Shell-led LNG Canada could approve Phase 2 expansion by early October, sources say

LNG buyers are prioritising supply security as the Middle East conflict, Red Sea disruptions and lack of certainty over restoring flows via the Strait of Hormuz have reinforced a need — particularly in Asia — to diversify supply sources.

LNG Canada, a joint venture led by Shell and backed by Malaysia's Petronas, PetroChina, Mitsubishi Corp and Korea Gas Corp (KOGAS), is Canada's first large-scale LNG export terminal and one of the country's largest private-sector investments. The facility is strategically positioned on Canada's Pacific Coast, giving it shorter shipping routes to key Asian markets compared with US Gulf Coast exporters that must transit the Panama Canal.

"We continue to work with the venture partners to explore pathways to a possible Phase 2 expansion. Any decision will consider factors such as competitiveness and affordability, government support and stakeholder needs," Shell said in a statement to Reuters.

The project's first phase, which cost about C$40 billion, is designed to produce 14 mtpa of LNG from two processing trains. The facility shipped its first cargo earlier this year and is viewed as a cornerstone of Canada's effort to become a major global LNG exporter.

Partners in the Shell-led LNG Canada export project could reach a final investment decision on its Phase 2 expansion as early as next month, three people familiar with the matter told Reuters.

The expansion would add a further 14 million metric tons per annum (mtpa) of liquefied natural gas export capacity to the facility in Kitimat, British Columbia, effectively doubling the project's total capacity to 28 mtpa.