30 May 2026 4 min read

Ksi Lisims LNG Announces "Agreement" with German Buyer; All Levels of Govt Continue Aggressive LNG Support; FIDs Further Delayed

Tim Hodgson featured in an article about Ksi Lisims LNG's misleading German agreement.

Highlights

The Canadian government announced a long-term sales agreement between the German state-owned enterprises SEFE and Ksi Lisims LNG, but a closer look reveals that the announcement was mostly hot air.
Provincial and federal government continue to go all out for LNG expansion.
FID delays for both LNGC and Ksi Lisims LNG continue.

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Details

Ksi Lisims LNG's Misleading Sales Agreement Announcement

On May 27th, federal Natural Resources Minister Tim Hodgson held a press conference to announce a new deal reached between the German state-owned company SEFE and Ksi Lisims LNG. He described this agreement as an "offtake" agreement, which credulous Canadian media widely reported as a major step forward that makes reaching a positive final investment decision much more likely.

The problem is that this is not actually the agreement that was signed. SEFE's press release about the agreement is much clearer: Ksi Lisims and SEFE have signed what's known as a Heads of Agreement (HoA). The exact details are not known, but HoAs are typically non-binding, pursued by LNG proposals to try to demonstrate interest but often failing to convert into firm offtake agreements. To quote SEFE's press release, the agreement they've signed "is contingent on the finalisation of a definitive Sales and Purchase Agreement between the two parties."

That's the key: they've made an agreement to negotiate towards a Sales and Purchase Agreement (SPA). They have not signed an SPA, despite the federal government's mis-representation of this.

This is important because to reach its final investment decision and come up with the financing necessary to actually build the project, Ksi Lisims LNG needs to prove to lenders and/or investors that there is a viable market for its products at the cost it will take to produce them. For LNG projects, this typically requires signing SPAs with buyers for around 80% of a project's capacity. Ksi Lisims has signed two of these: one with TotalEnergies in May, 2025, and one with Shell in January 2024. Together, those agreement account for 4 million tonnes of LNG per year (mtpa), or 1/3rd of the project's proposed 12 mtpa capacity.

The new agreement to reach an agreement accounts for just 1 mtpa. Even if it were an SPA, which it's not, it would bring the project up to just 41.67% subscribed. As is, the project remains only 1/3rd subscribed and hasn't signed an SPA in over a year, suggesting a lack of momentum and a lack of buyer interest, both of which are being compounded rather than reversed by the market shock of the Iran war.

Hodgson, Western LNG, and their allies in other levels of government sought this deal-to-plan-to-make-a-deal to give the impression the project has is moving forward. Whether they did this in an effort to attract investors, or in an effort to smooth the pathway for vast public investment from the Canada Infrastructure Bank and other institutions remains to be seen; the answer is likely some combination of both. That said, serious and informed observers (including most private investors and lenders) will recognize the hollow nature of this announcement even if Canada's media failed to.

Provincial and Federal Government All-in for LNG Expansion

Over the last few weeks, the province of BC and the federal government have made it abundantly clear that they are doing everything they can to convince the proponents behind LNG Canada and Ksi Lisims LNG to move forward with their projects, something that looks increasingly unlikely in the post-Iran-war world. On May 14th, Hodgson and BC Premier David Eby held a press conference to announce "enhanced investment co-operation efforts" in support of LNG Canada's Phase 2 expansion. The press conference contained nothing of substance and appears to hvae been a stunt to help Hodgson build political momentum for public and private financing of these projects behind the scenes.

FID Delays

In spite of aggressive public support from both provincial and federal governments, the proponents of LNG Canada Phase 2 and Ksi Lisims LNG have continued to push their timelines for final investment decisions. The latest from both projects is that they expect to reach a decision by the end of 2026. Ksi Lisims, in particular, seems to move back the timeline every time a reporter asks about it.