Updates with quote from interview in paragraphs 14-16

By Amanda Stephenson

CALGARY, May 27 (Reuters) - Canada and Germany’s state-owned energy firm SEFE said on Wednesday they had reached what Canada described as its first LNG supply deal with a European buyer, underscoring efforts on both sides to diversify energy trade amid global market uncertainty.

The non-binding deal, which is contingent on the completion of a sales and purchase agreement, outlines SEFE's intent to purchase 1 million metric tons of liquefied natural gas per year from Canada's Ksi Lisims, a proposed LNG export facility to be located on British Columbia's Pacific coast.

The deal highlights Canada’s push to expand exports and Europe’s effort to secure alternative supplies after the loss of Russian pipeline gas and renewed disruptions linked to the war in Iran.

SEFE already has LNG agreements with U.S.-based Venture Global VG.N, Argentina's Southern Energy S.A. and Turkey's state energy company BOTAS as it works to diversify Germany’s energy supply.

Canada, the world's fifth-largest natural gas producer, has been seeking to grow its energy exports in an effort to protect its economy against the threat posed by U.S. President Trump's trade policies.

Prime Minister Mark Carney traveled to Germany in August 2025 to pitch Canada as a reliable energy supplier to Europe.

"In a world that feels uncertain and volatile, the world trusts Canada," Canadian Energy Minister Tim Hodgson said on Wednesday.

German Economy Minister Katherina Reiche said the deal underscored a strategic energy partnership with Canada.

"By working more closely together, we diversify our supply chains and make our economies more resilient to global risks," she added.

The agreement comes as backers of the Ksi Lisims project have been working to finalize contracts with purchasers before making a final investment decision this year.

The Ksi Lisims facility is proposed by Houston-based Western LNG, a consortium of Canadian natural gas producers called Rockies LNG, and the Nisga'a First Nation, who own the land for the project. It will have a capacity of 12 million tonnes of LNG per year, making it Canada's second-largest LNG export facility.

Shell <SHEL.L> and TotalEnergies <TTEF.PA> have already signed 20-year LNG purchase agreements with Ksi Lisims.

Under the terms of Wednesday's agreement, SEFE could begin taking deliveries in the early 2030s for a period of up to 20 years. Hodgson said those deliveries could travel physically to Europe through the Panama Canal, or could be swapped with other LNG buyers on the international market.

OTHER EUROPEAN BUYERS

Asia has long been seen as the logical market for Canadian LNG, due to the shorter shipping times to that continent from Canada's Pacific coast when compared to the U.S. Gulf.

But Hodgson said Wednesday he is aware of other European buyers who are interested in Canadian LNG, adding the wars in Iran and Ukraine have prompted customers to consider Canada even though they would not have before due to distance.

"They've now changed their view and absolutely view it as an important part of their diversity of supply agenda," Hodgson said in an interview.

Canada is seeking to fast-track the project through its major projects office as it aims to speed up regulatory approvals.

However, the project also faces opposition. Several Indigenous groups have challenged the pipeline needed to supply the facility, while environmentalists have criticized the government’s pivot towards fossil fuels.