Shell-led LNG Canada inks $1bn First Nations equity deal
LNG Canada has secured a $1 billion equity option agreement with five First Nations for its Phase 2 expansion, setting a new precedent for indigenous ownership in Canadian energy infrastructure.
Shell-operated LNG Canada and its joint venture partners have agreed to an equity option with MNT Investments, a limited partnership representing five neighbouring First Nations. Under the deal announced on July 14, MNT can invest up to $1 billion to acquire a majority stake in a special purpose entity that will purchase the project’s Phase 2 storage tank.
The proposed structure involves leasing the tank back to LNG Canada for the operational life of the facility, located roughly 700 km north of Vancouver in Kitimat, British Columbia. For project finance professionals, this sale-and-leaseback model shifts the capital expenditure burden of the storage asset off the primary joint venture balance sheet while securing operational control.
However, the transaction remains highly conditional. It requires the joint venture partners to approve a final investment decision for the Phase 2 expansion, which is now targeted for the end of 2026. The equity option will only execute if that expansion formally moves forward.
Indicators suggest the expansion is advancing. In June, Fluor Corporation received a limited notice to proceed with Phase 2 construction work. The core LNG facility is already a commercial reality, having exported its first cargo to South Korea last year and marking its 100th cargo delivery last month.
The MNT Investments partnership includes the Gitga’at, Haisla, Kitselas, Gitxaała, and Kitsumkalum First Nations. The Haisla Nation’s traditional territory hosts the Kitimat site. If the deal closes, it will mark the largest indigenous ownership position in a major Canadian infrastructure project to date.
Global energy producers are increasingly tying indigenous equity into major capital projects to mitigate regulatory and social licence risks. “Our announcement reflects our continued commitment to reconciliation by creating a pathway for Indigenous equity in our proposed Phase 2 expansion,” LNG Canada President and CEO Chris Cooper said. “This agreement recognizes that Indigenous Nations should have the opportunity to participate in major investments like Phase 2, not only through jobs, training, procurement and community benefits, but also through long-term ownership and value creation at a global scale,” Cooper added.
