Buyers in the Middle East are looking to secure liquefied natural gas from Canada as a hedge against geopolitical turmoil, the president of the company that majority-owns Canada's Woodfibre LNG project said.
Ratnesh Bedi, president of Singapore-based Pacific Energy — which owns a 70% stake in the Woodfibre project currently under construction on Canada's Pacific Coast near Squamish, B.C. — said in an interview that his company is fielding inquiries from Middle Eastern buyers even though the project's 2.1 million tonnes per year of capacity is already fully contracted to BP (BP.L).
The interest reflects a broader shift among global LNG buyers seeking to diversify supply sources in the wake of the war in Iran and Strait of Hormuz disruptions. Even the Middle East, one of the world's top LNG-producing regions, is now looking to secure backup supply from routes free of geopolitical chokepoints like the ones that threaten its own exports.
"Almost every week, someone is approaching us to say, 'hey, do you still have capacity?'" Bedi said. "Very interestingly, not only is it north Asia that is coming, but to my surprise, even LNG suppliers out of Middle East are coming to find alternate supplies for their customers."
Bedi declined to name the companies. A spokeswoman for Canada's Energy Minister Tim Hodgson confirmed Middle Eastern buyers have expressed interest not only in investing in the Canadian LNG sector, but in securing physical LNG cargoes from Canada, the world's fifth-largest natural gas producer.
"The federal government has heard strong interest from Middle Eastern companies in pursuing both LNG equity investments and offtake deals," said spokeswoman Charlotte Power in an email.
The Woodfibre project, which Bedi said is targeting December 2027 for its first export cargo shipment, is one of several LNG facilities under construction on Canada's west coast. The project's geographic location offers shorter shipping times to Asian markets than U.S. Gulf Coast LNG exporters, and Asian customers are increasingly interested in Canada as a supplier, Bedi said.
The war in Iran and the resulting Strait of Hormuz disruptions have changed the way LNG buyers think about their portfolios, Bedi said. Increasingly, buyers worldwide want geographic diversification that will allow them to procure short-term emergency supply if necessary without relying on the global spot market.
He added Canada benefits from this because its west coast LNG industry isn't exposed to any geopolitical chokepoint, such as a strait or tight waterway that could be closed or blocked.
"(Buyers) are looking at what-if scenarios," Bedi said. "They are thinking, 'tomorrow, if something goes wrong, I should already be a customer of Canada.'
LONG-TERM DEALS
In the last several months, Germany's SEFE and Uniper have both signed long-term offtake agreements with another Canadian LNG project, Ksi Lisims.
MidOcean, which is backed by EIG and Saudi Aramco, bought into Petronas' stake in LNG Canada last year, another indication of growing international interest in Canada's liquefied natural gas industry.
Bedi said despite Western Canada's low natural gas prices, the country remains a comparatively expensive jurisdiction in which to develop an LNG project due to its extensive regulatory process that can add years to project timelines. But he added he is encouraged by recent efforts by Canadian Prime Minister Mark Carney to speed permitting times for energy projects.
Bedi also did not rule out an expansion of the Woodfibre project in years to come, but said its backers are not yet at that point.
"Market demand is very exciting. Government support is very exciting. But we are at that very critical juncture of our project where we need to bring it to the finish line," he said.
