Source: Fortune
Summary
Iran’s threat to close the Strait of Hormuz has sparked an energy crisis in Asia, with oil and LNG tankers opting to stay put rather than risk getting fired upon. Asian countries are now frantically searching for alternative energy sources. Canada’s Pacific energy infrastructure, including the LNG Canada project and the Trans Mountain pipeline, offers a faster, cheaper, and geopolitically safer route for Asian buyers. Canada’s LNG exports can reach Northeast Asian terminals without passing through the Strait of Hormuz or other potential chokepoints.
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The strategy enters a familiar phase.
When Iran’s IRGC brigadier-general Ebrahim Jabari declared the Strait of Hormuz closed, 150 oil and LNG tankers decided to stay put. Qatar Energy and other oil and gas producers halted production, declaring force majeure. Canada’s Pacific energy infrastructure offers an alternative route for Asian energy buyers. The U.S. can’t help gas-hungry Asian buyers due to geography. Canada’s LNG exports from Kitimat take roughly 10 to 11 days to reach Japan, compared to 24 days from the U.S. Gulf Coast.
The window for Asian utilities to lock in 20- to 40-year contracts with Canadian LNG exporters is now. Ottawa is encouraging Asian participation to diversify energy exports away from the U.S. market.
Asia’s energy buyers are recognizing that relying on a 33-kilometer wide passage flanked by a hostile power is not a stable energy security strategy.
Canada’s Pacific coast is becoming a critical energy hub for Asia.
The threat of Hormuz is accelerating Canada’s emergence as a key player in the global energy market.
