Canada needs ‘business case’ for LNG exports to Europe: PM | Oil and Gas News

Canada is exploring whether a ‘business case’ can be made for exporting liquefied natural gas (LNG) to Europe, Prime Minister Justin Trudeau has said, as European nations seek alternative energy sources to wean themselves off Russian supplies.

Speaking alongside German Chancellor Olaf Scholz at a press conference in Montreal, Trudeau said on Monday that such exports pose logistical and financial challenges, but that his government would do everything possible to increase global energy supplies. in the middle of the war in Ukraine.

Economic conversations about potential LNG exports are taking place between Canadian and German companies, Trudeau told reporters.

“We will do what we can to contribute to the global energy supply by increasing our capabilities in the short term, and explore ways to see if it makes sense…and if there is a business case for it. , to export LNG directly to Europe,” said Trudeau.

But he added that one of the challenges is the investment needed to build LNG export infrastructure, pointing out that Canada’s “best capability” right now is to increase the world’s energy supply significantly. more general.

“LNG conversion plants are typically placed close to LNG sources, and while we are looking into the possibility that LNG plants on the east coast could ship to Germany, we find ourselves far from the gas fields of the Western Canada,” Trudeau said.

“It’s doable, we have infrastructure around that, but we’re looking a lot at how we can best help, and right now our best ability is to continue to contribute to the global marketplace, move gas and electricity. energy that Germany and Europe can then locate from other sources.

Russian President Vladimir Putin has repeatedly warned that his country’s natural gas supply to Europe could face dramatic cuts under international sanctions over the war in Ukraine.

“Russia is no longer a reliable trading partner,” Scholz said Monday. “He reduced gas deliveries all over Europe, always referring to technical reasons that never existed. And that’s why it’s important not to fall into Putin’s trap.

Russia’s state-owned gas company Gazprom cut gas deliveries through the Nord Stream 1 pipeline to Germany by 60% in June, citing alleged technical problems with the turbine its partner Siemens Energy sent to Canada for overhaul and which has not could not be returned due to sanctions. imposed during the war.

The pipeline will also be closed for three days of maintenance at the end of this month, Gazprom announced last week, increasing economic pressure on Germany and other European countries that rely on fuel to power industry, produce electricity and heat homes.

Canada, home to the Alberta oil sands, is the world’s fifth-largest oil producer, according to the government, and earlier this year it announced plans to increase oil and gas production to help its allies in Europe distance themselves from Russia.

The European Union is heavily dependent on Russia for its energy needs, with Moscow supplying around 40% of the bloc’s natural gas last year.

“Our European friends and allies need Canada and others to step in,” Jonathan Wilkinson, Canada’s Minister of Natural Resources, said in March. “They tell us that they need our help to get out of Russian oil and gas in the short term, while accelerating the energy transition across the continent. Canada is uniquely positioned to help in both cases.

Pro-oil lobby groups and conservative politicians in Canada have urged the government to increase energy production, but environmentalists have criticized the push, saying any increase – even in the short term – will prevent Canada from meeting its commitment. to tackle the climate crisis.

Experts have also pointed out that Canada will not be able to increase its LNG exports in time to meet Europe’s needs.

“Due to climate commitments and energy security concerns, Europe is accelerating its plans to reduce gas consumption by increasing energy efficiency and the use of renewable energy sources. While there may be demand for some fossil fuels, markets like Norway make more sense to meet immediate needs,” the International Institute for Sustainable Development, an international think tank, recently said.

“The result is a fundamental mismatch with Canadian sourcing opportunities. Canada cannot increase supply until 2025, when Europe’s energy needs will be largely met by then.

Germany fears a further cut in natural gas supplies from Russia this winter in retaliation for Western sanctions following the invasion of Ukraine, Economy Minister Robert Habeck told German TV on Monday. ARD.

In an interview with Reuters news agency last week, Wilkinson, Canada’s Minister of Natural Resources, highlighted the country’s potential to supply clean hydrogen to Germany and the rest of Europe instead of trying to build LNG terminals as the world moves away from fossil fuels.

On Tuesday, Canada and Germany will sign an agreement in Newfoundland to develop clean hydrogen for export to Germany as early as 2025, Wilkinson said.

“Canada is playing a really, really central role in the development of green hydrogen,” Scholz, the German Chancellor, said during Monday’s press conference with Trudeau. “That is why we are very happy to be able to extend our cooperation in this area on this occasion as well.”