VANCOUVER — The deal was years in the making and, for the governments selling it, perfectly timed. Canada announced Wednesday that Germany’s state-owned energy utility has signed a long-term agreement to purchase one million tonnes of liquefied natural gas per year from the Ksi Lisims project, a $10-billion floating export terminal planned for the far northern coast of British Columbia, in a transaction that marks the first such accord between the two countries and the first Canadian LNG sale to a European buyer.
Natural Resources Minister Tim Hodgson made the announcement in Vancouver alongside British Columbia’s Energy Minister Adrian Dix and Nisga’a Nation President Eva Clayton, whose government is a co-owner of the project. The deal is with Securing Energy for Europe, known as SEFE, the former German subsidiary of Gazprom that Berlin nationalized in 2022 at a cost of roughly 6.3 billion euros after Russia’s invasion of Ukraine sent the continent’s energy market into crisis.
“In a moment that feels uncertain and volatile, the world trusts Canada,” Hodgson said at the news conference.
Deliveries are scheduled to begin in the early 2030s and run for up to 20 years, covering a volume that would amount to approximately one-eighth of Germany’s total LNG imports last year. The commercial mechanics of the arrangement reflect the realities of global gas logistics: SEFE is expected to direct the cargoes primarily toward Asia, with the effect of freeing equivalent volumes elsewhere in the world to flow toward European terminals, a standard practice in commodity markets known as a cargo swap.
The Ksi Lisims project is being developed by Houston-based Western LNG alongside Rockies LNG, a consortium of Canadian gas producers, and the Nisga’a Nation on whose ancestral territory Pearse Island sits, roughly 80 kilometres north of Prince Rupert and near the Alaska border. The floating plant would export up to 12 million tonnes of LNG annually at full capacity, making it among the largest export facilities of its kind in Canada if built. The project carries regulatory approval but its owners have yet to make a final investment decision, the outcome that would actually commit capital and launch construction.
“Our agreement with SEFE reflects growing confidence in Ksi Lisims LNG, our commercial and engineering approach, and brings our project a significant step closer to starting construction,” said David Thames, head of Western LNG.
The SEFE deal is the third major offtake agreement Ksi Lisims has secured in recent years. Paris-based TotalEnergies SE signed a 20-year purchase contract for two million tonnes per year in 2025, acquiring a 5 percent stake in Western LNG as part of the arrangement. A unit of Shell PLC signed a comparable deal, also for two million tonnes annually. Together, the three commitments account for five million tonnes per year, just under half of the terminal’s projected output. The remaining capacity would still need buyers before a construction green light becomes commercially sound.
European countries began urgently seeking alternative gas supplies after Russia, formerly the dominant provider for Germany and much of the continent, launched its full-scale invasion of Ukraine in February 2022. The subsequent scramble to replace Russian pipeline volumes accelerated LNG import infrastructure buildout across the continent, with Germany in particular constructing several floating storage and regasification units along its coastline in record time. More recently, rising geopolitical turbulence tied to American trade policy has reinforced European capitals’ determination to lock down supply agreements with stable democratic partners.
The case for Canadian LNG as a strategic commodity has sharpened further since late February, when hostilities between the United States, Israel and Iran disrupted shipments from the Middle East. Hodgson acknowledged that Germany was not the most geographically natural destination for gas exported from northern B.C., a region whose LNG infrastructure was conceived with Asian buyers in mind. He framed the SEFE agreement as a signal of Canada’s reliability as an energy partner at a moment when geopolitical allegiances are being actively redrawn.
“We are a reliable partner in a world where reliable partners are increasingly hard to find,” he said.
B.C. Premier David Eby, speaking earlier this week at a meeting of western premiers in Kananaskis, Alberta, described the deal as an “alley-oop” for the federal government to capitalize on. The Carney government has made expanding non-American trade one of its central economic objectives, pledging to double exports to non-U.S. partners over a decade.
Clayton framed the agreement partly in the language of Indigenous economic self-determination. “We’re managing poverty,” she said at the news conference. “We now want to manage prosperity.”
Not everyone was ready to celebrate. Federal Conservative Leader Pierre Poilievre, appearing before reporters in Ottawa, downplayed the announcement. “You actually don’t need to sign new agreements because the rest of the world is already begging for our energy,” he said. “It doesn’t take a master negotiator to convince a man in the desert to take a glass of water.”
The project continues to face organized opposition from environmental advocates and legal challenges from several First Nations groups who were not party to the Nisga’a Nation’s consent. Grand Chief Stewart Phillip of the Union of British Columbia Indian Chiefs said the deal ignored the “devastating impacts of climate change” that Indigenous communities were already experiencing. Jesse Stoeppler of the Skeena Watershed Conservation Coalition noted that a government announcement does not resolve active litigation or create Indigenous consent where it does not yet exist.
Environmental groups have disputed the characterization of LNG as a clean energy transition fuel, pointing to methane emissions across the full supply chain. A 2024 study from Cornell University concluded that LNG’s lifecycle greenhouse gas footprint may be worse than that of coal when methane leakage is properly accounted for. Critics also noted that the cargoes from Ksi Lisims under the SEFE agreement would not physically travel to Germany, undermining, in their view, the diplomatic framing of the deal.
Hodgson addressed questions about whether LNG exports would serve global decarbonization goals or simply feed the surging electricity demands of artificial intelligence infrastructure. “We need to engage in the world as it is, not as we wish it to be,” he said. “The AI revolution is a real revolution. It is dramatically increasing the demand for power.”
The LNG Canada facility in Kitimat, B.C., owned by Shell and four Asian energy firms, became the country’s first operational LNG export terminal less than a year ago. Two smaller projects, Cedar LNG and Woodfibre LNG, are under construction in the province. Ksi Lisims and an expansion to LNG Canada have both been referred to the federal major projects office, which is tasked with accelerating approvals for infrastructure deemed in the national interest. A final investment decision on Ksi Lisims is expected before year’s end.
