Canada was eyeing Europe’s gas market months before Russian invasion

John Woodside
Jonathan WIlkinson speaks at an event at the United Nations' COP26 climate conference on Nov. 6, 2021 in Glasgow, Scotland. Photo by Karwai Tang via COP26 / Flickr (CC BY-NC-ND 2.0)

Aug. 4, 2022

Canada was quietly trying to muscle in on Europe’s gas market months before Russia’s invasion of Ukraine pushed the continent’s energy security to mainstream attention, documents obtained by Canada’s National Observer reveal.

Last November, as diplomats and policymakers convened at the United Nations climate change conference in Scotland, Natural Resources Minister Jonathan Wilkinson and his team promoted Canadian liquified natural gas (LNG) as a major priority, reflected in briefing materials for meetings with Germany, the Netherlands, the European Union and others.

The briefing materials, which Canada’s National Observer received through a federal access-to-information request, spell out objectives, talking points and background context for the meetings and repeatedly cast the Canadian fossil fuel as a solution to European “energy security.”

“Reiterate the ongoing potential role of Canadian natural gas and LNG, highlighted by the current instability in energy markets,” reads one of the objectives in a note prepared for a meeting with German State Secretary Andreas Feicht.

“An LNG export market with Germany would increase energy security while at the same time taking advantage of Canada’s advantages in terms of proximity and ESG [environmental, social and governance] credentials.”

A briefing note prepared in advance for a meeting with Dutch climate envoy Jaime de Bourbon de Parme also includes several talking points related to “energy co-operation” that show Canada “would welcome opportunities … to ensure European markets have access to competitive, secure and reliable energy.”

The Netherlands is an important trade hub with a major LNG import terminal and access to a natural gas network across Europe, according to the note. With Dutch gas exports "rapidly declining" as the country phases out one of its own gas fields, the note also suggests European markets could become more reliant on Russian natural gas in the future.

Europe’s reliance on Russia for gas — and the geopolitical consequences that implies — is also referenced in a note prepared for a meeting with European Union commissioner for energy Kadri Simson. That meeting note lists two objectives: “underscore the importance of the EU leadership on implementing climate change measures” and “explore opportunities in the EU for Canadian LNG exports.”

EU countries “are reliant on natural gas from Russia, and LNG imports from the Middle East and the U.S.,” the note says. Meanwhile, “Canada has the potential to become a significant supplier of cleaner LNG.”

“Some countries have expressed concern the construction of (the Nord Stream 2 pipeline) will increase Russia’s capacity to use energy as a tool of influence and coercion and harm Ukraine as a transit,” the note reads.

Months before Russia invaded Ukraine, Canada was promoting Canadian LNG to European countries under the banner of "energy security," #ATIP documents obtained by @NatObserver reveal. - Twitter

The Nord Stream natural gas pipelines cross the Baltic Sea, stretching more than 1,200 kilometres to link Russia to Germany. Nord Stream 1 was recently thrust into the news as Russia cut the amount of gas flowing through it, and Germany successfully urged Canada to return a turbine for the pipeline that was in Montreal for maintenance to avoid an even worse energy crisis. Nord Stream 2 was designed to double gas exports to Europe and is fully built. However, it is not in operation because Germany stopped its certification process after Russia formally recognized two regions in Ukraine’s Donbas as independent in the days before the February invasion.

Pipeline politics

Russian gas exports to Europe have long been a wedge between western allies. Last July, a meeting between former German chancellor Angela Merkel and U.S. President Joe Biden focused on the Nord Stream 2 pipeline, Russia and Ukraine. Germany was in favour of the pipeline because it could fuel the country’s growing economy, while the U.S. was opposed, citing concerns it could be used as leverage over Europe in a conflict. Biden later told reporters he reiterated his concerns to Merkel but that “good friends can disagree… It made more sense to work with the chancellor on finding out how she’d proceed based on whether or not Russia tried to, essentially, blackmail Ukraine in some way.”

