A German energy company has signed a landmark agreement to purchase liquefied natural gas from the Ksi Lisims LNG project in British Columbia, marking what the federal government on Wednesday called Canada’s first binding, long-term agreement to supply LNG to a European utility.
Under the offtake agreement, the proposed Ksi Lisims LNG export terminal in northwestern B.C. would supply two million tonnes of LNG annually to Düsseldorf-based Uniper for up to 20 years, with first deliveries expected in 2032.
The $30-billion Ksi Lisims project, which has yet to reach a final investment decision, is being co-developed by the Nisga’a Nation, Western LNG and Rockies LNG.
The federal government says the project has the potential to represent 13 per cent of Canada’s total natural gas exports by the middle of the next decade.
Uniper and Ksi Lisims announced last month that they had signed a letter of intent outlining the framework for the supply agreement finalized Wednesday.
The supplied gas would primarily serve customers in Germany, Sweden, the U.K. and the Netherlands, though Uniper said the shipments would remain flexible enough to bolster energy security across Europe as needed.
“The ultimate destination of these volumes will depend on free market conditions and regulation,” said Mike Newman, Uniper’s senior managing director for North American gas trading, during a news conference in Vancouver.
“Should Europe face another supply crisis, these Canadian volumes could play an important role in supporting security of supply in Germany and across Europe,” he added.
“It diversifies Uniper’s global LNG portfolio and strengthens the resilience of Europe’s energy system in an increasingly uncertain world.”
A statement from the federal government said Canada has relied for decades on the U.S. market for its natural gas exports. It said the new agreement with Germany would broaden the customer base and provide economic stability and trade sovereignty.
The Ksi Lisims facility is expected to produce up to 12 million tonnes of LNG annually from two floating production and storage facilities on Nisga’a land near the Alaska border.
According to the company and the federal government, the gas liquefaction process would be powered by hydroelectricity with a plan to make the facility a net-zero emissions operation.
Ottawa says the project would contribute more than $15 billion to Canada’s GDP over 30 years and become the country’s second-largest LNG facility, after LNG Canada in Kitimat.
Richard Brooks, climate finance director with the environmental group Stand.earth, called the deal “a major step backwards for climate action” for both the Canadian and German governments, which “pulled out all the stops,” he said, to get the deal through.
“Moving forward with a massive new methane gas project as devastating wildfires rage across Canada and Europe is irresponsible and an abdication of leadership,” Brooks said in a statement following the announcement.
“Morally, it’s a slap in the face to all of us who are impacted by deadly heatwaves and smoke.”
