Shell Greenlights $33B LNG Canada Phase 2, Doubling Export Capacity to 28 Mtpa

Shell plc has approved a final investment decision on LNG Canada Phase 2, a $33 billion expansion that will double the facility’s production capacity from 14 to 28 million tonnes per annum by the early 2030s. The move strengthens Shell’s position in global liquefied natural gas markets as Asian demand for LNG is forecast to rise 60 percent by 2040. Shell will receive nearly 6 million tonnes of additional LNG annually from the expansion.

Shell’s 40% stake secures 6 mtpa of new LNG supply

Shell owns a 40 percent stake in LNG Canada and will receive nearly 6 million tonnes per annum of additional LNG once Phase 2 reaches full capacity. The expansion is expected to generate double-digit returns and support long-term cash flow growth. The project is designed to deliver an internal rate of return above Shell’s hurdle rate for its Integrated Gas business.

Phase 2 adds two processing trains and new infrastructure

The expansion will add two LNG processing units, known as trains, plus an additional storage tank, condensate tank, and expanded utility systems. LNG Canada has also signed commercial agreements to work with TC Energy’s Coastal GasLink pipeline, which will add five new compressor stations along the existing 670-kilometer route. Commercial operations are targeted for the early 2030s.

Fluor and JGC secure $15 billion construction contract

The Fluor-JGC joint venture has won a $15 billion contract to deliver engineering, procurement, fabrication, construction and commissioning for Phase 2. Fluor will book $7.5 billion for its share in the third quarter of fiscal 2026, while JGC, a Japan-based contractor, will record the same amount. The Canadian government estimates the second phase will require about $23 billion in total capital investment.

Asian demand and global LNG outlook drive expansion

LNG Canada’s Pacific Coast location provides direct access to major Asian LNG-consuming markets. According to Shell’s LNG Outlook 2026, global LNG demand is expected to rise around 60 percent by 2040 and 65 percent by 2050, driven by growing energy demand and the need for secure, flexible energy supplies. The expansion positions Canada to become one of the world’s largest LNG suppliers and represents more than a quarter of Ottawa’s ambition to expand the country’s LNG export capacity to 100 million tonnes annually by 2040.

Final Thoughts

Shell’s $33 billion LNG Canada Phase 2 approval signals confidence in long-term Asian energy demand and disciplined capital allocation. With Meyka grading SHEL as A-rated and forecasting $91.95 within 12 months, the stock trades at a 10.4 times earnings multiple, suggesting limited downside from current levels.

FAQs

Disclaimer:

The content shared by Meyka AI PTY LTD is solely for research and informational purposes.  Meyka is not a financial advisory service, and the information provided should not be considered investment or trading advice.