Is China Really "Not Interested" in Canadian LNG? ——Reflections from an FT Panel Discussion

A colleague attended The Financial Times Panel on "A Volatile Era for Asia's Commodity Markets." During the session, a panelist responded to a specific question by suggesting that while China seeks to diversify and secure its LNG supplies, it is not necessarily looking to acquire and/or invest in Canadian production facilities at this time. This observation prompted deeper reflection: Are Chinese energy companies truly walking away from Canadian LNG opportunities? The following is an objective analysis based on publicly available information and data, examining both sides of the argument.

I. Why "China May Not Be Looking to Invest"? ——Real and Substantial Headwinds

1. Tightening Regulatory Scrutiny and Rising Policy Uncertainty

Canada has been steadily tightening its foreign investment review framework in recent years. The Investment Canada Act has undergone multiple amendments, strengthening the review of investments by State-Owned Enterprises (SOEs) and expanding the scope of national security reviews to include critical minerals and critical infrastructure. The 2025 update to the Guidelines on Investment Review for National Security further raised compliance thresholds for Chinese enterprises seeking to establish a presence in Canada's key sectors.

Investment data shows that Chinese FDI in Canada's natural resources sector contracted significantly between 2018 and 2025 amid tighter regulation, national security reviews and Canada-China geopolitical frictions. Public opinion surveys also indicate that a considerable proportion of Canadians are cautious about Chinese companies holding equity stakes in critical resource development. Such policy uncertainty does influence the decision-making cadence of Chinese investors.

2. Historical Investment Returns Have Been Disappointing

Over the past decade or more, several Chinese oil companies acquired Canadian unconventional oil and gas assets during periods of high oil prices. Some of these projects faced high upfront acquisition costs, extended construction timelines and production outputs that fell short of expectations, all of which weighed on overall investment performance. These historical experiences have made Chinese energy companies more cautious when evaluating new projects, with greater emphasis on economic viability and risk controllability.

3. Diversification of Global Investment Footprint

China's overseas investment strategy is accelerating toward the Belt and Road Initiative countries, Africa, the Middle East and Central Asia. In 2025, Chinese investment in Belt and Road partner countries grew by 17.6% year-on-year, significantly outpacing overall ODI growth. With limited capital and human resources, North America is not the only — or necessarily the highest-priority — destination.

II. Why "China Is Still Invested"? ——Facts Speak Louder Than Inference

1. PetroChina Is a Core Shareholder in Canada's Largest LNG Project — Now in Production

The most compelling counter-evidence: PetroChina is a core shareholder in Canada's LNG Canada project. The project represents a total investment of approximately US$48 billion, with a shareholder structure comprising Shell (40%), PETRONAS (25%), PetroChina (15%) , Mitsubishi (15%) and KOGAS (5%). PetroChina has made a US$3.46 billion equity investment in the project's first phase.

In June 2025, the first production train at LNG Canada came online. On July 24, 2025, a vessel carrying 160,000 cubic metres of Canadian LNG departed Kitimat for China, marking the successful first offshore delivery of PetroChina's Canadian LNG — and making LNG Canada the first and currently only LNG export terminal in Canada to reach production. The project has successfully opened a Pacific LNG shipping route from Canada to Asia.

2. Chinese Officials Have Explicitly Expressed Interest in Expanding Production and Investment

The Chinese Consul General in Calgary, Zhao Liying, stated unequivocally in a public bylined article: Chinese major oil and gas enterprises have been deeply engaged in Canada for many years, with total investment exceeding C$75 billion, and have the willingness and capability to further expand investment and production capacity under a favourable policy environment. Speaking at a ceremony celebrating the first LNG shipment, she also emphasised that Canada-China energy cooperation has "strong momentum and enormous potential." This is not a signal of "retreat," but a commitment to "deep cultivation."

3. Senior Canadian Government Officials Have Travelled to China to Promote Phase II Expansion

In January 2026, Canadian Prime Minister Mark Carney visited China, and the two sides signed the Memorandum of Understanding between the National Energy Administration of China and Natural Resources Canada on Strengthening Energy Cooperation, agreeing to launch a ministerial-level energy dialogue to strengthen cooperation in traditional energy sectors including oil and gas.

