Investing In Canadian LNG Part 1 – Canadian LNG From A Global Perspective

Interest in Canada’s budding Liquefied Natural Gas (LNG) export industry is rapidly growing. Recent LNG market disruptions in the Middle East, the heightened energy security concerns that have resulted, and continuing demand for lower emissions energy are focusing attention on Canadian LNG.

What, then, are the key features of Canadian LNG and the potential for further investment and development going forward? To answer these questions, we’ve written a series of insights on investing in Canadian LNG. In this first installment we address: 

• Putting Canadian LNG in context
• A brief history of Canadian LNG
• Key features of Canadian LNG projects
• Canadian LNG going forward.

Watch for the next instalments in our series where we focus on (1) key legal, commercial and strategic considerations regarding investing in Canadian LNG, (2) recent government initiatives supporting Canadian LNG, and (3) Indigenous partnerships and investment in Canadian LNG.¹

Putting Canadian LNG in Context

Global LNG and Oil Markets Compared

The global LNG and oil markets are fundamentally different on several levels. Much of these differences are the result of basic physics. Oil can be stored and transported at ambient atmospheric temperatures. To be liquified into LNG, natural gas must be cooled to -162 Celsius. This makes LNG more complex and costly to store and transport. This also means that, while the oil market is truly global in scale, the LNG market is more limited. As of 2026, only 25 countries exported LNG and less than 50 countries imported LNG.

The relative ease with which oil can be transported also means that oil cargoes can easily be swapped. This in turn means the global oil market generally operates based on short-term, spot contracts. By contrast, the LNG market has historically relied on long-term (15+ years) fixed contracts to underwrite the costs of building LNG export infrastructure. That said, the steady expansion of the LNG industry has been leading to more spot and swap trading.   

Major LNG Exporters, Importers and Trade

LNG exports and imports – which are measured in metric tonnes per annum (MTPA) – are heavily weighted toward certain markets and geographic regions. Only three countries accounted for more than half of global LNG exports in 2025.

These were the United States (over 100 MTPA), Qatar (approximately 81 MTPA) and Australia (approximately 80 MTPA). Similarly, only three countries accounted for almost half of global LNG imports in 2025. These were China (approximately 68 MTPA), Japan (approximately 65 MTPA) and South Korea (approximately 47 MTPA). Europe collectively accounted for approximately 103 MTPA of LNG imports in 2025.

The LNG industry has historically been characterized by three main regions. Asia-Pacific and Europe have historically been LNG’s largest demand centres and have often experienced different price trends. The Middle East (principally Qatar) has historically played the role of swing supplier and often benefits from arbitrage opportunities between the two basins. More recently, the rise of more flexible and spot LNG contracts – particularly from the United States – has been reducing the distinction between the two basins.

Recent supply disruptions in the Middle East caused spot prices for LNG in March 2026 to spike as much as 90% in Asia-Pacific and 60% in Europe. Prior to these disruptions approximately 20% of the world’s LNG supply passed through the Strait of Hormuz, including all LNG exported by Qatar. 

The History of Canadian LNG in Brief

Canada only joined the global LNG export industry in June 2025 with shipment of the first cargoes from LNG Canada in Kitimat, BC. The project made its positive final investment decision ("FID") in October 2018, more than seven years after interest in developing Canadian LNG export infrastructure first began surging. The March 2011 tsunami that struck Japan and caused the Fukushima nuclear disaster sent LNG prices in Asia skyrocketing and sent Asian LNG importers (and the international LNG companies that supply them) searching for new production sources.

Canada’s west coast was of immediate appeal. Canada is the world’s 5th largest natural gas producer with almost all production occurring in northern BC and Alberta. The relatively close proximity of BC’s coasts to Asia greatly reduces maritime transit times and costs. BC’s relatively cool temperatures (e.g., compared to the Middle East and the U.S. gulf coast) significantly reduce the energy needed to cool natural gas into LNG. Canada is a stable, democratic and investment-friendly jurisdiction with longstanding commitment to the rule of law. Western Canada also offers lower-emissions LNG potential relative to other export markets, including because of strong environmental regulation and hydro-electric power.

This interest led to a boom of almost 20 different west coast LNG export project proposals beginning in 2012. Canada’s National Energy Board received over 40 LNG export applications and approved over 30. However, various different factors combined to frustrate the great majority of these projects, including (1) a collapse of global LNG prices around mid-decade, (2) regulatory complexity and delays, and (3) difficulty securing local stakeholder support. The result is that only two additional positive Final Investment Decisions (FIDs) have followed LNG Canada to date, being that of Woodfibre LNG in April 2022 and Cedar LNG in June 2024. 

Canada’s first foray into the LNG industry dates to 2009 and the Saint John LNG import terminal in New Brunswick.²The facility was built to supply natural gas to eastern Canada and the northeastern United States through imports from Atlantic basin suppliers. However, changing market dynamics in the years that followed meant that its operations peaked in 2010-2011 and thereafter declined as the rapid growth of low-cost shale gas production in the United States (made possible by advancements in hydraulic fracturing technology) reduced the need for imported gas. A recent question has been whether the terminal could be economically converted from an import to an export terminal, as have several LNG facilities on the U.S gulf coast since 2016.

