INTERVIEW: Mitsubishi hopes for early FID on LNG Canada expansion

Japan's Mitsubishi Corp. hopes to reach a final investment decision to expand and possibly double LNG Canada's 14 million mt/year production capacity "at an early date," alongside its partners, Masaru Saito, executive vice president and CEO of the company's Environmental Energy Group, told Platts, part of S&P Global Commodity Insights.

"First, this is about whether we can firmly reach the FID, which we will carefully assess," Saito said in an interview in Tokyo on Feb. 28.

LNG Canada, in which Mitsubishi holds a 15% stake, is in the final stages of construction and is set to start production as planned in mid-2025, he added.

"We are working hard with the contractors to ensure that we can achieve this target and, ideally, start production a day earlier than planned," he said, declining to elaborate on the exact timing for the first cargo shipment.

The Shell-led LNG Canada, with a capacity of 14 million mt/year in remote Kitimat, British Columbia, will position Canada as a global LNG supplier and open the country's vast gas reserves to the international market.

"Regarding Canada, this Phase 1 is just the beginning, and LNG will start flowing from Canada," Saito said, adding that LNG Canada's supplies will be competitive, backed by upstream gas assets and "an extremely low GHG [greenhouse gas] emission rate per ton, approximately half that of normal LNG."

"The location is advantageous as it is close to the Far East market from the west coast loading ports without passing through the Panama [Canal]," Saito said.

"Since we can also share the infrastructure of Phase 1, we are actively considering investing in Phase 2 as well," he said, adding that LNG Canada is looking at adding an additional production capacity of around 14 million mt/year.

Priority developments

Mitsubishi is considering the LNG Canada expansion as it aims to boost its equity LNG production volumes to around 18 million mt/year by the early 2030s, from the current level of 13 million mt/year.

"Given the current surge in EPC [engineering, procurement and construction] prices and the inflation challenges associated with constructing new LNG facilities, we are focusing on developing the assets we already have," Saito said.

"We will concentrate on the thorough development of our existing assets, such as the expansion of LNG Canada and the expansion of Cameron in the US," he said, adding that the company is also working on developing and connecting Browse upstream gas to an existing facility in the North West Shelf in Australia.

The move comes as natural gas demand is expected to increase more than ever before, driven by the proliferation of generative AI and data centers, as well as a growing fuel-switch demand from coal to gas in emerging economies.

Most recently, Shell said Feb. 25 that more than 170 million mt of new global LNG supply is expected to be available by 2030, helping to meet the growing gas demand, especially in Asia.

"We aim to develop our existing assets effectively and utilize the existing infrastructure as much as possible to develop LNG," Saito said, adding that this aligns with the trends and needs driving LNG growth in the market.

"Even though the global LNG market is expected to grow, we need to maintain our competitiveness in this environment; otherwise, our development efforts will not be successful," he said. "Therefore, we aim to focus on the development of LNG that leverages strong existing assets and infrastructure."

Cameron, Browse

On the Cameron expansion, Saito said, "We are closely monitoring the EPC market to determine how the economics align with our interests."

"It may take a bit more time to assess this, but we are thoroughly examining the EPC market, especially considering the inflation in the US, with the hope of linking this analysis to the expansion efforts," he added.

Saito said that despite reforms to the Safeguard Mechanism that took effect in 2023, Mitsubishi still sees Australia as "one of the most effective sources" for large markets in Northeast Asia due to its proximity.

Japan imported 25.14 million mt of LNG from Australia in 2024, accounting for 38.2% of the country's total imports for the year, making it the largest supplier, according to data from the Ministry of Finance.

"In this context, developing Browse, which has a significant scale within Australia, and connecting it to the existing North West Shelf plants to produce LNG is important for energy security," Saito said.

"Although the Safeguard Mechanism has been introduced, we are also considering reducing CO2 emissions to a certain level while implementing CCS [carbon capture and storage]."

Under reforms to the Safeguard Mechanism that came into effect in July 2023, industrial facilities, including oil and gas production and mining operations, that emit more than 100,000 mt/year of CO2 equivalent must offset their emissions through measures such as purchasing carbon credits or implementing CCS.

The Woodside Energy-led Browse project obtained environmental approvals for the NWS plant last year, Saito said.

"Since we need those approvals to inject gas into the plant, it was essential to clear that hurdle first for gas development to proceed, and that has now been accomplished, giving us some momentum," he added.

"Therefore, we need to obtain the environmental approvals for Browse, and the permitting processes are moving forward one step at a time," Saito said. "We aim to leverage this momentum to enter FEED [front-end engineering design] as soon as possible, with the hope of starting production around the early 2030s."

Strategic Energy Plan

Commenting on Japan's recent cabinet approval of the Strategic Energy Plan, which outlines the country's energy supply and demand outlook for the fiscal year 2040-41 (April-March), Saito said he "highly values" the principal energy policy as it is based on multiple scenarios.

"While nuclear and renewable energy will be the central focus for decarbonized energy, it is essential that thermal power plays a role, with LNG positioned as an important component in this energy transition framework," he said.

"We appreciate the role of LNG, especially as the scenarios balance decarbonization, economic viability and stable supply," Saito said, adding that the company needs to consider what the realistic approaches and supply-demand environments are for LNG within these scenarios.

The Strategic Energy Plan projects that Japan will need 53 million-74 million mt of natural gas in its primary energy supply for FY 2040-41 under multiple scenarios, based on a target of 61%-73% GHG emissions cuts from FY 2013-14 levels.

"We need to closely examine how the actual gaps will develop in line with the advancements in technology within these scenarios," Saito said, commenting on the FY 2040-41 gas supply gap of 21 million mt.

"Therefore, rather than focusing solely on the gap of 21 million mt, we need to carefully assess how the actual demand will grow," he added. "We believe that each scenario will have its own gaps."