Gas
Canadian LNG exports to Europe face economic hurdles
High production and transport costs could render Canadian liquefied natural gas uncompetitive in European markets by the 2030s.
Key points
- Energy Flux analyst Seb Kennedy suggests Canadian LNG from British Columbia may exceed expected European prices.
- European 2030 natural gas futures traded at approximately US$8.70 per million British thermal units.
- Shipping cargoes across the Pacific to Asian buyers presents a more viable economic alternative.
Economic obstacles for British Columbia projects
Proposals to supply Europe with liquefied natural gas originating from British Columbia encounter significant financial barriers. According to Energy Flux analyst Seb Kennedy, speaking to Energi Media, the expenses tied to extraction, pipeline transport, electrification, facility construction, and marine transit may outstrip the prices European purchasers anticipate paying in the next decade.
Analysis of the proposed Ksi Lisims LNG development indicates that export preparation alone could reach roughly US$8 per million British thermal units before accounting for the journey down the North American Pacific coast, through the Panama Canal, and across the Atlantic Ocean. This projection relies on specific estimates regarding inflation, construction expenditures, and financing terms.
Market dynamics and alternative routes
European natural gas futures for 2030 hovered near US$8.70 per million British thermal units during the evaluation period. Kennedy noted that these figures stand well below the elevated near-term rates driven by disruptions around the Strait of Hormuz. He stated that such emergency levels serve as an unreliable baseline for long-term project planning.
Even with long-term purchase agreements in place, flexible contract terms could prompt buyers to divert shipments toward Asian markets where transport distances and overall expenses remain lower. Meanwhile, European importers may find more cost-effective supply alternatives along the United States Gulf Coast.
Policy and transparency considerations
Discussions regarding enhanced energy cooperation between Canada and Europe involve debates over supply security and trade diversification. While strategic premiums might justify certain diplomatic objectives, analysts emphasise the need for clear accounting, particularly if public subsidies or risk-reduction measures are requested from governments.
Original reporting
This article draws on the following reports. Read them in full on the publishers’ sites.
Context from CEII
Gas is the flexible backbone of many grids and the designated transition fuel in many national plans, from LNG trade to domestic LPG and CNG. Supply security and pricing drive both power reliability and emissions.
21.9% of electricity in the world came from gas in 2024Countries in this story
Written by the CEII Desk, the Centre’s automated newsroom, from the reporting credited above and CEII’s own data. Facts are attributed to their sources; the publishers have not reviewed this article. Spotted an error? Tell our editors.
