Shell and Mitsubishi weigh sale of stakes in C$40 billion LNG Canada

Multiple anonymous industry sources on Jan. 16–17 say Royal Dutch Shell and Mitsubishi Corp are exploring options to sell part or all of their equity stakes in the C$40 billion LNG Canada liquefaction complex, a strategic deliberation that comes as partners consider a possible Phase 2 expansion.

LNG Canada’s Phase 1 is operational and when fully ramped will offer about 14 million metric tons per year of liquefied natural gas. The project, whose capital cost is commonly quoted at roughly C$40 billion (about US$28.8 billion), began output in mid-2025 but has experienced technical setbacks, including a shutdown of liquefaction Train 2 in early December 2025. Those operational issues are salient to potential buyers because they affect near-term cash flow and the allocation of maintenance and upgrade costs.

Shell is the largest equity holder with a 40 percent stake and has been sounding out potential buyers with Rothschild & Co, according to sources. Executives are reported to be willing to divest as much as three-quarters of that holding, or up to 30 percentage points, while considering differentiated exposure to the operational Phase 1 and the riskier proposed Phase 2. Mitsubishi holds a 15 percent interest and has engaged RBC Capital Markets to assess options. Sources stress Mitsubishi’s deliberations are at an early stage and any marketing of its stake would likely occur later in 2026.

Estimates of the capital a buyer would need to commit vary. Multiple sources cited a ballpark figure near US$15 billion inclusive of equity, assumed debt and prospective Phase 2 capital requirements; one estimate placed the figure near US$20.9 billion. Those ranges reflect differing assumptions about the portion of project debt a purchaser would assume and the scale and timing of Phase 2 investment. Reporters were also told that Shell would retain a gas supply contract with the terminal for 30 years, an arrangement that could shape revenue predictability for investors buying into Phase 1 cash flows.

Market participants say the contemplated divestments fit a broader pattern in energy infrastructure: major developer-owners prune stakes in operational assets to crystallize returns and redeploy capital. Large infrastructure funds, pension-backed investors and commodity-focused developers are the most likely buyers, drawn by long-duration, contract-backed revenue streams, but they will price in recent reliability problems and Phase 2 execution risk.

The potential sales come after Malaysia’s Petronas previously reduced its holding in the venture, a move cited by partners as contextual precedent. LNG Canada referred queries to Shell and Mitsubishi. Shell declined to comment, and Mitsubishi did not respond to requests for comment.

Policy and market context complicate valuation. Long-term global gas demand remains subject to decarbonization policies, competition from renewables, and changing gas demand in Asia where many of LNG Canada’s contracts are targeted. For buyers, the asset offers attractive long-run contracted cash flows, but also faces near-term technical uncertainty and the capital intensity of any expansion.

If formal sale processes open, analysts will be watching the size and timing of offerings, the extent to which buyers are asked to assume project debt or Phase 2 commitments, and how the recent operational track record is reflected in price. Those factors will determine whether Shell and Mitsubishi can convert equity in a marquee Canadian LNG project into the kind of capital redeployable for strategic investments.