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As energy costs continue to strain economies, many German businesses are eyeing Canada’s liquefied natural gas (LNG) as a supplementary supply option through swap deals. Canada is currently the world’s fifth-largest producer of natural gas.
Canada’s Natural Resources Minister Tim Hodgson stated that German energy companies could leverage LNG from Canada’s West Coast for global trade and subsequently buy back LNG cargoes at a lower price for transportation to Europe. This approach could alleviate Germany’s supply pressures in the short term.
During former Chancellor Olaf Scholz’s visit, the then-Trudeau administration believed that Canada lacked LNG business potential. However, the current government has shifted its perspective, emphasizing its adaptability to new realities and the expectations of its citizens.
Currently, Canada has only one LNG facility – the LNG Canada project in Kitimat, British Columbia – with a capacity of 5.6 million tons per year, expected to rise to 14 million tons annually when the full chain is completed. This $40 billion project is a joint venture between Shell, Petronas, PetroChina, Mitsubishi, and Kogas. While Asia is considered the primary market, the development of the global spot market also presents opportunities for European partners.
According to the European Gas Infrastructure (GIE), as of August 25, the region’s gas storage levels reached only 76% of capacity, equivalent to approximately 85 billion cubic meters – lower than last year’s 92% and below the 10-year average of 80.5%. Meanwhile, data from analytics firm Kpler showed that European LNG imports have declined from a peak of 11 million tons in March to 7.4 million tons in August due to weak demand and fierce competition from Asia.
In contrast, LNG imports to Asia surged to 26 million tons in August, up from a low of 21 million tons in February. However, analysts predict that the region’s buying trend will slow for the remainder of 2025 due to high inventory levels, particularly in China. This could free up additional LNG volumes for Europe.
The expected increase in LNG imports is anticipated to offset the decline in domestic supply due to seasonal maintenance at some Norwegian gas fields, which will last until the end of September. As a result, Europe is likely to attain a 90% storage level before the heating season in October, alleviating energy security concerns.
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