LNG Canada joint venture could approve Phase 2 capacity-doubling expansion by early October
The Shell-led LNG Canada joint venture could approve a major Phase 2 expansion as early as October, according to sources familiar with the matter. The decision would add 14 million metric tons per annum of export capacity to the Kitimat, British Columbia terminal — effectively doubling its output to 28 mtpa. Partners in the venture include Malaysia’s Petronas, PetroChina, Mitsubishi Corp, and Korea Gas Corp (KOGAS).
Phase 2 decision expected as early as October
Sources close to the deal say LNG Canada’s joint venture partners could approve the Phase 2 expansion by early October. The timing is striking — Phase 1 only shipped its first cargo last year, meaning the venture would be moving toward doubling capacity while the original facility is still finding its commercial footing.
LNG Canada confirmed the broad timeline in a statement, saying it hopes to make an investment decision before year-end. The company was careful to add that any final decision “remains subject to LNG Canada’s Joint Venture Participants independently satisfying their commercial, fiscal, regulatory and governance requirements.” In other words, Shell, Petronas, PetroChina, Mitsubishi Corp, and KOGAS each has to clear its own internal bar before any collective green light becomes possible.
Shell acknowledged the momentum in a statement to Reuters: “We continue to work with the venture partners to explore pathways to a possible Phase 2 expansion.
The expansion would add two more processing trains and 14 mtpa of export capacity, bringing the facility’s total to 28 mtpa — putting Kitimat firmly among the largest LNG export hubs in the world.
Why partners are pushing for expansion now
The timing of a potential Phase 2 approval isn’t accidental. Global LNG markets are tight, and buyers — especially across Asia — are increasingly focused on locking in reliable, diversified supply.
Conflict in the Middle East, ongoing Red Sea shipping disruptions, and uncertainty over future flows through the Strait of Hormuz have all sharpened the urgency. Buyers that once relied on spot markets or single-source contracts are hunting for alternatives. Long-term supply agreements with stable, politically secure producers are in high demand.
That’s only part of the picture. Countries moving away from coal — particularly across Southeast and East Asia — are turning to natural gas as a transitional fuel, a shift expected to sustain LNG demand growth for decades. Outages among major producers have simultaneously tightened available supply, leaving little slack in the global market. Against that backdrop, a scalable facility on Canada’s Pacific Coast looks increasingly valuable.
Shell acknowledged the momentum in a statement to Reuters: “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.”
What a Phase 2 approval would mean for Canada’s LNG ambitions
Canada has long been seen as a potential LNG powerhouse — vast natural gas reserves and direct access to Pacific shipping lanes. For years, that potential went unrealized. LNG Canada’s Phase 1 changed the narrative. Phase 2 would accelerate it significantly.
A positive investment decision would expand Canada’s LNG export footprint in a meaningful way and reinforce its standing as a serious global supplier rather than simply an emerging one. The Kitimat location is central to that pitch. Ships leaving British Columbia’s Pacific Coast reach key Asian markets faster than vessels departing US Gulf Coast terminals, which must transit the Panama Canal — a geographic advantage that translates directly into lower shipping costs and shorter delivery windows.
The Indigenous investment dimension sets this project apart from most. MNT Investments LP, representing a coalition of five neighboring First Nations, signed an agreement earlier this year giving the group an option to invest up to $735 million USD in Phase 2. That would represent one of the largest Indigenous investment opportunities in Canadian energy history — a meaningful shift in how major resource projects engage with local communities.
Background: LNG Canada’s Phase 1 and the joint venture
LNG Canada is Canada’s first large-scale LNG export terminal and one of the country’s largest-ever private-sector investments. Phase 1 came in at approximately $29 billion USD, a figure that reflects both the scale of the infrastructure and the logistical complexity of building in a remote coastal location. The facility shipped its first cargo last year, marking Canada’s formal entry into the global LNG export market.
Designed to produce 14 mtpa from two liquefaction trains, the project is widely seen as a cornerstone of Canada’s broader energy export strategy. The joint venture is led by Shell and backed by Malaysia’s Petronas, China’s PetroChina, Japan’s Mitsubishi Corp, and South Korea’s KOGAS. That mix of Asian partners matters — each represents a country with significant and growing LNG import needs, which builds natural alignment between supply and demand directly into the venture’s structure.
A potential Phase 2 approval could come as early as October. The expansion would double Kitimat’s capacity to 28 mtpa, driven by tight global LNG markets and strong Asian demand for supply security. LNG Canada has confirmed it hopes to finalize an investment decision before year-end, though each partner must independently satisfy its own commercial and regulatory requirements before any commitment is made. If approved, Phase 2 would mark a substantial step forward for Canada’s role in global energy markets.
Kelly is an experienced writer with 15 years of experience exploring the big stories that shape our world, from tech breakthroughs and space exploration to climate, energy, and the fascinating quirks of science. She has a talent for turning complex ideas into sharp, memorable insights that stay with readers long after they’ve finished reading.
