Three US potential buyers emerge for Shell’s LNG Canada stake

Three US investment firms have expressed interest in acquiring a portion of Shell’s share in LNG Canada, sources with knowledge of the matter told Reuters on April 30.

KKR, Apollo Global Management, and Blackstone are all believed to be suitors to acquire part of Shell’s 40% stake in Canda’s flagship LNG project. The world’s largest LNG trader is believed to be looking to offload as much as 30% of this stake, which could fetch it between $10 bn to $15 bn.

Shell is eyeing expansion of LNG Canada, with Phase Two of the project on Prime Minister Mark Carney’s Major Projects List. Phase Two would double the Kitimat, British Columbia-located facility’s production capacity to 28 mn tonnes per year (tpy).

The news also comes in the wake of Shell’s announcement on April 27 that it will purchase Canadian natural gas producer ARC Resources, which is headquartered in Calgary for $16.4 bn.

While a sale could be on the cards, the London-headquartered company could just as easily retain its 40% share. The company’s CEO said in late April that the supermajor was “very comfortable” with its stake.

Shell has remained bullish on forecasts of global LNG demand while some of its competitors have begun to pump the brakes. The firm expects that LNG demand will rise by 60% by 2040 and the proportion of LNG that makes up natural gas sales will climb from 13% to reach 20% by 2040.

BP, on the other hand, forecasts a rise in LNG trade to the end of the decade, but its predictions beyond 2030 are more restrained for the sector. In fact, by 2050, BP expects LNG exports to fall to about 25% below their 2023 level.

Shell’s joint venture partners in LNG Canada include Malaysia’s Petronas, which has a 25% stake, PetroChina with a 15% interest, Japan’s Mitsubishi holds a 15% interest and Korea’s Kogas has a 5% stake.