Pieridae Energy, considering whether to build Canada’s first major liquefied natural gas (LNG) export terminal, is in talks with Axpo, a Swiss utility and energy trader, for a 10-year supply deal, the companies said.

A sales and purchase agreement would boost the chances that Pieridae would decide to build the C$10 billion ($7.6 billion) Goldboro project in Nova Scotia on Canada’s Atlantic Coast, although high hurdles remain.

Canada is rich in gas but has yet to export major shipments of LNG to Asia from its Pacific Coast or across the Atlantic. The lack of big export terminals has depressed natural gas prices in Canada, while US producers benefit from terminals along the Gulf Coast.

Axpo said in a statement that it would buy LNG from Goldboro’s second train, or liquefaction unit, for sales across Europe.

Deliveries are estimated to begin in the third quarter of 2023.

The Axpo deal is ready to be finalized once Pieridae secures gas supplies from Eastern Canada and the northeastern United States, hopefully within five months, said Pieridae Chief Executive Alfred Sorensen in an interview.

Sorensen declined to identify the size of the Axpo supply agreement. Pieridae already has a 20-year agreement to sell five million tonnes annually to German utility Uniper.

Goldboro would produce 10 million tonnes annually starting in 2023 if construction begins by year-end.

Securing financing for such a large project, mainly through offtakes, is a big challenge, however, for a company with a C$195 million market cap.

"Are we delusional about how we can get to the finish line? It really has been from the very beginning about how we can work with the Germans and work to improve their energy security," Sorensen said.

Germany depends heavily on gas imports from Russia and is seeking to diversify its suppliers. Pieridae is finalizing a loan guarantee of at least $3 billion from the German government.

The company is "very close" to securing enough committed sales to make a positive final investment decision, he said. Pieridae is also in talks to acquire an undisclosed Alberta gas producer to supply Goldboro, he said.