Canada's $33 Billion Bet on Asian Gas Demand Faces Uncertain Future

The $33 billion LNG Canada Phase 2 project has been approved, and it's a massive bet on Asian demand for natural gas. Shell and its partners are doubling the export capacity of the Kitimat facility from 14 million to 28 million tonnes per year.

However, experts warn that the project may not pay off if Qatar recovers from the damage caused by Iranian attacks and resumes its LNG exports. The Strait of Hormuz has also reopened, which could disrupt Canadian LNG shipments.

The coming global LNG supply wave is expected to push prices down, making it less attractive for Asian buyers. China's LNG imports have already peaked, and other mature importers like Japan and South Korea offer limited growth.

Analyst Seb Kennedy says that Shell's demand projections are highly ambitious and require spectacular growth from emerging economies. He argues that the burden of proof is on Shell to prove that demand will grow as fast as they say it will at a profitable price.