Shareholders in the Shell Plc-led LNG Canada venture have approved a second phase at Kitimat, British Columbia, that will roughly double the export terminal's capacity to 28 million metric tons of liquefied natural gas per year — a decision that locks in roughly $23 billion of new investment on Canada's west coast, according to the Canadian government.

The plant shipped its first LNG in June 2025. The expansion is slated to begin commercial operations in the early 2030s, Shell said in a statement on Tuesday.

For Asian importers — the world's largest LNG buyers — the timing matters. The Iran war and the near-closure of the Strait of Hormuz have produced the biggest supply shock in recent memory in global energy markets, cutting off most LNG flows from the Persian Gulf and flipping the market from an expected glut to a supply squeeze. Prices across much of the world have surged this year as a result.

Kitimat's geography is the commercial argument. The terminal sits on Canada's Pacific coast, giving it a direct run to Northeast Asian demand centers without transiting the shipping chokepoints that have roiled Middle East supply. Importers have responded by chasing cargoes from the US to Nigeria, and Canadian Prime Minister Mark Carney has pitched the country as a top candidate to fill the gap — placing the proposed expansion on his list of "nation-building" developments last year.

Shell holds a 40% stake in the venture. Its partners include Petroliam Nasional Bhd, PetroChina Co., Mitsubishi Corp. and Korea Gas Corp., with MidOcean Energy — a unit of private equity firm EIG — holding a stake through Petronas. Korea Gas, which owns 5%, plans to invest a total of about $1.26 billion in the project.

The ownership roster may still shift. Abu Dhabi's XRG is exploring an acquisition of a stake and has held talks with existing backers, including PetroChina, about buying some of their first-phase holdings, Bloomberg reported earlier this month.

Tuesday's sanction decision underscores Shell's broader push to grow its LNG portfolio as global majors position the molecule as a bridge fuel in the energy transition — a thesis the company has held to despite several years of volatile prices. The Iran war has since rewritten the demand-side calculus: buyers who once anticipated a well-supplied market are now scrambling for volume security, and long-cycle supply from politically stable export points commands a premium.

The capacity arithmetic is straightforward. Phase one put Canada on the LNG export map for the first time at scale; phase two takes the site to 28 million tons a year, a volume that will require a corresponding ramp in feedgas throughput from British Columbia's gas fields and additional shipping activity across the Pacific when operations begin in the early 2030s.

By then, the market context will almost certainly have moved again — new US capacity, potential Middle East recovery and Asia's own contract restructuring will shape whether 28 million tons finds eager buyers. For now, the partners have judged that Hormuz risk has hardened Asia's preference for supply routes that avoid chokepoints entirely, and they have committed capital accordingly.