LNG

Shell – and its partners PETRONAS, PetroChina, Mitsubishi and KOGAS – have taken a final investment decision (FID) on the second phase of LNG Canada, approving a C$33 billion expansion that will double the British Columbia export terminal’s production capacity to 28 mtpa.

The project will add two liquefaction trains at the Kitimat facility, raising total capacity from 14 mtpa. Commercial operations are expected to begin in the early 2030s, Shell announced today.

FID on the second phase of LNG Canada marks a major expansion of the country’s LNG industry, with the Shell-led project being the country’s first large-scale LNG export project – positioned on the Pacific coast to supply customers in Asia.

Shell owns 40% of LNG Canada and expects to receive nearly 6 mtpa of additional LNG from Phase 2. The other partners are Malaysia’s Petronas, with a 25% stake; PetroChina, with 15%; Japan’s Mitsubishi Corporation, with 15%; and Korea Gas Corporation, with 5%.

Project partners’ approval comes as LNG producers and buyers prepare for a period of strong growth in global liquefaction capacity. New projects in North America and elsewhere are expected to add substantial supply during the late 2020s and early 2030s.

LNG Canada’s first phase comprises two trains with combined capacity of 14 mtpa. The facility began operations in 2025 and has since shipped more than 100 cargoes. Phase 2 will use existing infrastructure and site layouts designed to accommodate the additional trains. The expansion will include an additional LNG storage tank, a condensate tank and loading berth, as well as expanded utility and process systems.

To secure a stable flow of feedgas, LNG Canada partners also agreed to work with Coastal GasLink to expand the existing 670-kilometre pipeline through the addition of five compressor stations.

The collapse of US-Canada trade negotiations, followed by new US tariffs of up to 50% on a range of Canadian imports, could raise construction costs and make new Canadian LNG export projects harder to finance.

Kino Aski, led by the Atikamekw Nation, has partnered with energy developer Marinvest Energy Canada to develop a 15 mtpa LNG project in Quebec, targeting European buyers. The project is still in the development phase, with technical studies, environmental assessments and consultations underway.

German state-controlled utility Uniper has agreed to offtake 2 mtpa of destination-flexible LNG from Canada’s proposed Ksi Lisims terminal in British Columbia. First deliveries are expected from 2032.

PetroChina is considering divesting part of its 15% share in LNG Canada Development Inc. in Kitimat, British Columbia, to help finance a planned Phase 2 expansion of the liquefaction project, people familiar with the matter told Bloomberg. The Chinese state-owned producer, which is working with an adviser to gauge buyer interest, may reduce its holding gradually through several smaller transactions.

Optionality, not just molecules, is what LNG buyers are scrambling for as spare capacity shrinks and shipments from Qatar remain constraint. As sources for ‘safe’ supply become finite, each new shipping disruption has a greater impact on prices and procurement decisions, analysts warn.

Soaring LNG trade flows from the US and Canada have offset around 70% of the lost supply via the Strait of Hormuz, though further military escalations in the region and delays in restoring Qatari exports keeps could prolong market tightness into 2027, the International Energy Agency (IEA) warns.

LNG Canada passed a year of exports with feedgas near Phase 1 capacity. Across 106 loadings since the first sailing from LNG Canada since last June, South Korea took the largest single share, roughly one cargo in three, ahead of Japan at a quarter and China at just over a fifth.

Canada has moved closer to unlocking a new Pacific Coast crude outlet from Alberta while fast-tracking British Columbia LNG projects with the aim of tripping LNG production and export beyond 2030.

Designating the Western Canadian Sedimentary Basin and the Montney formation as “strategic national assets” would help reduce feedgas risk and uncertainty facing Canada’s LNG sector today, Ottawa-based Public Policy Forum said in a report on unlocking LNG export potential.