Agreement reached to advance $33B LNG Canada Phase 2

Key Takeaways:

• The federal and provincial governments have signed an agreement to resolve final regulatory and commercial hurdles to support a final investment decision for LNG Canada Phase 2 by late 2026.
• Joint venture partners have authorized hundreds of millions of dollars in immediate funding for engineering, long lead item procurement, and First Nations engagement.
• The expansion would double the Kitimat facility’s capacity to 28 million metric tons per year while utilizing specialized design to maintain an emissions profile significantly below the global average.

The Whole Story:

The federal and British Columbia governments reached an agreement on enhanced investment co-operation to support a potential final investment decision (FID) for the LNG Canada Phase 2 expansion. The agreement establishes a framework for the two levels of government to resolve final commercial, regulatory, and fiscal items required for the project proponents to reach a decision by the end of 2026.

The announcement follows a May 1 decision by the LNG Canada joint venture participants—including Shell, PETRONAS, PetroChina, Mitsubishi Corporation, and KOGAS—to approve hundreds of millions of dollars in incremental funding. These funds are designated for critical work scopes, including further engineering, the placement of long-lead equipment orders, and the progression of benefit agreements with First Nations. Construction work is also expected to advance at the project’s marine offloading terminal in Kitimat to prepare for the potential expansion.

The LNG Canada project represents the largest private sector investment in Canadian history, with Phase 1 alone carrying an estimated total budget of $40 billion. Since its 2018 sanctioning, the project has directly employed more than 50,000 Canadians and invested approximately $3.8 billion through local suppliers and contractors. The facility began initial operations in June 2025, and a successful Phase 2 expansion would double its export capacity from 14 million to 28 million metric tons per year. Beyond its scale, the project is considered a strategic economic asset intended to diversify Canada’s export markets and strengthen the value of the national currency by positioning the country as a top-five global LNG exporter.

“Today’s announcement demonstrates the progress we are making to advance critical projects like the proposed LNG Canada Phase 2 expansion,” said Tim Hodgson, federal minister of natural resources. “With the co-ordinated efforts outlined in this agreement, we are helping unlock economic opportunities, creating good jobs for Canadians, strengthening our trade connections with global allies and moving one step closer to positioning Canada as a leading exporter of clean, responsibly produced energy.”

For the first and second phases of the project, LNG Canada has utilized a tiered construction and engineering model involving some of the world’s largest industrial firms. Phase 1 is being delivered by the JGC Fluor BC LNG Joint Venture (JFJV), a partnership between JGC Corporation and Fluor Corporation that serves as the prime engineering, procurement, and construction (EPC) contractor for the Kitimat facility.

This joint venture has managed a workforce of more than 50,000 Canadians and utilized a broad network of domestic contractors, including Bird-ATCO Joint Venture for modular camp services and Soletanche Bachy Canada for specialized marine work.

As the project moves toward a potential Phase 2 expansion, the execution model has evolved to include TR Canada E&C, a subsidiary of the Spanish engineering firm Técnicas Reunidas, which was selected in March 2026 to provide front-end engineering design (FEED) services. Under a newly established commercial framework, TC Energy has transitioned into a technical advisory role for the Coastal GasLink pipeline expansion, while the LNG Canada joint venture itself will act as the execution manager to oversee the construction of additional compression facilities.