Canadian LNG exports to Europe face tough economics, analyst warns

October 13, 2026 | British Columbia, Canada, News

Proposals to ship Canadian liquefied natural gas to Europe face a formidable economic obstacle: the cost of producing and delivering LNG from British Columbia could exceed the prices European buyers expect to pay in the 2030s, according to Energy Flux analyst Seb Kennedy.

In an interview with Energi Media, Kennedy said European natural gas futures for delivery in 2030 were trading at approximately US$8.70 per million British thermal units at the time of the discussion. That contrasts sharply with the much higher near-term prices associated with the energy disruption around the Strait of Hormuz.

“If that is going to be the price of gas in 2030, then there is no economic incentive to ship any LNG from Canada,” Kennedy said, referring to shipments to Europe.

Kennedy is modelling the proposed Ksi Lisims LNG project in British Columbia. His analysis considers the cost of feed gas, pipeline connections, electrification infrastructure, plant construction and marine transport to European regasification terminals.

He estimated that LNG loaded at the B.C. export terminal could cost about US$8 per MMBtu before the expense of moving cargoes down North America’s Pacific coast, through the Panama Canal and across the Atlantic. Kennedy emphasized that the result depends on assumptions about construction costs, inflation and financing.

Even a European company that signs a long-term purchase agreement may not ship those cargoes to Europe, he added. Flexible free-on-board contracts can allow the buyer to redirect LNG wherever the returns are strongest.

“The economic signs all point in the same direction,” Kennedy said: send West Coast Canadian cargoes across the Pacific to Asian importers, where shipping distances and costs are lower. European buyers could instead source LNG from the U.S. Gulf Coast.

Kennedy said disruption to LNG exports from Qatar and the United Arab Emirates has changed the outlook for the global market, tightening supply and potentially delaying a widely anticipated LNG surplus. Nevertheless, he argued that emergency prices are a poor guide to the economics of Canadian projects targeting operation in the next decade.

The interview also examined the distinction between full-cycle project costs and operating costs after construction. Kennedy argued that even setting capital costs aside might not make B.C.-to-Europe shipments viable at the European futures prices he cited. Long-term take-or-pay obligations could leave buyers exposed if cargoes cost more than their market value.

The debate has political implications as Canada and Europe discuss deeper energy ties. Security of supply and trade diversification may justify a premium, Kennedy acknowledged, but that premium needs to be made explicit.

Energi Media’s Markham Hislop argued that Canadian taxpayers deserve transparent accounting if governments are asked to subsidize or otherwise reduce the risks of new LNG projects. The interview did not quantify any particular public subsidy.

Kennedy and Hislop also discussed holding a follow-up webinar to demonstrate how changing project-cost and gas-price assumptions affects the modelling.

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