Natural Resources Minister Tim Hodgson says there is demand in Europe for Canadian liquefied natural gas (LNG), but that it may be met through offtake agreements and cargo swaps — LNG volumes bought on Canada’s West Coast and swapped through trading desks — rather than direct shipments to Europe. “Many of the buyers are prepared to buy LNG off the West Coast of Canada and trade those products in the international market,” he told reporters on Wednesday during a virtual press conference at the close of a two-day trade trip to Berlin. “German companies today are looking at buying West Coast LNG and swapping it for deliveries into Europe so that they can take advantage of our production on the West Coast to supply German needs in the Atlantic.” Cargo swaps are routinely used by energy traders and other bulk buyers of LNG to take advantage of price differences or to save money on freight costs, analysts say. German traders would likely have to swap Canadian cargoes with Asian buyers, with the Germans taking the nearer Atlantic cargo while Asian buyers take the Pacific ones. Four Canadian LNG projects — LNG Canada, Ksi Lisims LNG, Woodfibre LNG and Cedar LNG — joined government officials on the two-day trip to Germany, according to a list of delegates from the Canadian Embassy in Berlin. “What we heard loud and clear from German LNG buyers and LNG users is they believe there is demand and they want to buy our products,” he said. Ksi Lisims, pronounced “s’lisims” in the Nisga’a language, confirmed Hodgson’s remarks on Wednesday, adding that it identified several potential buyers during the trip and was working to close purchase agreements for its proposed 12-million-tonne-per-year (Mtpa) floating LNG terminal north of Prince Rupert, B.C. “The group of potential customers that we are working with to conclude (sale and purchase agreements), with our existing offtakers Shell and TotalEnergies , will constitute one of the most bankable customer groups in the industry,” Ksi Lisims spokesperson Rebecca Scott said in an email. Offtake agreements lock buyers into long-term contracts for fixed amounts of LNG and are essential to securing financing for the construction of costly LNG export terminals. With so much global LNG demand growth expected to come from the Pacific Basin over the next 10 to 20 years, S&P Global Inc. associate director Ross Wyeno said “it could be feasible” for German buyers to take take Canadian Pacific Coast LNG offtake and regularly swap with an Asian LNG buyer with offtake capacity in the Gulf Coast. “The trade would likely yield a positive gain for both the German offtaker and the Asian buyers owing to optimized shipping distances,” he said. Yet even with the upbeat signals from industry and allies, Hodgson’s most recent comments suggest he may be looking to lower expectations about the feasibility of directly shipping energy to Europe. LNG projects under construction in Canada will primarily serve Asian markets, he said. “I want to be very clear to the Canadian audience: any project that could potentially serve European markets would have to be built in collaboration with the affected provinces and with Indigenous partners and have a strong chance of successful execution,” he said. Earlier this week, Prime Minister Mark Carney , standing alongside German Chancellor Friedrich Merz, suggested that port upgrades in Churchill, Man., could enable future LNG exports as part of the government’s major nation-building investments under Bill C-5. Canada to launch talks on shipping LNG to GermanyCanada can become an LNG powerhouse “It’s certainly a recognition that there are challenges in these projects,” Ian Archer, associate director, North America Natural Gas at S&P Global Inc., said. “In Churchill, there’s infrastructure upgrades that would be required and it could be expensive. The fact that the port is blocked by ice for a number of months during the year also limits its utility. It’s saying, without outwardly saying it, there’s a reason these projects haven’t advanced.” mpotkins@postmedia.com