Earlier this year, when Shell explored the possibility of selling some of its 40% stake in LNG Canada, the naysayers and the BANANA Brigade (Build Absolutely Nothing Anywhere Near Anything) had a field day.
It was obvious, they crowed, that LNG Canada was verging on failure, and that Shell was seeking to bail out.
That was, of course, simply not true. In fact, what Shell was really doing was simply exploring ways to raise ready money to invest in the Phase 2 expansion of LNG Canada — which carries a reported $33-billion price tag.
In July came one more example: PetroChina began weighing options to sell part of its shares in LNG Canada Development Inc. to help fund the planned expansion.
We have heard no more about those explorations, but now we do see four of Canada’s major pension funds investing in the expansion through such options: the Canada Pension Plan Investment Board, the Ontario Municipal Employees Retirement System, the Investment Management Corp. of Ontario and the Public Sector Pension Investment Board.
They are part of an investor group led by Blackstone, a major U.S. investment management company, which has signed a deal to invest US$3.1 billion (C$4.3 billion) to acquire a 49.9% stake in the Mitsubishi Corp. subsidiary that holds a 15% interest in LNG Canada. Roughly US$1.5 billion (C$211 billion) of the investment will directly fund LNG Canada’s Phase 2 expansion.
(The other partners in LNG Canada are Shell Canada Energy, 40%; Malaysia’s Petronas, 25%; PetroChina, 15%; and Korea Gas Corp, 5%. Together, the five partners decided in September to proceed with Phase 2, which will LNG Canada’s production capacity to 28 million tonnes a year.)
Roughly $1.5 billion of the Blackstone investment will directly fund LNG Canada’s Phase 2 expansion, which was greenlit in late September to double the terminal’s capacity to 28 million tonnes per year by the early 2030s.
Mitsubishi Corp., which owns 15 per cent of LNG Canada, said the Blackstone deal would not affect its LNG offtake volumes (now 2.1 million tonnes a year but to grow to 4.2 million with the expansion) or with its customer relationships. And Mitsubishi will retain the remaining 50.1% controlling interest in its subsidiary.
As those big pension funds moved to back LNG Canada, the naysayers were at it again, accusing the funds of “gambling with Canadian workers’ retirement savings” and “investing in fossil fuels and backing away from climate commitments.”
But the Canada Pension Plan’s managing director, Geoff Souter, called LNG Canada “a high-quality, globally strategic asset” with the potential to deliver attractive returns to its funds.
“We see this as a compelling opportunity to invest at scale in Canada alongside Mitsubishi, Blackstone and our Canadian peers.”
In a report published Oct. 20, industry analyst Wood Mackenzie saw LNG Canada’s decision to proceed with Phase 2 development as an “important milestone” for Canada’s ambitions to expand its LNG export capacity in a rapidly changing market.
The report, prepared by Petronas and Wood Mackenzie, with Energy Asia, noted that Asian LNG buyers have sought to diversify their sources of the fuel after repeated geopolitical disruptions, such as Russia’s war on Ukraine and the U.S. conflict with Iran.
“As buyers look beyond traditional sources, Canada is emerging as a compelling long-term supplier due to its proximity to the Asian market, as well as its lower carbon intensity.”
According to Wood Mackenzie, Asian LNG demand is expected to double from approximately 260 million tonnes a year today to around 500 million by 2060. “Critically, a significant share of this future demand remains uncontracted, creating opportunities for new LNG suppliers to secure long-term market access.”
But Wood Mackenzie’s Joshua Ngu wrote that Canada offers a substantial potential resource with short shipping routes to Asia on the Pacific Rim. “Canada’s resource advantage is real, but realizing its full potential will depend on competitiveness, execution and timely project delivery.”
And the report contains a message to Canada: “The white paper identifies four priorities for Canada to derisk projects and attract the scale of capital required.”
Those priorities: Improve cost competitiveness, strengthen regulatory certainty, develop innovative financing solutions, and deepen government-to-government engagement.
“Strengthening energy diplomacy and economic cooperation with key Asian importing countries can help support investment, facilitate long-term contracting and reinforce Canada’s position as a reliable energy supplier.”
(Posted here 11 November 2026)
