iran war, sources said.
They are among potential customers in talks with Canada’s Ksi Lisims LNG project, which is seeking to secure buyer agreements ahead of a final investment decision expected this year.
Ksi Lisims LNG Project
Interest in Ksi Lisims from prospective European buyers, including Germany’s state-owned Uniper, is notable, since Canada’s growing LNG export sector is better positioned to serve Asia, and routing cargo through the Panama Canal adds time and cost.
All of Canada’s existing and emerging LNG export capacity is located on the country’s west coast, offering short shipping times to Asian buyers, while its east coast has virtually no infrastructure beyond Repsol’s Saint John terminal.
Infrastructure Limits
Canada’s limited infrastructure has long hindered significant LNG exports to Europe, but the Middle East conflict is pushing European buyers to consider costlier, longer Panama Canal shipments to secure supply from a stable source like Canada.
The Ksi Lisims project is not an immediate solution to Europe’s energy needs. Even if its proponents — Houston-based Western LNG; a consortium of Canadian natural gas producers called Rockies LNG; and the Nisga’a First Nation, who own the land for the project — decide to go ahead, it will be in construction for several years.
Strategic Push
However, the project has been referred by the Canadian government to Canada’s major projects office for fast-tracking. Prime Minister Mark Carney has sought to speed up natural resource projects permitting to boost an economy that has been threatened by U.S. trade policy.
Shell and TotalEnergies have already signed 20-year LNG purchase agreements with Ksi Lisims.
Canada’s Energy and Natural Resources Minister said in August German companies are looking to buy and swap Canadian LNG cargoes. But now, they are also interested in taking shipments of the physical Canadian product, the sources said.
Canadian LNG is among the world’s lowest-risk, said Charlotte Power, a spokeswoman for Canada’s Energy Minister Tim Hodgson who has been traveling the world in recent months pitching his country as a reliable, democratic supplier of energy.
The Iran war and the resulting Strait of Hormuz closure have made it increasingly likely that Ksi Lisims gets built, said Jamie Heard, vice president, capital markets for Tourmaline Oil, one of the Rockies LNG partners behind the project.
Heard said Western Canadian natural gas prices continue to lag behind the U.S. benchmark, making a strong business case for Canadian LNG.
(With inputs from Reuters)
