Europe Turns to Canadian LNG as Gulf and Russian Gas Risks Deepen

A number of European energy utilities have expressed interest in buying the future output of the Ksi Lisims LNG project, which will be Canada’s second export facility for liquefied gas.

The Ksi Lisims LNG facility already has offtake agreements for 5 million tons in annual production, but the companies behind the project want to secure commitments for another 3 to 4 million tons, the chief executive of Western LNG, the project leader, told Reuters in an interview.

The Ksi Lisims plant will have a total annual capacity of 12 million tons of superchilled gas, and once the additional purchase commitments are secured, the project will proceed to a final investment decision, the publication also reported.

The Reuters interview follows news that Ksi Lisims had secured an offtake commitment from Germany’s state-owned utility SEFE, set up specifically to boost the country’s supply of natural gas. This is Ksi Lisims LNG’s first commitment from a European company, as the continent scrambles to find gas supplies that are not under sanctions and do not originate in a Gulf state.

The Ksi Lisims LNG facility, if the final investment decision is made, will produce gas from two floating platforms, aiming for a low-emission profile in tune with the federal Canadian government’s priorities, which recently changed somewhat, putting the exploitation of the country’s abundant hydrocarbon resources higher.

The markets for this LNG will be in the Pacific Basin, per the project’s website, with a focus on Asia, where demand for low-emission fuels is growing. However, the talks with European energy buyers suggest strongly that plans for future markets are flexible and the gas will go where it is needed, possibly regardless of the price, since European importers do not really have a lot of options to choose from when it comes to gas sellers.

By Irina Slav for Oilprice.com

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