Canada will not financially support two proposed LNG export projects, although it will help with the negotiations with the prospective buyers in Germany, Natural Resources Minister Jonathan Wilkinson told the Globe and Mail in an interview.
Demand for LNG has soared this year as EU members seek to reduce their energy dependence on Russia. After becoming the largest buyer of U.S. LNG, the EU seems to be looking for diversification options over the longer term.
Reuters reported at the end of last month that Germany was in talks with Canada about liquefied natural gas exports from Canada’s east coast, following debates in the Canadian federal government from earlier this year about how it could speed up the development of two proposed LNG export terminals.
“Our view is the private sector should be putting up the money for these projects, and it should be done on a commercial basis,” Wilkinson told the Globe and Mail.
“We’re certainly willing to assist in the conversations with our friends in Germany who are looking for these kinds of supplies to ensure that there are long-term arrangements, contractual arrangements that provide certainty for the private sector.”
Currently, there is one LNG export terminal under construction in Canada—Shell-led LNG Canada in Kitimat, British Columbia, which is scheduled to start exporting in three years.
Because of the size of the investment typically needed for LNG export facilities, total reliance on private funding means that the developers behind the two proposed projects—Pieridae Energy and Repsol—will probably insist on sealing long-term supply deals with their European buyers.
Yet long-term contracts for any form of fossil fuel imports go against the Brussels grain with regard to climate and emission reduction commitments, and this might complicate matters for Canadian LNG export hopes.
Both proposed projects are at a very early stage of development, with Pieridae Energy recently saying it was going to carry out a feasibility study on its Goldboro LNG project after it shelved it last year.
By Irina Slav for Oilprice.com