LNG in N.B. not dead, despite Germany’s Qatar deal: expert
Political will, approvals are hurdles
• A massive deal that will see Qatar supply liquefied natural gas to Germany doesn’t spell the end of an opportunity for New Brunswick to do the same through the building of a new export LNG terminal, according to an industry expert.
But it should raise questions about why the German government is signing deals with a Middle Eastern partner before Canada, they add.
“It’s definitely not closed,” said Todd Mcdonald of Energy Atlantica, a Halifax-based energy trading company, in speaking about the region’s window to build an LNG export facility. “The amount of gas that’s needed for Germany and other European countries is massive.
“The deal with Qatar, it’s big, but that doesn’t mean the opportunity is closed.”
Qatar is to supply liquefied natural gas to Germany under a 15-year deal signed Tuesday as the European economic powerhouse scrambles to replace Russian gas supplies that have been cut during the ongoing war in Ukraine.
The deal would begin in 2026. Under the agreement, Qatar would send up to two million tons of the gas to Germany through an under-construction terminal at Brunsbuettel.
That’s as Repsol continues to consider the creation of an LNG export terminal in Saint John next to its existing import facility.
In an email, Repsol spokesman Mike Blackier said that the company is still “reviewing the liquefaction feasibility study results.”
“We are moving as fast as possible and things are progressing as planned,” Blackier said.
It’s also awaiting a Canada Energy Regulator decision to see if existing export approvals it got more than half-adecade ago can be extended.
Mcdonald noted that Russian gas represented anywhere from 30 to 60 per cent
of supply, depending on the European country.
“This deal (with Qatar) likely only offsets things in the single digits,” he said.
He added that Europe’s problem also isn’t temporary, believing that there will be a constant question of supply for as long as Russia isn’t a trusted source of energy.
“And what’s that, five or 10 years after the end of the war, and depending? If they all-of-a-sudden replace (Russian President Vladimir) Putin with the Pope, it’s still going to take at least five years,” Mcdonald said with a laugh.
“It means the window isn’t closing.”
He said that the European benchmark price on the forward market remains “very expensive” all the way up until the end of 2026, meaning that Europe will continue to look for options.
But Mcdonald adds that
the “frustrating” difference between Canada and countries already inking deals with Germany is political will.
“Qatar has the existing infrastructure, landscape, political and social licence and willingness to do it,” he said. “And Canada doesn’t.
“If Canada had the same political will and social licence, Canada would be in the lead on a list of suppliers. Instead, we’re at the very bottom of the stack.”
He added: “So that said, I’m not optimistic that Canada can pull this off.”
Prime Minister Justin Trudeau and several federal cabinet ministers have said the government is willing to streamline the approval process to get an LNG export terminal built on the East Coast, while stressing that a series of other hurdles are in the way.
That includes getting natural gas from Western Canada to the East Coast through a network of pipelines that would need upgrades.
New Brunswick Premier Blaine Higgs also said this month that those upgrades remain a stumbling block.
“Transcanada Energy could make the gas supply available to this plan,” he said. “It’ll come from the west or the midwest in the U.S., but it needs an upgrade in a portion of the line along the way. A portion of that line comes through Quebec, maybe 70 kms.
“Would that ever be approved in Quebec? So there lies a challenge right there and I can understand Trans-canada’s reluctance to commit because of what they went through with Energy East.”