In June 2026, British Columbia Premier David Eby led a delegation to China, with a clear focus on advancing the LNG Canada Phase II project. Phase II is planned to double capacity from 14 million tonnes per annum to 28 million tonnes per annum. Premier Eby expressed gratitude to the Chinese side for its participation in Phase I and encouraged investment in Phase II. During the same period, Sinopec Group Vice President Niu Shuanwen also met with Premier Eby and his delegation to exchange views on cooperation in LNG and clean energy. A provincial premier making a personal visit to China to promote LNG projects underscores the importance of Chinese capital to Canada's LNG sector.

4. Energy Security Is the Core Driver — China and Canada Are Highly Complementary

China is the world's largest energy consumer and importer. Amid escalating trade protectionism and geopolitical challenges, China's stable and vast market demand presents a significant opportunity for Canada's oil and gas industry. Canada boasts abundant natural gas resources — third globally in proven reserves and fifth in production — and the AECO hub price has consistently traded below the U.S. Henry Hub. From Alberta to British Columbia, Canada's energy resource endowment is highly complementary to China's enormous import demand.

In the first five months of 2026, Canada's crude oil exports to China exceeded US$1.1 billion, with the majority of the incremental volume coming from new capacity enabled by the expanded TMX pipeline. Against the backdrop of U.S.-China trade frictions, China has sharply reduced crude imports from the U.S. while turning to Canada at an unprecedented scale — a vivid illustration of capital flows driven by energy security considerations.

III. A Balanced Assessment: Not "Unwilling to Invest," But "Investing More Selectively"

Synthesising the evidence on both sides, this author believes the panelist's observation that China is "not necessarily looking to acquire and/or invest in Canadian production facilities at this time" should be understood as a characterisation of the complexity of the current investment climate, rather than a definitive conclusion about Chinese investment appetite.

A more accurate description might be: Chinese enterprises are not "unwilling to invest" in Canada's LNG sector, but rather are "evaluating carefully and investing selectively." This manifests in the following ways:

• First, existing investments have formed a strategic foothold. PetroChina's 15% equity stake and US$3.46 billion investment in LNG Canada is not a tentative "trial" but a deep strategic commitment. The successful first LNG shipment marks the beginning of the harvest phase of this strategic positioning.

• Second, incremental investment is under active discussion. LNG Canada Phase II expansion is on the agenda, and Sinopec has engaged in high-level dialogue with British Columbia on LNG cooperation. A provincial premier personally visiting China to attract investment is hardly evidence of a lack of interest.

• Third, investment approaches are becoming more flexible and diversified. In the face of regulatory and geopolitical uncertainty, Chinese companies are increasingly favouring consortium-based investment, minority equity participation and multi-country partnership structures to mitigate political and commercial risks, rather than pursuing majority-controlled acquisitions.

• Fourth, the policy window is opening. The signing of the bilateral energy cooperation MOU and the launch of ministerial-level energy dialogue in 2026 mark the entry of Canada-China energy cooperation into a new institutional framework. Canada's urgent need to reduce over-reliance on the U.S. and China's pursuit of supply diversification are closely aligned strategic imperatives.

Conclusion

The panelist's observation reflects an objective reality: in the current international political and economic environment, Chinese investment in Canadian energy does indeed face more obstacles and uncertainties than in the past. But to extrapolate from this to "China does not want to invest" is to overlook a substantial body of evidence — both what has already happened and what is actively unfolding.

From the successful commissioning of LNG Canada Phase I, to active discussions on Phase II expansion, from the signing of a bilateral energy cooperation MOU at the head-of-government level, to a provincial premier's personal visit to China to attract investment — Chinese energy companies' interest in and participation in Canadian LNG is real, sustained and strategically deep-rooted. The observation that China is "not necessarily looking to acquire or invest" is more accurately interpreted as: Chinese enterprises will not invest at any cost or regardless of risk; rather, they are actively seeking opportunities that are risk-manageable, offer attractive returns and align with China's national energy security strategy. Amid the current global LNG supply-demand landscape, investment opportunities that strike an effective balance between project implementation efficiency, time-to-market and capital allocation merit particular attention from market participants.

---

Disclaimer: This article is for general informational purposes only and does not constitute legal or investment advice. Specific circumstances should be discussed with qualified professionals.

About FirstCapital Advisers

FirstCapital Advisers is a boutique cross‑border advisory firm serving corporations and families. Our “Twin Pillars” strategy – Corporate & Institutional Advisory and Private Wealth & Global Mobility – offers one‑stop solutions ranging from corporate finance and cross‑border M&A to global asset allocation and residency/citizenship planning. If you would like to learn more about family wealth planning, please contact our team.