KITIMAT – October 3, 2026 – LNG Canada will build the modules for its $33-billion Phase 2 expansion in Kitimat with Chinese steel, the same state-owned yard that built Phase 1, because the company says no Canadian fabrication yard can do the work.
The joint venture — Shell 40 per cent, PETRONAS 25, PetroChina 15, Mitsubishi 15, KOGAS 5 — took a final investment decision at the end of September. Two more trains, storage and a loading berth. Nameplate capacity goes from 14 million tonnes a year to 28, which Carney called the second-largest plant of its kind, with completion pencilled for the early 2030s. He said the expansion is more than $30 billion and will create thousands of jobs.
Asked at that event whether the steel would be Canadian or Chinese, the prime minister said it was “a great question for the proponents of Phase 2. I’ll leave it to them.” He added there would be “full opportunities to buy Canadian steel” and that Ottawa would keep investing in the domestic industry, “but it will be for them to decide.”
They decided. Spokesperson Paul Hagel told CBC the issue is not a preference for offshore steel. Modules of this size need yards with space, quality systems and marine access, and “there are no fabrication yards in Canada that can manufacture and deliver the additional modules required for Phase 2.” Five yards in the world can, he said, including China Offshore Oil Engineering Co., a unit of state-owned CNOOC, which built the Phase 1 modules. The pipeline side is different: Coastal GasLink is targeting almost 15,000 tonnes from Canadian mills, about 70 per cent of the steel for new compressor stations.
The Conservatives called it a break with the buy-Canadian line. Phase 1 already had a remission on anti-dumping duties for Chinese fabricated components. Phase 2 repeats the pattern while Ottawa tightens quotas on foreign steel elsewhere and Canadian mills idle lines under U.S. tariffs.
Northwestern Ontario does not build LNG modules. It does live with the tariff file those mills are on. A national project that doubles gas exports to Asia, with a Chinese state partner in the ownership and a Chinese state yard on the steel, is the diversification strategy as it actually gets built.
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