As the year drew to a close, Canadian energy watchers learned Qatar had inked a long-term deal to supply Germany with liquefied natural gas (LNG) in a bid to help replace Germany’s Russian supplies.
Many of those Canadian energy watchers were left scratching their heads. “This could have been us in the supplier role,” some thought.
They’re not wrong. The conversation over Germany’s growing interest in replacing Russian energy with other sources is widely known. As one close observer remarked, Canada has failed, so far, to recognize a business case in LNG – while Qatar has embraced it.
According to Eric Nuttall, a commentator and partner with Ninepoint Partners, Canadians stand to lose out on about $100 million annually in taxes and royalties on this one deal alone.
It’s a massive transaction. Qatar has signed agreements that will see them send as much as two million tons of LNG a year to Germany beginning in 2026. The agreement will run for at least 15 years.
And it’s a deal that begins to solve Germany’s supply problem even as the country continues to reach out globally for an alternative source and to build new infrastructure to receive – and then to distribute – LNG.
A big question remains: How could Canada, so blessed with an abundance of natural gas and other sought-after energy resources, have squandered this opportunity?
The inescapable answer is that Canada’s just not showing up. There’s a real need, in my view, for a renewed market diversification focus on Canadian oil and natural gas exports.
And it’s not just in Germany. The world will require natural gas, oil, hydrogen, hydroelectricity, uranium and every other future Canadian energy product for a long time to come. Concluding this deal doesn’t mean Canadian resources aren’t still in hot demand.
The Qatar – Germany arrangement equates to only about six per cent of the volumes of Russian gas that Germany imported in 2021. So it’s an important first step in replacing Germany’s Russian supply, but there still appears to be room for other suppliers in the discussion.
And at 15 years in duration, the deal suggests Berlin may be softening its opposition to longer contracts – even as long as 25 years, Bloomberg reports. This runs counter to suggestions in media interviews from Canada’s Natural Resources Minister Jonathan Wilkinson that Canada has only three years of LNG markets ahead of it because, he says, the European Union plans to move shortly to hydrogen.
I think this whole markets discussion has to be revisited – and fast. Canada’s an exemplary energy supplier, with an enviable record on the environment, human rights, safety and Indigenous reconciliation. We simply can’t afford to sit this discussion out.
Cody Battershill is a Calgary realtor and founder / spokesperson for CanadaAction.ca, a volunteer-initiated group that supports Canadian energy development and the environmental, social and economic benefits that come with it.