Under a new supply deal with Germany’s SEFE, most liquified natural gas from B.C. ‘s planned Ksi Lisims project will be swapped on the global market rather than shipped directly to European terminals, according to an industry source granted anonymity to speak freely.

Under the agreement, the Berlin-based utility giant will purchase one million tonnes of LNG annually from Ksi Lisims for up to 20 years.

The deal is structured on a Free-on-Board basis, meaning SEFE retains full control over the fuel’s final destination and market, setting the stage for “win-win” swaps with other energy companies.

Ksi Lisims has long targeted markets in the Pacific basin, “primarily in Asia where demand for cleaner fuels continues to grow,” reads the company website.

The source told iPolitics some of the SEFE-bought cargo will end up in Europe, but most of it will be swapped on the global market.

To reach Europe, SEFE could route shipments through the Panama Canal, though the maritime shortcut is increasingly costly, plagued by drought and congestion, and limited by physical cargo capacity.

READ MORE: LNG project Ksi Lisims secures supply deal with major German firm

Asked about the shipping logistics during the announcement on Wednesday, Federal Energy Minister Tim Hodgson described SEFE as a “very sophisticated buyer” that will choose where to send the cargo.

He said if the product is on a smaller ship, it could flow through the Panama Canal, or go around South America or Africa.

He also described the global market for LNG swaps. “We see producers do that all the time, so that makes production off of B.C. even more valuable, because it’s not just valuable for people buying in Asia, but it makes it more attractive to people in Europe.”

With the SEFE deal alongside previous 20-year offtake agreements with Shell and TotalEnergies, five of Ksi Lisims’ 12 million tonnes of annual LNG capacity are now spoken for.

Whether these commitments are enough to drive a final investment decision later this year remains to be seen for the project’s backers – Houston-based Western LNG, Rockies LNG, and the Nisga’a First Nation.

Other major proposed LNG projects, like the nearby $45B Glenfarne Alaska LNG project, are looking to have 80 per cent of the plant’s targeted annual capacity secured under supply deals before making a final investment decision.