Key Features of Canadian LNG Projects

LNG export projects and their value chains can have very different characteristics depending on the jurisdiction in which they are located. In this regard, Canadian LNG export projects represent a mix of conditions and potential value chain participants that is somewhat unique on the global stage. We note: 

• Many LNG export projects are located in countries that do not have a robust domestic natural gas industry or network. Examples include Papua New Guinea, Angola and Mozambique. By contrast, Canada boasts a longstanding and robust domestic natural gas industry, including almost 600,000 kilometers of transmission and distribution pipelines. Similarly, whereas LNG export projects in some jurisdictions rely almost entirely on the entry of foreign oil and gas companies, Canada hosts the full spectrum of market players, from locally headquartered junior and senior producers through to the local subsidiaries of vertically integrated global oil and gas majors. 

• Many LNG export projects are based on a single or small number of large new dedicated exploration and production concessions granted by the host state (e.g., offshore licenses). By contrast, natural gas production in Canada is characterized by many relatively smaller production leases that can be aggregated (i.e., bought, sold and exchanged) to supply an LNG export project. Western Canada’s robust domestic natural gas industry and infrastructure also means that the dedication of, or the sale of, natural gas produced from such leases to an LNG export project is only one of numerous different potential monetization strategies. This infrastructure and regional market also create the possibility (absent in many other LNG exporting countries) of stripping out and selling natural gas liquids such as butane and propane from the natural gas before it is liquefied into LNG, potentially increasing a project’s economic viability. 

• The Canadian government generally does not seek or require direct involvement in LNG export projects, whether through an equity interest or otherwise. This stands in contrast to the many LNG exporting jurisdictions in which the host state seeks direct participation in project ownership, development and operations, typically through a state-owned entity (SOE) and using a joint venture or similar structure. Canadian government involvement is generally limited to its role as regulator. Nor does Canada generally prohibit foreign investors from owning upstream oil and gas production rights, as occurs in some other LNG exporting jurisdictions. The absence of direct host-state involvement in Canada can mean greater freedom in structuring an LNG project relative to other jurisdictions. 

• Canadian LNG export projects have generally required more new pipeline infrastructure to transport natural gas from its point of production to the associated coastal liquefaction facility than is the case in other LNG export jurisdictions. In western Canada, this challenge is made more complex by the mountainous terrain between natural gas production in northeastern BC and Alberta, on the one hand, and BC’s Pacific coast, on the other hand. That said, the completion of the 670-kilometer Coastal GasLink Pipeline feeding LNG Canada (and to also feed Cedar LNG) demonstrates the viability of such infrastructure. 

• Natural resource and infrastructure development in Canada, and particularly in BC, requires appreciation of the constitutional rights of Canada’s Indigenous peoples, including regarding consultation and accommodation. The practical result is that developing LNG infrastructure in Canada requires early, meaningful and sustained consultation with potentially impacted Indigenous groups to ensure alignment. Indigenous groups in Canada are also increasingly seeking active participation in energy projects, including through equity ownership. Government-backed Indigenous loan guarantees and lending programs are facilitating this. Indigenous equity participation also serves as a strong bankability signal. 

Canadian LNG Going Forward

Canada’s federal government has expressed an ambition for the country to become one of the world’s leading LNG exporters, with the potential to reach up to 100 MTPA in the coming decades. Currently LNG Canada’s liquefaction capacity of 14 MTPA is only enough to have Canada join the lower tier of LNG exporters. For example, each of Malaysia, Indonesia, Russia, Algeria and Nigeria all have over 20 MTPA of liquefaction capacity.

The start-up of Cedar LNG’s planned 3.75 MTPA of liquefaction capacity and Woodfibre LNG’s planned 2.1 MTPA of liquefaction capacity will be noteworthy additions. Two questions come next. First, whether LNG Canada will make a positive FID for its proposed second phase, which would double the project’s liquefaction capacity to 28 MTPA. This expansion would be fed by increasing the capacity of the existing Coastal GasLink Pipeline through the addition of six compressor stations. Second, whether Ksi Lisims LNG will make a positive FID and eventually add another 12 MTPA to Canada’s liquefaction capacity. This project would rely on a new, fully permitted (but yet to be built) pipeline being developed by the project’s proponents. Each of these proposals have been designated as projects of national interest by the federal government³ and were they to successfully move forward Canada would have more than 45 MTPA of liquefaction capacity by the early 2030s, enough to potentially put it into the top five of export countries (depending on capacity increases in competitor jurisdictions). To ultimately reach 100 MTPA would require multiple new projects.

The natural export markets for LNG projects on Canada’s west coast are in Asia. The natural export markets for any future LNG projects on Canada’s east coast, or possibly from the Canadian arctic from Churchill, Manitoba, are in Europe. That said, recent reports indicate that some European importers are exploring the possibility of contracting for future cargoes from western Canada, either to take physical delivery through the Panama Canal or to use as swap cargoes with other LNG buyers (or traders) with geographically diversified portfolios. LNG cargoes from western Canada to Asia would also free-up other cargoes to supply Europe. This highlights the potential impact of Canadian LNG exports across basins. It also highlights Canada’s attractiveness as a reliable export jurisdiction amidst heightened geopolitical instability. 

Watch for the next instalments in our series where we focus on (1) key legal, commercial, and strategic considerations regarding investing in Canadian LNG, (2) recent government initiatives supporting Canadian LNG and (3) Indigenous partnerships and investment in Canadian LNG. 

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.