Canada Expects an Increase in LNG Projects as Asian Buyers Hunt its Certified Gas

As Asian buyers focus on Canada for its low-carbon LNG during a period of “unprecedented global energy crisis,” the start of the Shell-backed 14 million mt/year LNG Canada project in 2025 will encourage expansions in British Columbia.

Speaking to Canadian industry leaders about securing supplies, several Asian embassies—Japan in particular—”are saying we want you in the market and we want your product,” according to Timothy Egan, President of the Canadian Gas Association, who conducted an interview from Ottawa with S&P Global Commodity Insights.

The four Canadian LNG projects in British Columbia, which are at different stages of development, aim to be within the 0.16 mtCO2e carbon intensity benchmark set by the province. These projects are the 14 million mt/year LNG Canada, the 12 million mt/year Ksi Lisims, the 3 million mt/year Cedar LNG, and the 2.1 million mt/year Woodfibre.

In addition to complying with strict federal government requirements for greenhouse gas emissions, Canadian producers hope that their low carbon intensity will result in a higher price from Asian buyers.

The first shipment of Canadian LNG to global markets is now expected in approximately two years, with initial amounts sailing for Asia, at a time when global buyers have been anticipating a new entry, stated Egan.

According to Egan, Canada’s West Coast LNG producers have a couple of built-in benefits for the Asian market, such as shorter distance (a 10-day shorter shipping time for an LNG carrier from the Canadian Pacific Coast to buyers in Asia, compared to the US Gulf Coast) and a colder temperature for production.

While pricing will be important for Asian consumers, Egan believes that the main advantage for Canadian producers will be supply security in the wake of an extreme geopolitical crisis such as the Ukraine war.

“Pricing will be a strategic aspect. But given the incredible volatility in the global markets, buyers want secure supplies and Canada can offer that. So that may translate into a price advantage.”