Shell and Mitsubishi Consider Selling LNG Canada Stakes: Sources
Shell and Mitsubishi are reportedly considering selling their stakes in the LNG Canada project. This comes as they weigh potential expansions and partnerships in the liquefied natural gas (LNG) sector.
Details on Stake Sales
Shell holds a 40% stake in the C$40 billion ($28.8 billion) LNG Canada project, while Mitsubishi owns 15%. Reports indicate that Shell may seek to sell up to 30% of its stake, valued at approximately $15 billion, covering equity, debt, and capital commitments for future phases.
- Shell’s Stake: 40% of LNG Canada
- Mitsubishi’s Stake: 15% of LNG Canada
- Estimated Sale Value: Up to $15 billion for Shell’s potential stake, including commitments
Exploring Options and Evaluating Risks
Shell has engaged investment bankers from Rothschild & Co to investigate buyer interest. The company is open to various options regarding both the operational Phase 1 and the proposed Phase 2 of the project, which carry differing levels of risk.
Mitsubishi has enlisted RBC Capital Markets to explore its options, although discussions are still in the preliminary stages. Any sale processes for both Shell and Mitsubishi are not guaranteed, and discussions remain confidential.
Recent Developments in LNG Canada
LNG Canada, located in Kitimat, British Columbia, is the first major LNG facility on the North American Pacific Coast. Since its operational launch in June, the facility has encountered some challenges, including issues with its second processing unit.
- Operational Start: June 2025
- Capacity Goals: 14 million metric tons of LNG annually when fully operational
- Current Issues: Operational setbacks in December affecting production
Market Context and Future Prospects
The global LNG market faces concerns about oversupply due to the addition of new production facilities. Moreover, existing stakeholders are responding to market conditions. For instance, Petronas recently reduced its stake in the project, creating further opportunities for reallocation among investors.
With Shell anticipating a consistent increase in LNG sales and production over the next five years, the partners are preparing for a final investment decision on the second phase of LNG Canada. This phase could significantly enhance the facility’s capacity and operational output.
As energy markets continue to evolve, the implications of these sales could reshape the dynamics of LNG investment and production in the coming years.