Europe using more Russian gas is a driver of the ongoing conflict in Ukraine, says John Foster, author of Oil and World Politics and an international oil economist who spent decades with the World Bank, Petro-Canada and British Petroleum.

As the world’s largest gas producer, the U.S. “wants in on Europe’s huge gas market, displacing Russian gas,” he told Canada’s National Observer over email. However, U.S. gas is more expensive than Russian long-term prices, he said, implying Russia would likely need to be pushed out to make way for North American producers.

“I suspect Canadian gas will also prove more costly than Russian,” he added.

Foster said Canada’s argument “depicting Russian gas to Europe as unreliable is self-serving,” and that “Canada’s emerging promotion of LNG exports from the Maritimes to replace Russian gas in Europe raises the stakes” of the conflict.

“Canada is mimicking American arguments,” he said.

Wilkinson was not made available for an interview, but his director of communications, Ian Cameron, told Canada’s National Observer the country was working with allies and the private sector to help Europe reduce its reliance on Russian oil and gas over the short to medium term. Canada and the EU formed a working group in March to discuss ways for Canada to help fill the energy void.

In a speech last month to the Regina & District and Saskatchewan chambers of commerce, Wilkinson called the energy security situation in Europe “potentially devastating” because for Europeans, “this is about a fundamental threat to their ability to provide the basics for their citizens.”

“Not surprisingly, western European countries are working vigorously to secure predictable energy supplies in the context of an increasingly belligerent Russia,” he said. “As part of these efforts, they have asked for help from their friends. And Canada has responded.”


East Coast LNG

This month, German Chancellor Olaf Scholz is visiting Canada for an expected East Coast energy announcement. Details of the trip are being kept close to the vest, but in recent weeks, Canada has signalled interest in developing an LNG export terminal in Nova Scotia or New Brunswick. An export terminal would cool gas to liquify it before loading it onto ships to transport overseas.

German Chancellor Olaf Scholz attends a European Council event on June 24, 2022, in Brussels, Belgium. Photo by Francois Lenoir © European Union

In late June, Climate Minister Steven Guilbeault told Reuters the fastest option would likely be to build an export terminal in Saint John, N.B., where Spanish energy giant Repsol already operates an LNG import terminal. However, Germany has previously supported Calgary-headquartered Pieridae Energy’s plans to develop the US$10-billion Goldboro LNG terminal in Nova Scotia.

A briefing note prepared for a meeting with German State Secretary Feicht at last year’s UN conference notes the country pledged a US$4.5-billion loan guarantee in principle for the project. German utility Uniper also has an agreement to buy half of the LNG Goldboro produces.

“Germany has demonstrated clear support for the development of Canada’s East Coast LNG projects,” the briefing note reads.

Pieridae originally planned to build the proposed Goldboro terminal on land, but it was later scaled back to a floating barge. Since Russia’s invasion of Ukraine, the company is considering reviving the project on land.

But Europe’s demand for natural gas is set to drop this decade as the EU invests more in renewables and energy efficiency, said Niklas Höhne, climate scientist and professor at Wageningen University.

“Any plans for Canada to build new LNG export facilities and related pipelines would take longer than the few years when Europe's gas demand is expected to drop,” Höhne said in a statement.

“Canada shouldn't cloak attempts at locking in new oil and gas infrastructure in language about helping Europe.”

A recent poll from Abacus Data found only three in 10 Canadians support a new gas export terminal on the East Coast. That poll, conducted in June, also found 51 per cent of Canadians believe climate impacts should factor into any decision to approve a new export gas terminal, and that Canadians are divided on whether an export terminal would help Europe’s energy needs, with 32 per cent believing it would, while 34 per cent believe it would be “pointless.”

[Top photo: Jonathan WIlkinson speaks at an event at the United Nations' COP26 climate conference on Nov. 6, 2021 in Glasgow, Scotland. Photo by Karwai Tang via COP26 / Flickr (CC BY-NC-ND 2.0)]