Delegates are silhouetted before the start of the LNG 2023 conference, in Vancouver, B.C., Monday, July 10, 2023. Officials from the LNG industry gathering in Vancouver for an industry conference say the consensus among economists is that the gas shortage in Europe is a situation unlikely to last beyond 10 years, with the rise of renewables cutting into demand from 2030 onward. THE CANADIAN PRESS/Darryl Dyck

Canadian liquefied natural gas projects looking to fill gaps in the global market left by the absence of Russian gas may run into more challenging conditions than expected, industry experts have told a global conference in Vancouver.

They said the consensus among economists is that the gas shortage in Europe caused by the war in Ukraine is unlikely to last beyond 10 years, while the rise of renewables will cut into demand from 2030 onward.

Peter Abdo, chief commercial officer for LNG for German energy giant Uniper, told the LNG 2023 conference his company is committed to entering into 10-year contracts with potential suppliers — but longer-term deals will be more challenging because of Europe’s uncertain long-term demand for natural gas.

“I guess the caveat is, if any European player is entering into a long-term contract irrespective of the portfolio benefits, let’s just make sure that we have enough flexibility in that deal to where we can take it to Asia or some other market, in case we’re faced with a situation like stranded gas,” Abdo said.

Octavio Simoes, president and CEO of U.S.-based natural gas firm Tellurian, agreed that the biggest opportunity opened by the European gas shortage is in Asia, a region with a much brighter long-term outlook in LNG demand.

However, Simoes said challenges remain on that front.

He told the conference that the current European gas shortage revealed a fundamental challenge for anyone wanting to sell LNG to Asia, as planned by projects in British Columbia — price may be the ultimate determining factor, not environmental standards touted by the West.

Simoes said European countries such as Germany jumped into the LNG market in the last two years to replace Russian gas, paying more for the commodity and essentially “taking it from the rest of the world” while driving up prices.

He said high prices pushed Pakistan to abandon plans to buy natural gas and instead quadruple commitments to coal, and similar trends are happening in Indonesia, Thailand, Vietnam and the Philippines.

“I look at it from the principle that we have roughly half the (global) population — 4 billion people — living on less than $7 a day,” Simoes said. “So whatever we do to decarbonize, if it’s not affordable, it’s not going to happen.”

Earlier in the conference, LNG Canada CEO Jason Klein had said Canada would be competitive on the global market, partially due to its high environmental and social standards.

Klein said the $40-billion LNG Canada export facility in Kitimat, B.C. — the only one of its kind to reach the construction stage on the Canadian West Coast — is about 85 per cent complete and is scheduled to begin exports by “mid-decade.”

In a written statement, the $40-billion joint-venture LNG project’s management said it does not comment on pricing and market conditions, but reiterated the facility will produce an affordable supply through “highly efficient equipment” and “access to an abundant supply of low-cost” Canadian natural gas.

The CEO of multinational energy giant Petronas, which is backing LNG Canada, said Tuesday that he agrees pricing will play a big role as Asian countries decide whether to import LNG, switch to renewables or stay with coal.

But Muhammad Taufik told the conference that each market has unique dynamics, and Canadian LNG’s emphasis on environmental and social standards has a market in many Asian countries.

That demand will grow, he said, as governments around the world develop more concrete carbon-pricing policies, which would add more incentive for countries to buy lower-polluting fuels like LNG.

“They will want this high-quality LNG,” he told the conference. “I can tell you already that my marketing and trading team are already delivering — or have already delivered — carbon-neutral LNG, and there have been customers who are specifically asking for carbon-abated cargoes.”

One such market would be China, said PetroChina International’s senior vice-president Keith Martin.

Martin said Chinese President Xi Jinping’s announcement at the United Nations two years ago that China would achieve carbon neutrality before 2060 has set the world’s second-largest economy strictly down the path of buying lower-emitting fuels such as LNG.

“When President Xi made that speech at the UN, that wasn’t just a speech,” Martin said. “That was an order.”

Muhammad Taufik said that comparing LNG’s costs and benefits as a whole, versus coal and renewables, may play to its advantage in Asia.

The key for LNG Canada and other Canadian projects, he said, is timing, making it imperative that production does not get delayed, thereby missing the window.

“A call-out to our Canadian friends: You do have probably one of the most unique opportunities to be part of the global solution,” he said. “You are just naturally positioned to cater to these markets, and I think it would be a huge opportunity lost if we do not pivot to actually respond to those needs.”

This report by The Canadian Press was first published July 11, 2023.

News from © The Canadian Press, 2023. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

  • 0067 PFM SaskWorks Payroll Investment Plan
    0067 PFM SaskWorks Payroll Investment Plan
  • 0066 WBPC Promo video 30 seconds
    0066 WBPC Promo video 30 seconds
  • 0065 Anova Resources field operator Oxbow
    0065 Anova Resources field operator Oxbow
  • 0064 Estevan OTS
    0064 Estevan OTS
  • 0063 Turnbull Excavating hiring crusher
    0063 Turnbull Excavating hiring crusher
  • 0062 TED_EPAC_Technology_30
    0062 TED_EPAC_Technology_30
  • 0061 SIMSA 2024 For Sask Buy Sask
    0061 SIMSA 2024 For Sask Buy Sask
  • 0060 Arizona Lithium Lease building
    0060 Arizona Lithium Lease building
  • 0059 Southeast College Heavy Equipment Operator
    0059 Southeast College Heavy Equipment Operator
  • 0058 Royal Helium Steveville opens anonymous rocket
    0058 Royal Helium Steveville opens anonymous rocket
  • 0055 Smart Power Be Smart with your Power office
    0055 Smart Power Be Smart with your Power office
  • 0053 Kingston Midstream Westspur Alameda Click Before You Dig large text
    0053 Kingston Midstream Westspur Alameda Click Before You Dig large text
  • 0052 Predator Inspections
    0052 Predator Inspections
  • 0051 JML Hiring Pumpjack assembly
    0051 JML Hiring Pumpjack assembly
  • 0049 Scotsburn Dental soft guitar
    0049 Scotsburn Dental soft guitar
  • 0046 City of Estevan This is Estevan
    0046 City of Estevan This is Estevan
  • 0041 DEEP Since 2018 now we are going to build
    0041 DEEP Since 2018 now we are going to build
  • 0032 IWS Summer hiring rock trailer music
  • 0022 Grimes winter hiring
  • 0021 OSY Rentals S8 Promo
  • 0018 IWS Hiring Royal Summer
  • 0015 Latus Viro
    0015 Latus Viro
  • 0013 Panther Drilling PO ad 03 top drive rigs
  • 0011
  • 0006 JK Junior
  • 0002 gilliss casing services
    0002 gilliss casing services
  • 9002 Pipeline Online 30 sec EBEX
    9002 Pipeline Online 30 sec EBEX
  • 9001