Ukraine’s biggest state-owned oil and gas company Naftogaz has signed a preliminary deal with what may be one of the most speculative, early-stage liquefied natural gas (LNG) export projects on offer to international investors at Prime Minister Mark Carney’s Canada Investment Summit earlier this week.

Naftogaz announced its memorandum of understanding with La Tuque, Quebec-based Kino Aski Inc. Sept. 11, three days before Carney convened the summit at Toronto’s Four Seasons Hotel. But the project is already generating the kind of community pushback that has sunk past LNG development proposals in Quebec.

While the two-day investment summit was under way Sept. 14-15, the Anishnabe Nation of Lac-Simon declared its continuing, strong opposition to the resurrected GNL-Québec terminal proposal that is linked to the Kino Aski LNG project. And in a post for Corporate Knights, three top energy analysts from Quebec and one from Newfoundland and Labrador warned of serious risks that might give investors pause about signing on to the project.

Kino Aski Inc. previously announced the project last month in partnership with Marinvest Energy Canada, a subsidiary of Bergen, Norway-based LNG developer Marinvest Energy AS, which will be a minority investor in the project.

Ukraine inked a previous LNG contract in Quebec in June, 2022, shortly after Russia’s invasion began.

“We are expanding our network of international partners to create more opportunities to purchase gas on competitive terms,” Naftogaz Group Acting CEO Sergei Fedorenko said in the Sept. 11 statement. “Cooperation with Kino Aski LNG will allow us to assess the possibility of adding Canadian LNG to our supply portfolio. For Naftogaz, it is important to have a choice of different supply sources and routes so that we can respond flexibly to Ukraine’s needs.”

The project profile in the Canada Investment Summit dealbook described Kino Aski as a “proposed cross-Canada LNG export project that will connect Western Canadian natural gas supplies to the Port of Baie-Comeau, Québec,” valued at US$23-billion but still at pre-application stage. “Developed through a partnership between Indigenous and industry stakeholders, the project is designed to produce up to 15 million tonnes of ultra-low-emission LNG annually.”

In addition to the terminal, Kino Aski has been scouting out two possible routes for a gas pipeline to Baie-Comeau, raising serious concerns for Indigenous rights-holders and nature conservation groups.

The dealbook listing said the project is “seeking early-stage development financing from strategic partners with LNG and/or pipeline expertise, with opportunities for project equity participation and potential guaranteed offtake.”

CEO Yves Crits put himself forward to 250 of the world’s biggest investors and financiers by offering them a Gmail address for follow-up.

But with Kino Aski pitching its project, and investment summit participants focusing their attention on Canada, the project is running into obstacles that would-be financial backers wouldn’t learn about in a 92-word dealbook summary. The Anishnabe of Lac-Simon said in a statement Monday the project “currently lacks both community consent and social acceptability,” months after Chief Lucien Wabanonik told Le Devoir the developers had offered money at their very first pitch meeting.

Indigenous consent was one of the two major issues that Université du Québec à Montréal professor Éric Pineault, HEC Montréal energy sector management chair Johanne Whitmore, Trottier Energy Institute scientific director Normand Mousseau, and Memorial University professor Angela Carter flagged in their Corporate Knights post.

While Kino Aski Inc., which operates under the leadership of the Atikamekw Nation Council, has 50.1% Indigenous ownership, “ownership is not consent,” the authors wrote. “Indigenous ownership matters,” they add, but “the proposed [pipeline] corridor would cross the territories of multiple Indigenous nations. Their rights are not transferred to another Indigenous organization simply because it owns part of the project. One nation’s right to say yes cannot extinguish another nation’s right to say no.”

The other level of political risk is a history of strong opposition to LNG development in Quebec, the first jurisdiction in the world to ban oil and gas exploration. With a provincial election now under way, the authors said there’s no telling how or whether that policy—which enjoys broad public support—might shift.

The Kino Aski proposal also includes a commitment to decarbonize production emissions by building 1,700 megawatts of wind capacity and securing 550 MW of grid electricity from provincial utility Hydro-Québec, after the previous LNG-Québec proposal—then priced at just $14 billion—was denied in 2021 based on its mix of energy sources and its emissions profile. But that’s just one part of the picture, Pineault and colleagues said.

“Electrification would lower emissions relative to gas-fired compressors, but it does not make LNG production low-carbon,” they wrote. “Gas arriving at Baie Comeau may require carbon dioxide removal to meet LNG specifications; if that carbon dioxide is vented rather than captured and stored, electrification does not eliminate those emissions.”

But it’s too soon to estimate those impacts, since Kino Aski has provided no information on its feed gas composition, gas treatment requirements, or CO2 management plans.

And even then, Kino Aski’s claim that its wind generation would be “balanced by the clean grid” means it would depend on capacity in Quebec’s wider grid network. But that power  “has competing uses, from electrifying transportation to decarbonizing industry.”

Researchers have also concluded that, just like oil, even the best carbon capture would only keep about 20% of the emissions in a shipment of natural gas out of the atmosphere. The rest is lost in transit to its end consumer, or is emitted when that consumer uses the gas as directed by burning it.

All of these issues “go straight to bankability,” the four authors conclude.  “Indigenous rights disputes create permitting and schedule risks; political uncertainty creates regulatory risk; electricity constraints create infrastructure and operating risk; unresolved emissions questions undermine environmental assessment and financing.”

And for investors, “delays turn all of them into financing risk.”