Prime Minister Mark Carney agreed to a joint study of long-term Canadian LNG supplies to Europe. But falling EU gas consumption and costly export infrastructure raise doubts about whether the market will still exist when new projects come online.
Prime Minister Mark Carney agreed to a joint feasibility study on Canadian LNG supplies to Europe during the EU-Canada summit in Montreal. The study will assess market conditions, infrastructure needs and potential long-term supplies.
The push comes as Canada and the EU look to reduce their reliance on the United States amid trade tensions and tariff disputes. Earlier this year, British Columbia's Ksi Lisims LNG project signed a 20-year deal with Germany's SEFE for 1 million tonnes per annum, with deliveries expected to begin in the early 2030s.
Europe's gas demand is falling
But Globe and Mail columnist Eric Reguly argues that the EU's gas demand is falling fast, and that LNG projects can take a decade or longer to build. By then, EU gas consumption could be half or less of what it is now.
Adrian Hiel, director of the Electrification Alliance, shares that view. According to Hiel, quoted by Reguly: "Europe should be out of the LNG game" by the middle of the next decade.
A Brussels think tank estimates that EU gas consumption in 2025 was down 17% from 2020. In Q2 2026, 54.1% of EU electricity came from renewable sources, according to Eurostat data.
War keeps prices high
After the United States and Israel attacked Iran, Iran retaliated by closing the Strait of Hormuz, through which 20% of the world's LNG and crude oil passes. Last week, European gas prices passed 100 euros per megawatt hour for the first time in four years. Benchmark prices were up about 40% in October.
Shortages keep prices high, which is leading the EU to pursue renewable energy. Reguly writes that the EU wants to break its reliance on the US, which supplies close to 60 per cent of its LNG.
Canadian projects face steep costs
Canadian export projects carry their own burden. Manitoba Premier Wab Kinew has noted that a Port of Churchill LNG route would need dredging and an offshore loading terminal, at an estimated $70-$80 billion. Icebreakers would escort the cargoes out of Hudson's Bay, which is covered by ice about half of the year.
The open question is whether it makes sense to build major infrastructure for an export market that could be substantially smaller by the time it opens.
Source: Oilprice.com
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