A liquid natural gas (LNG) carrier ship docked at LNG Canada's export facility in Kitimat, B.C., on Aug. 19, 2025. LNG Canada’s Phase 2 expansion plans are on the federal government’s list of major projects to be considered for fast-tracking.Jesse Winter/Reuters
Shell PLC and Mitsubishi Corp. are considering altering their stakes in LNG Canada to help raise funds for expansion plans at the joint venture’s $18-billion export terminal in British Columbia, according to two industry sources.
A scenario being considered by Shell and Mitsubishi could result in each of them entering deals to extract value from LNG Canada’s export terminal in Kitimat. The commercial terms could be structured in a way that would allow the co-owners to maintain their existing equity stakes by reaching side deals with prospective investors, said the sources.
Such transactions would exclude the associated and separately owned $14.5-billion Coastal GasLink pipeline that transports natural gas from Northeast B.C. to the Kitimat facility, they said.
Under another scenario, Shell and Mitsubishi would divest a minority portion of their equity stakes to raise capital while remaining joint venture partners, the sources said.
The Globe and Mail is not identifying the sources because they were not authorized to speak publicly on the matter.
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London-based Shell has the largest stake in LNG Canada at 40 per cent, followed by Malaysia’s state-owned Petronas (25 per cent), Japan-based Mitsubishi (15 per cent), PetroChina (15 per cent) and South Korea’s Kogas (5 per cent).
Last September, Washington-based MidOcean Energy acquired a 20-per-cent interest in key Petronas assets in Canada, participating in natural gas operations in Northeast B.C. and the Petronas stake in LNG Canada.
Prime Minister Mark Carney, as part of his goal to make Canada an energy superpower and reduce economic dependence on the United States, announced in September that LNG Canada’s Phase 2 expansion plans had been added to his government’s list of major projects of national interest to be considered for fast-tracking.
Costs for Coastal GasLink were pegged at $6.2-billion in 2018, but subsequently rose to $14.5-billion. The contentious pipeline project was completed in late 2023, and LNG exports to Asia began last June.
Coastal GasLink is operated by TC Energy Corp., which currently owns 35 per cent of the B.C. pipeline.
Calgary-based TC Energy has agreed to set aside a 10-per-cent interest in the pipeline for a planned equity sale to as many as 20 elected First Nation councils along Coastal GasLink’s route. In 2020, TC Energy sold a 65-per-cent stake in the pipeline venture to Alberta Investment Management Corp. and KKR & Co. Inc.
Reuters reported earlier this month that Shell has hired Rothschild & Co while Mitsubishi retained RBC Capital Markets as investment advisers.
The co-owners of LNG Canada made their final investment decision in October, 2018, to forge ahead with the first phase of the terminal. Back then, the federal government described the costs as totalling $40-billion for Phase 1, including the 670-kilometre Coastal GasLink pipeline project and other expenses, but that dollar figure is outdated.
The costs of building the first phase of LNG Canada are now expected to be $48.3-billion, including the Kitimat terminal, Coastal GasLink and other infrastructure, as well as annual budgets for drilling in the North Montney region of Northeastern B.C.
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The Institute for Energy Economics and Financial Analysis (IEEFA), a U.S.-based research group, has warned that LNG proposals and associated pipeline plans in B.C. have faced high construction costs.
“Why are Shell and Mitsubishi reluctant to put more of their own money into Phase 2?” IEEFA analyst Clark Williams-Derry said in a statement. “If LNG Canada’s Phase 2 were a fantastic investment opportunity, you’d expect both companies to be willing to put more of their capital into it.”
LNG Canada’s Phase 1 has the capacity to export 14 million tonnes a year, though the Shell-led project could increase that figure to 15 million tonnes through operating efficiencies at the Kitimat site, located on the traditional territory of the Haisla Nation.
Under LNG Canada’s Phase 2 plans, the terminal’s export capacity could double by the early 2030s.
LNG Canada told The Globe that inquiries about the fate of Phase 2 should be made to Shell and Mitsubishi. Shell declined to comment on Monday and Mitsubishi did not respond.
In 2013, there were more than 20 LNG proposals in British Columbia. Today, only two smaller B.C. projects – Woodfibre LNG near Squamish and Cedar LNG in Kitimat – are under construction in Canada.
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IEEFA released a wide-ranging analysis on Tuesday of North America’s LNG industry, noting that export terminals operating along the U.S. Gulf Coast have much lower costs than ventures in B.C.
“Measured per tonne of LNG production capacity, Woodfibre LNG could turn out to be one of the most expensive LNG projects in the world,” IEEFA said, adding that there is a looming glut of supplies of the fuel globally.
Woodfibre will have capacity for 2.1 million tonnes a year while Cedar could potentially export up to 3.75 million tonnes a year.
If the Nisga’a Nation-backed Ksi Lisims LNG project gets built in Northwest B.C., that would add another 12 million tonnes a year of exports.
In November, Mr. Carney said Ksi Lisims has been added by Ottawa to the growing roster of plans submitted to the Major Projects Office.
“The LNG industry has targeted the Pacific coast of Mexico and Canada for new LNG projects aimed at Asian markets. But export plans in both countries have struggled,” IEEFA said in its analysis.