Canada signs first long-term LNG deal with Germany
Canada’s LNG exports are about to get a lot less American. On Wednesday, the federal government announced a deal to ship one million tonnes of liquefied natural gas per year to Germany for up to 20 years. That’s a first for a European buyer. For a country that, until last year, had no large-scale LNG terminals—and whose actual gas exports, nearly all of them last year, went south—it’s a sharp turn sideways.
Natural Resources Minister Tim Hodgson told reporters in Vancouver the pact shows the world trusts Canada “in a moment that feels uncertain and volatile.” The contract, with German state-owned utility SEFE, would see deliveries start in the early 2030s.
The gas is supposed to come from the Ksi Lisims floating LNG terminal, a $10-billion project planned for Pearse Island near the Alaska border. It’s a partnership between the Nisga’a Nation, Houston-based Western LNG, and a consortium of Canadian producers called Rockies LNG. The idea has been kicking around for years, but the German offtake agreement, Hodgson said, makes it “very likely” the consortium will greenlight construction within months.
A project on Nisga’a territory
Ksi Lisims is designed to be different from older resource projects. The Nisga’a Nation, on whose traditional territory the terminal would sit, is a full equity partner. Eva Clayton, president of the Nisga’a Lisims Government, described the deal as proof that energy security and climate ambition can coexist. “Ksi Lisims LNG is designed to meet both needs,” she said. The promise is that the floating facility will have lower emissions than land-based plants, though independent analyses have questioned some of those claims.
That promise is exactly what Berlin was looking for. After Russia invaded Ukraine, Germany lost more than half its gas supply. SEFE itself is the former German arm of Gazprom, nationalised in 2022. Then fighting in the Middle East knocked Qatari production offline. The result was a global scramble for LNG cargoes, and Canada wanted to muscle in.
The push to diversify away from the U.S. market—now a trade policy goal under Prime Minister Mark Carney—took a big step here. Carney and several ministers flew to Berlin last August to pitch Canadian gas. This SEFE deal is the fruit of that trip.
Opposition that won’t go away
For all the handshakes in Vancouver, the terminal doesn’t exist yet and may never. More than a dozen Indigenous and environmental groups have vowed to block it. Alex Walker of Environmental Defence called the project “a high-risk, legally contested fossil fuel project that has failed for decades to attract capital.” There are active court challenges from some First Nations, though the Nisga’a are not among them.
Inside the federal Liberal Party, the tension is raw. Last week, 14 Liberal MPs wrote to the prime minister expressing “deep concern” about backsliding on environmental commitments. On Wednesday, former environment minister Steven Guilbeault—long the party’s climate conscience—said he will resign from caucus this summer. It’s hard to see the LNG push as unrelated. Hodgson shrugged off the departure, calling the Liberals a “big tent party.”
The financing question
The consortium hasn’t yet announced a final investment decision. Hodgson says the German contract makes one likely within months, but he wouldn’t give a timeline. Even then, the partners need to raise billions. The project already has supply agreements with Shell and TotalEnergies, but lenders will want to see the legal challenges resolved.
B.C. Premier David Eby said Tuesday that nailing down buyers is the critical step. But until shovels go into Pearse Island, the deal remains ink on a page. The first liquefied gas wouldn’t sail for Germany until the early 2030s. By then, a lot can change—including the political winds in Berlin and Ottawa, and the pace of Europe’s own energy transition. For now, the Nisga’a Nation’s pro-development leadership is betting on gas, while court dates loom and financing talks drag on.