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Canada · Energy

LNG Canada Phase 2 modules to be built with Chinese steel; Carney declines to intervene

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The $33B LNG Canada Phase 2 expansion modules will be built by the same Chinese state-owned yard as Phase 1; a spokesperson told CBC no Canadian yard can do the work; Carney said it is 'for them to decide', drawing Conservative criticism.

Why it matters

One of the largest private investments in Canadian history will have its modules fabricated by a Chinese state-owned shipyard, clashing with Ottawa's tightening quotas on foreign steel and idle Canadian mill capacity under U.S. tariffs — and a political fight is already underway.

Full report

According to RL News on October 3, the modules for LNG Canada's $33-billion Phase 2 expansion in Kitimat, B.C., will be built by the same Chinese state-owned yard that built Phase 1: China Offshore Oil Engineering Co., a unit of state-owned CNOOC.

Spokesperson Paul Hagel told CBC the issue is not a preference for offshore steel, but that 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.

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 will lift nameplate capacity from 14 million to 28 million tonnes a year, with completion pencilled for the early 2030s. Carney called it the second-largest plant of its kind.

Asked whether the steel would be Canadian, Prime Minister Carney said it was 'a great question for the proponents of Phase 2. I'll leave it to them,' adding Ottawa would keep investing in the domestic industry and there would be 'full opportunities to buy Canadian steel.'

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. The Coastal GasLink Phase 2 pipeline is different: almost 15,000 tonnes from Canadian mills, about 70 per cent of the steel for new compressor stations.

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