European energy companies are eyeing purchases of Canadian liquefied natural gas in search of supply diversification in challenging times, according to a Reuters report citing unnamed sources familiar with the matter.
European energy buyers are already big clients of U.S. LNG producers, but long-term diversification would require spreading reliance over more suppliers, hence the interest in Canadian LNG, which has yet to start flowing.
The report concerned a planned LNG export terminal, Ksi Lisim, which has yet to get a final approval and move to construction. The facility will involve a floating production vessel with the capacity to produce some 12 million tons of liquefied natural gas annually. 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.
Yet demand for LNG is growing in Europe as well as the European Union prepares to stop buying all energy commodities from Russia by the end of next year. “Since the war in Iran started, there has been especially strong interest in (Ksi Lisims) offtake from LNG buyers all around the world, including from Europe,” one of the sources said, adding that the European buyers were ready to accept the higher cost of Canadian LNG for the sake of diversification into “a stable, democratic jurisdiction like Canada,” per Reuters.
One of the potential buyers of Canadian LNG is Germany’s Uniper. According to Reuters, Europe’s largest economy last year bought 96% of its liquefied gas from the United States.
If built, the Ksi Lisims facility will be the second LNG project to be completed in Canada in less than a decade, despite the previous federal government’s stance that there was no business case for building LNG trains. The current government, while still publicly committed to a transition from oil and gas to low-carbon electrification, has signaled eagerness to utilize Canada’s hydrocarbon resources.
By Irina Slav for Oilprice.com
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