First cargo departs LNG Canada in Kitimat, June 30, 2025. Photo courtesy LNG Canada<\/p>\n
Europe Eyes Canada LNG as Iran War Rewires Energy Routes<\/p>\n
CALGARY, April 15 (Reuters)\u00a0\u2013\u00a0European buyers, including Germany\u2019s Uniper, are exploring the possibility of purchasing liquefied natural gas from Canada\u2019s Pacific coast and\u00a0shipping\u00a0it through the Panama Canal as part of a long-term strategy to diversify supply, an effort made more urgent in the wake of the Iran war, two sources familiar with the matter said.<\/p>\n
Three sources said European buyers are among the potential customers that have had commercial talks with Canada\u2019s\u00a0Ksi Lisims LNG, a proposed liquefied natural gas export\u00a0terminal whose backers have been working to finalize contracts with purchasers before making an expected final investment decision this year.<\/p>\n
The interest in Ksi Lisims from potential European customers \u2014 who include state-owned German energy group Uniper, according to two sources \u2014 is significant, as<\/p>\n
Canada\u2019s burgeoning LNG export\u00a0industry<\/p>\n
is geographically more suited to supplying Asia and tolls and\u00a0shipping\u00a0time through the Panama Canal will increase costs.<\/p>\n
All of Canada\u2019s existing and emerging LNG export\u00a0capacity is located on the country\u2019s west coast, offering short\u00a0shipping\u00a0times to Asian buyers, while its east coast has virtually no infrastructure beyond Repsol\u2019s Saint John terminal.<\/p>\n
Lack of infrastructure has long been seen as a barrier to Canada supplying any meaningful amounts of LNG to Europe. But a source familiar with the Ksi Lisims LNG project said the current Middle East conflict means European buyers are considering accepting the costs and longer transit time of\u00a0shipping\u00a0through the Panama Canal in order to diversify their supply sources to a stable, democratic jurisdiction like Canada.<\/p>\n
\u201cSince 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,\u201d the source said.<\/p>\n
Uniper declined to comment. Reuters\u00a0reported in March\u00a0that the German company was in talks with Canada at a corporate and political level to expand its liquefied natural gas purchases. The United States accounted for 96% of Germany\u2019s LNG imports last year, and two sources said Ksi Lisims is seen having potential when it comes to diversifying that supply.<\/p>\n
The Ksi Lisims project is not an immediate solution to Europe\u2019s energy needs. Even if its proponents \u2014 Houston-based Western LNG; a consortium of Canadian natural gas producers called Rockies LNG; and the Nisga\u2019a First Nation, who own the land for the project \u2014 decide to go ahead, it will be in construction for several years.<\/p>\n
However, the project has been referred by the Canadian government to Canada\u2019s major projects office for fast-tracking. Prime Minister Mark Carney has sought to speed up natural resource project permitting to boost\u00a0an\u00a0economy that has been threatened by U.S. trade policy.<\/p>\n
Shell and\u00a0TotalEnergies have already signed 20-year LNG purchase agreements with Ksi Lisims.<\/p>\n
Canada\u2019s Energy and Natural Resources Minister said in\u00a0August\u00a0German 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.<\/p>\n
is among the world\u2019s lowest-risk, said Charlotte Power, a spokeswoman for Canada\u2019s Energy Minister Tim Hodgson who has been traveling the world in recent months pitching his country as a reliable, democratic supplier of energy.<\/p>\n
\u201cAs our allies in Asia, Europe and beyond are looking to strengthen their energy security and reduce reliance on coercive actors, Canada stands out as a partner of choice for LNG,\u201d Power said in an email.<\/p>\n
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\u00a0TOU.TO, one of the Rockies LNG partners behind the project.<\/p>\n
He said Western Canadian\u00a0natural gas prices\u00a0continue to lag behind the U.S. benchmark, making a strong business case for Canadian LNG.<\/p>\n
\u201cThe economic rationale is there, these projects can pay themselves off quite quickly with spreads at that level,\u201d Heard said in an interview.<\/p>\n