Canada poised to miss huge LNG opportunity | OilPrice.com

Shortly after Russia invaded Ukraine in late February, dozens of eurozone countries pledged to drastically reduce imports of Russian natural gas or stop them altogether as soon as they could afford it. . These countries have taken several aggressive steps to replenish their natural gas stocks ahead of the winter season, including reach a political agreement reduce gas consumption by 15% until next winter. It is therefore not surprising that Germany – the country most affected by the Russian energy crisis – is currently on a mad dash find other sources of gas before the onset of winter. But here’s the biggest irony of all: Germany and Europe are more likely to secure future gas supplies to Mozambique, one of the world’s poorest countries with little infrastructure, riddled with terrorism. and located 8,140 km from Germany, than Canada, one of the largest producers of this material, with more than a dozen potential LNG sites and “only” 6,400 km away.

Indeed, this could prove to be one of the greatest missed opportunities in Canadian history given that at current prices, a single Canadian port exporting chilled gas could be add nine digits to Canadian GDP every day.

love-hate relationship

Canada is the country of the planet fifth largest producer of natural gas and ranks 15th in the world for proven natural gas reserves. The country’s biggest problem is simply the lack of infrastructure and political goodwill.

It is somewhat shocking to learn that Canada does not have a single LNG export terminal, with almost all of the country’s natural gas exports delivered to the United States by pipeline. But it’s not for lack of trying. During the last years, Natural Resources Canada says he has received proposals for 18 LNG export projects, including five on the East Coast. Currently only one terminal is under construction, with a second not quite ready to innovate.

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In stark contrast, Mozambique is gearing up for a $100 billion LNG windfall, the country prepares to ship its first cargo of liquefied natural gas (LNG) abroad at a time when prices have reached record highs, as Europe desperately tries to cut energy ties with Russia.

According to ship tracking data compiled by Bloomberg, the British LNG carrier Mentor, operated by BP, was due to arrive this week at a new floating terminal that the Italian energy giant Eni SpA ends off the northern coast of Mozambique. Eni said that the commissioning activities of the Coral-Sul FLNG vessel are progressing well, with the first exports expected to be communicated in due course. Italian society is already planning a second floating export platform in the southern African country that could be completed in less than four years.

All of this progress despite the fact that Mozambique has been plagued by terrorism, civil unrest and endemic systemic corruption for decades, so much so that it has been unable to tap its vast fuel reserves. fossil fuels, earning it the status of the third poorest country in the world.

You can blame this state of affairs on Canada’s love-hate relationship with fossil fuels.

Despite the Canada-US Free Trade Agreement in 1988, a sense of ambivalence toward fossil fuels still prevails today. In today’s geopolitical climate, oil and gas are both hated and loved. Hated because of their outsized role as the number one pariah of climate change. Loved as an alternative source of natural gas, especially since Russia’s invasion of Ukraine and the attendant threat that Moscow could cut off gas supplies to Europe.

Last March, Canada’s Minister of Natural Resources, Jonathan Wilkinson, announced that Canada had the capacity to increase its oil and gas exports by up to 300,000 barrels per day (bpd) by the end of this year to help improve global energy security. He also added that Canada was looking for ways to replace Russian gas with liquefied natural gas (LNG) after requests for help from Europe. Currently, a Shell-led consortium is building a large LNG facility on the west coast at Kitimat, which is expected to be completed around 2025, but the country does not export any LNG.

But it need not be so. Canada’s energy regulatory framework is notorious for scaring off oil and gas projects, and in February turned down a planned $10 billion LNG export facility in Saguenay, Quebec. largely based on that would increase greenhouse gas emissions. The five currently languishing East Coast projects were in the planning stages from 2015 but were held back by a hostile and byzantine regulatory climate.

At this point, it’s not 100% clear if Canada is ready to soften its stance on fossil fuels.

Recently, Prime Minister Justin Trudeau publicly stated that the export of LNG from the east coast of Canada to Germany could alleviate the gas crisis in Europe: “It’s doable, we have an infrastructure around it,“, he said in a joint press conference with German Chancellor Olaf Scholz, although he did not provide a timetable when asked for one.

However, as Politico notes, feasible does not necessarily mean realistic, especially since Europe wants to cut Russian gas purchases by two-thirds by the end of the year.

Along the same lines, Trudeau conceded that weak business cases prevented the proposed export facilities from moving forward: “Right now, our best ability is to continue contributing to the global market to replace gas and energy that Germany and Europe can then source from other sources,conceded Trudeau.

Recent comments from Canadian gas producers are also very telling. In a interview this week, Enbridge Inc. (NYSE: ENB) The Al Monaco CEO alluded to Canada’s infamous industry bureaucracy when he said the country must “going out of our own way when it comes to building energy and infrastructure.

Perhaps even sky-high natural gas and LNG prices aren’t enough to persuade the Trudeau administration to change its stance on oil and gas. But as they say, you never really know, given that the United States only started exporting LNG in 2016 and managed to become the world’s largest LNG exporter in such a short time.

By Alex Kimani for Oilprice.com

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