Shell and Partners Approve LNG Canada Phase 2, Doubling Kitimat Capacity to 28 Mtpa

Shell said on Tuesday that it and its partners in the LNG Canada joint venture have taken a final investment decision to double liquefied natural gas production capacity at the Kitimat, British Columbia facility to roughly 28 million metric tons per annum (mtpa) from 14 mtpa, according to CNBC. The Globe and Mail reported ahead of the announcement that the partners were expected to proceed with a $30-billion-plus expansion, with four sources familiar with the situation saying the green light would be announced in Vancouver.

What Was Decided

Shell's statement, as reported by CNBC, confirms the joint venture has moved forward with what is commonly referred to as Phase 2 of LNG Canada. The Canadian government has previously estimated the project will attract C$33-billion ($23.2 billion) in private-sector capital and create thousands of jobs, a figure also listed on the Major Projects Office's website, per The Globe and Mail. Commercial operations from the expansion are expected to start in the early 2030s, CNBC reported, noting the project's positioning on Canada's Pacific coast to supply customers in Asia.

Our calculation: based on the capacity figures reported by CNBC, (14 mtpa − 28 mtpa) ÷ 28 mtpa × 100 = −50%. In other words, the facility's current 14 mtpa capacity sits 50% below the newly targeted 28 mtpa level once Phase 2 is complete. This is a straightforward arithmetic comparison of the two reported figures, not a forecast of future output.

Ownership and Equity Stakes

Equity in the joint venture is held by Shell at 40%, Petronas at 25%, Mitsubishi at 15%, PetroChina at 15% and South Korea's Kogas at 5%, according to both CNBC and The Globe and Mail. Shell leads the project and holds the largest single stake.

The ownership structure has been in some flux. The Globe and Mail reported that last September, U.S.-based MidOcean Energy acquired a 20% interest in key Petronas assets in Canada, including northeast B.C. gas operations and Petronas's stake in LNG Canada. The paper also reported that some partners are seeking to sell down portions of their interests amid interest from global private-equity players, though no further detail on which partners or what stakes was confirmed.

Pipeline and Feedgas Requirements

Earlier this year, LNG Canada agreed to take the lead role in developing plans for an expansion of the Coastal GasLink pipeline, which carries natural gas from northeast B.C. to Kitimat, The Globe and Mail reported. Calgary-based TC Energy operates the pipeline and owns 35% of it. The paper noted the pipeline attracted significant Indigenous opposition when it was originally constructed, though the current status of Indigenous engagement around the proposed expansion was not detailed in the reporting reviewed.

Policy Context

The Globe and Mail reported that the LNG Canada expansion was among the first projects referred to Canada's Major Projects Office for consideration under fast-track approval. CNBC framed the decision as advancing Prime Minister Mark Carney's 2025 campaign pledge to make Canada a "global energy superpower," noting that Ottawa is currently in a trade dispute with the Trump administration and is seeking to reduce reliance on the United States, which The Globe and Mail reported buys the lion's share of Canada's oil and gas exports. The Globe and Mail also reported that Carney and Natural Resources Minister Tim Hodgson were scheduled to be in Vancouver on Tuesday for an energy-related announcement; Hodgson's spokesperson, Carolyn Svonkin, declined to comment ahead of time, and LNG Canada spokesperson Paul Hagel had similarly declined to confirm a final investment decision, saying only that "our joint venture partners continue to undertake their own assurance process for a potential phase 2 decision."

Executive and Company Statements

Shell's integrated gas president, Cederic Cremers, said Phase 2 \"supports Shell's strategic objective to be the world's leading integrated gas and LNG business by connecting Canadian resources with Shell's global LNG portfolio, trading capability and customer reach,\" according to CNBC. Cremers also said LNG Canada \"is a core part of our Integrated Gas portfolio, helping to supply LNG to customers in Asia at a time when diversity of energy supplies and energy security are increasingly important.\" LNG Canada itself described the investment as a \"nation-building investment\" that will \"further strengthen Canada's role as a trusted energy partner,\" CNBC reported.

Market Backdrop

CNBC and The Globe and Mail both linked the timing of the decision to disruption in global gas supply. The Globe and Mail reported that the U.S.-Iran war, and the resultant virtual closing of the Strait of Hormuz, has driven up prices for seaborne natural gas, with traders expecting fears of supply shortages to persist well beyond the winter. Separately, the paper noted European countries have been seeking new gas supply sources since Russia's invasion of Ukraine. CNBC characterized the investment as positioning Canada to become one of the world's leading LNG exporting nations amid these disruptions, though this framing reflects the outlet's own characterization rather than a confirmed market outcome.

LNG Canada began exports to Asia from its first phase in 2025, marking what The Globe and Mail described as Canada's entry into the global LNG market after years of delay.

Shell Share Reaction

CNBC reported that Shell's London-listed shares traded nearly 1% lower on Tuesday following the announcement, while the stock remains up more than 32% year-to-date. A single day's share movement following a major capital allocation announcement reflects immediate market digestion of the news and should not be read as a verdict on the long-term merits of the expansion.

Bottom Line

The final investment decision marks a significant capital commitment by Shell and its four partners toward doubling LNG Canada's export capacity, backed by an estimated C$33-billion in private investment as cited by the Canadian government and the Major Projects Office. The project's success will depend on execution through the early 2030s, including pipeline expansion via Coastal GasLink and the evolving ownership structure among partners, some of whom, per The Globe and Mail, may still sell down portions of their stakes. Readers should treat startup timing and market-share outcomes as attributed expectations from named outlets rather than guaranteed results.