Abu Dhabis XRG explores LNG Canada stake as partners weigh expansion

(Bloomberg) – Abu Dhabi’s XRG is exploring the acquisition of a stake in the Shell Plc-led LNG Canada export project, as the state-owned group pursues plans to become a major global supplier of natural gas, people familiar with the matter said.

XRG has been holding discussions with existing LNG Canada backers including PetroChina Co. about buying some of their holdings, the people said, asking not to be identified because the information is private.

There’s no certainty the deliberations will lead to a transaction, the people said. Spokespeople for XRG, LNG Canada and Shell declined to comment, while a representative for PetroChina didn’t immediately respond to queries.

The potential purchase of a stake in LNG Canada fits with XRG’s ambition to become a top five supplier of natural gas and petrochemicals, following deals from the US and Argentina to Africa. Backed by Abu Dhabi’s oil wealth, those ambitions are taking on even greater relevance as the war in the Middle East has highlighted the importance of supply from outside the region.

LNG Canada beganproductionfrom the facility at Kitimat in the country’s west in 2025, seven years after partners Shell, Malaysia’s Petroliam Nasional Bhd., PetroChina, Mitsubishi Corp. and Korea Gas Corp. approved the project at an estimated investment ofC$40 billion($28.5 billion) in 2018. The project, whose 14 million-ton annual capacity makes it one of the biggest operating plants in North America, supplies mostly South Korea, Japan and China.

The partners are considering a multibillion-dollar project to double capacity, with a decision expected later this year, according to Kogas and Petronas.

Gauging interest

Some of the partners are examining reducing their holdings. PetroChina, the country’s largest oil and gas producer, wasgauging interestfor its 15% stake so that it can use the proceeds from the sale to help finance the facility’s second phase, Bloomberg reported in July.

Besides PetroChina, Shell owns 40% stake in the project, while Petronas has 25%, Mitsubishi holds 15% and Kogas has 5%.

The LNG Canada project has provided an important alternative for Asia’s major LNG importers after the Middle East conflict disrupted deliveries from Qatar, which supplied nearly a fifth of the global market last year. The war has also increased the urgency for the expansion as the disruption in the Strait of Hormuz potentiallydelaysprojects in Qatar, leaving the market facing tighter supply for years.

XRG, meanwhile, has been snapping up assets across the world and is looking for more. The company would be interested in “exploring opportunities” in oil and gas production facilities and LNG in Canada, Musabbeh Al Kaabi, chief executive officer for upstream at parent Abu Dhabi National Oil Co. said in June.

Announced in2024as the international investment business of Adnoc, XRG has increased itsholdingin the Rio Grande LNG project in Texas, bought into a gas project in Argentina, owns stakes in facilities in Mozambique and Central Asia andacquiredGerman chemical maker Covestro AG. But last year XRG had to drop a planned$19 billiontakeover of Australian natural gas producer Santos Ltd. in what would have been its largest deal to date.

Image credited to Fluor.