A second German utility has expressed interest in purchasing liquefied natural gas from the Ksi Lisims project planned for the northern British Columbia coast, as the plant’s partners approach a final go-ahead decision.
Duesseldorf-based Uniper and Ksi Lisims LNG said Monday that they have signed a letter of interest that could see the company buy two million tonnes of gas a year, with deliveries beginning as early as 2032.
The letter of interest outlines key commercial terms for a firmer supply and purchase agreement with Uniper, whose core markets are Germany, the United Kingdom, Sweden and the Netherlands.
Uniper has 18.5 gigawatts of power generating capacity and is a major LNG importer in northwestern Europe. The German government took it over amid the 2022 energy crisis following Russia’s invasion of Ukraine, but is now in the process of privatizing it.
Diversifying Uniper’s portfolio of LNG supply is a key priority, CEO Michael Lewis said in a news release.
“Canada offers an attractive environment with significant gas resources, strong political stability and reliable regulatory frameworks,” he said.
“We see potential in projects like Ksi Lisims LNG to further enhance the resilience and flexibility of our supply portfolio.”
Houston-based Western LNG is the lead developer and future operator of Ksi Lisims alongside Rockies LNG, a consortium of Canadian natural gas producers, and the Nisga’a Nation, on whose lands the project would be located. The floating plant would export up to 12 million tonnes of LNG per year from the site on Pearse Island by the Alaska border.
The $10 billion project has regulatory approval but the partners have yet to make a final investment decision. Locking down long-term supply deals is a key step toward that milestone.
“This project, and Europe’s interest in it, demonstrates how energy security, climate responsibility, and community-focused economic development can be achieved together,” said Davis Thames, CEO of Western LNG.
LNG is natural gas that has been chilled into a liquid state, enabling it to be shipped by sea on specialized tankers.
Late last month, German government-owned company Securing Energy for Europe, or SEFE, signed a long-term agreement to buy one million tonnes of LNG per year from Ksi Lisims over an up to 20-year span.
Canada secures German buyer for Ksi Lisims LNG project in B.C.
Germany would not seem to be a logical buyer for western Canadian gas based solely on geography, but European countries have looked to source gas from places other than Russia, which had been their dominant supplier, since that country’s invasion of Ukraine in 2022.
The U.S.-Israel war with Iran has also halted LNG shipments out of the Middle East since late February, striking off another region from Europe’s list of suppliers.
Cargo from Ksi Lisims could travel to Germany via the Panama Canal, provided vessels are small enough, or take the long way around South America or Africa, Tim Hodgson, the federal natural resources minister, said late last month when the deal with SEFE was announced. But more likely are swap deals, where a European buyer could essentially trade cargoes with another company with a ship closer to the destination.
The Uniper-Ksi Lisims announcement is better understood as a “political move” in both Canada and Germany than a genuine energy security advancement, said Alex Walker, energy analytics program manager at Environmental Defence.
Local communities worried about pipeline required for Ksi Lisims LNG
“For Ottawa, this signals further momentum of the nation building agenda. For Germany, it helps prove the value of the state-owned Uniper ahead of its sale, reassuring prospective buyers such as the Canada Pension Plan that the company holds long-term supply commitments,” Walker said.
Reuters reported last week that the Canada Pension Plan Investment Board is among the possible bidders for Uniper.
Walker also noted Ksi Lisims’ prospects are clouded by First Nations opposition and pending legal challenges to the project and the pipeline that would feed it.
“Despite what the headlines say, this project is far from a Canadian nation building project waiting to happen.”
