A liquefied natural gas tanker fills up at an LNG Canada facility in Kitimat, B.C., in November, 2025.ETHAN CAIRNS/The Canadian Press
Canada is positioned to expand its exports of liquefied natural gas over the next several years as the Middle East conflict creates global supply shortages, though this country would fall well short of meeting the federal government’s long-term goals.
Prime Minister Mark Carney and Energy Minister Tim Hodgson are striving to spur development of LNG in Canada, believing that exporting 50 million tonnes a year is possible by 2030. They say that longer term, the country’s total LNG exports could reach up to 100 million tonnes annually by 2040.
A reality check, however, shows that those political aspirations are rosy targets rather than reflecting the harsh math of what will likely be built in the years ahead.
Before the United States and Israel launched attacks on Iran on Feb. 28, about one-fifth of the world’s oil and LNG supplies passed through the Strait of Hormuz, which is now effectively closed to marine traffic.
LNG Canada sharply boosts exports to Asia as global supplies tighten
Qatar, the world’s second-largest LNG exporter after the U.S. last year, halted its production in early March.
Iran has launched multiple attacks on the Ras Laffan LNG hub in Qatar, inflicting heavy damage in a bombardment on Wednesday.
“One-fourth of Qatar’s projected 2026 LNG production could be disrupted,” Rystad Energy said in a research note, adding that China, India and Pakistan are major buyers of Qatari LNG.
The repercussions of the extensive damage to Ras Laffan will have widespread impacts on the world’s LNG market, said Jason Feer, global head of business intelligence at Poten & Partners.
“Even if the war is over, even if the shooting winds down, there’s a longer-term impact on LNG supply,” he said during a webcast.
Shell PLC-led LNG Canada became this country’s first export terminal for the fuel when it started shipping from Kitimat, B.C., to Asia last June.
The project’s shipments last year put this country in 19th place out of 24 LNG exporting nations. Canada is currently the world’s fifth-largest producer of natural gas.
Only a month ago, an LNG glut had been widely expected. Global LNG supplies, however, are now forecast to be tight after damage to Ras Laffan this week. It could take up to five years for repairs to fully restore the lost Qatari output.
QatarEnergy's LNG production facilities in Ras Laffan Industrial City in Qatar on March 2. The country halted its LNG production in early March.Stringer/Reuters
Benchmark LNG spot prices for European and Asia-Pacific markets have doubled in March during the widening Persian Gulf conflict.
“What matters now is not only the volume lost, but the precedent set – once critical Gulf energy infrastructure is seen as vulnerable, buyers will price that risk for longer than the initial outage itself,” Rystad senior analyst Jan-Eric Fähnrich said in a statement.
Canada’s strategic value has increased with its proximity to Asian LNG markets, said Meredith Freeman, senior editor at Poten & Partners.
LNG Canada’s Phase 1 alone is capable of exporting 15 million tonnes a year.
Two B.C. projects are already under construction: Woodfibre LNG near Squamish, with a capacity of 2.1 million tonnes a year, and Haisla Nation-led Cedar LNG in Kitimat, with plans to export up to 3.75 million tonnes a year.
Nisga’a Nation-backed Ksi Lisims LNG hopes to ship 12 million tonnes a year from northwest B.C. to Asia.
Woodfibre is expected to finish construction by late 2027 and Cedar by late 2028. If Ksi Lisims forges ahead, its exports could begin within four years.
Combined with LNG Canada’s Phase 1, output from Woodfibre, Cedar and Ksi Lisims could put Canada’s export capacity at 32.85 million tonnes annually in 2030.
And if LNG Canada decides to press ahead with its Phase 2 expansion to double the Kitimat facility’s capacity, total exports could rise to 47.85 million tonnes a year, possibly by the early 2030s.
Other proposals in B.C. have included FortisBC’s expansion plans at its domestic Tilbury LNG site in Delta and Summit Lake PG LNG near Prince George.
Climate groups argue that the economic benefits of LNG have been greatly exaggerated, saying the focus on fossil fuel ends up delaying the global transition to renewables.
But last fall, the federal government referred LNG Canada’s Phase 2 expansion plan to the Major Projects Office for fast-tracking. As part of its quest to reduce economic dependence on the U.S., Ottawa also said Ksi Lisims has been added to the growing roster of major projects deemed to be of national interest.
In 2022, then-prime minister Justin Trudeau cast doubt on the business case for exporting LNG from the East Coast or Quebec to Europe. With the prospects for LNG shipments from Canada to Europe still on shaky economic ground, Canada’s export capacity could stall around 50 million tonnes a year through the rest of the 2030s.
A new report released earlier this week by the Canada Energy Regulator outlined scenarios in which this country could export between roughly 32 million tonnes and 51 million tonnes annually by 2040.
The report doesn’t outline specific LNG projects that would enable Canada to ramp up exports, but noted that there is the potential for shipments overseas to rise to 60 million tonnes a year by 2050.
After industry experts tallied the numbers, Canada’s LNG export capacity is on pace to be far short of the 100 million tonnes a year envisaged by Ottawa by 2040.