Native Canadians sell natural gas to Europe for the first time

Germany orders Canadian liquefied natural gas (LNG) for the first time. Relevant contracts were signed on Wednesday. From the beginning of the 2030s, one million tons of LNG are to be collected in Canada every year for 20 years – that sounds like a lot, but in terms of size it only corresponds to one and a half percent of Germany’s annual consumption in 2025. Nevertheless, it is a milestone that has been prepared for a long time, as it will be the very first delivery of Canadian LNG to Europe.

The importer on the German side is Sefe, the former Gazprom Germany, which was placed under receivership by the federal government. The provider on the Canadian side is a consortium called Ksi Lisims LNG consisting of the Nisga’a Lisims indigenous people, a group of Canadian natural gas producers (Rockies LNG Partners) and the Texas financing and management expert Western LNG. The neighboring Kitsela people also support the project.

However, the path for the gas is long: it is mined in western Canada, specifically the Montney Formation in the northeast of the Pacific province of British Columbia. From there it will be transported around 900 kilometers westward across British Columbia to the Pacific island of Pearse via a pipeline to be built by a third party. From Pearse, LNG tankers then have to bring the liquefied natural gas down the west coast of North and Central America and to Europe via the Panama Canal.

New terminal on Pacific island

The uninhabited island of Pearse is about half the size of the German state of Bremen, lies directly on the southern border of Alaska and is owned by the Nisga’a people. Two floating LNG terminals called Ksi Lisims are planned off the northern tip of Pearse. They are to be built far away and then delivered across the Pacific. Not only is this quicker than building on the island itself, but the impact of the construction work on the surrounding area is also reduced to a minimum.

An advertising film also emphasizes Ksi Lisim’s environmental friendliness; The greenhouse gas emissions per volume of LNG converted would be 90 percent below the usual emissions from LNG terminals. For this to happen, the electricity supply must come from the province’s hydropower. It just so happens that the province is planning to expand a 450-kilometer high-voltage line between the cities of Prince George and Terrace anyway. The only thing missing is a 120-kilometer-long connection through the Nass Valley to Ksi Lisims – but British Columbia will have to build new power plants, as the province’s electricity needs are expected to increase by around 60 percent by 2035.

New markets

Ksi Lisims is scheduled to go into operation as Canada’s second-largest LNG export terminal by the end of 2027 at the earliest and will then be able to export around twelve million tonnes of LNG per year. The only plan was to export to Asia, for which Shell and Total Energy have already secured 20-year contracts. But Europe would like to reduce its natural gas dependence on Russia, so that delivery routes as long as those from western Canada via the Panama Canal to Europe are now an option. At the same time, Canada wants to diversify its export markets to reduce its dependence on the USA.

Theoretically, natural gas swaps would also be conceivable; In this scenario, Canadian natural gas would actually be shipped to Asia and exchanged for gas that would otherwise enter Asia from the other side, such as Qatar. Given the stalemate in the Gulf region, this option currently appears to be impractical.

The official approvals required for Ksi Lisims have already been obtained. What is still missing is the final investment decision worth around 10 billion Canadian dollars (a good six billion euros). This decision should come soon, as there are already three long-term buyers with Sefe, Shell and Total, so there is not much left. The biggest obstacle is lawsuits against the necessary pipeline. Canada’s federal government has declared Ksi Lisims a so-called major project that is of special national interest and should therefore be approved quickly.

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