Mitsubishi’s LNG Strategy: Prioritizing Canada Over Alaska Amid Market Volatility
3min read The global LNG market is at a crossroads, with projects like Canada’s LNG Canada and Alaska’s proposed LNG venture vying for capital and geopolitical relevance. Mitsubishi Corporation, a key stakeholder in both, faces a strategic dilemma: focus on completing the nearly finished LNG Canada project or pursue the high-risk, high-reward Alaska LNG project. Recent statements from Mitsubishi’s CEO underscore a clear priority—finalize LNG Canada’s success before considering Alaska. This article dissects the rationale behind this decision, the risks involved, and what investors should monitor.
The LNG Canada Project: Nearing Completion, But Challenges Linger
LNG Canada’s first phase is 95% complete and set to begin production by mid-2025, as confirmed by Mitsubishi’s Executive Vice President Masaru Saito. The project’s success hinges on two pillars: its low emissions profile (half the GHG emissions of standard LNG) and its strategic location on Canada’s west coast, enabling direct access to Asian markets without Panama Canal transits. Mitsubishi’s 15% stake positions it as a critical partner in what will be one of the world’s largest LNG facilities.
However, delays in the Phase 2 expansion—a 14-million-tonne-per-year capacity boost—threaten long-term profitability. While Mitsubishi aims to boost equity LNG production to 18 million mt/year by the early 2030s, the Phase 2 FID has been repeatedly postponed. As of Q2 2025, unresolved Indigenous benefit agreements, depressed LNG prices, and regulatory uncertainties have pushed the decision to late 2025 at best.
Alaska LNG: A Costly Gamble with Uncertain Returns
The Alaska LNG project, with Mitsubishi holding a 5.2% stake, represents a vastly different challenge. The $50 billion venture—a 1,300-km pipeline and 20-million-mt/year plant—faces massive financial and logistical hurdles. Prior backers like ExxonMobil withdrew in 2016 over economic viability, and current partners (including Mitsubishi) must navigate $50 billion in costs, regulatory approvals, and competition from Canada’s cheaper, faster-to-market LNG Canada.
Key risks include:
1. Market Saturation: Asia’s LNG demand faces competition from Australia, Qatar, and Russia, with prices below breakeven for many projects.
2. Geopolitical Uncertainty: While U.S. policies like tariff exemptions for Asian buyers could sweeten the deal, Alaska LNG’s timeline stretches into the 2030s, making it a long-shot for returns.
3. Mitsubishi’s Limited Commitment: The firm has not formally committed to Alaska LNG, prioritizing existing projects like Browse Basin in Australia and LNG Canada’s expansion.
Why Mitsubishi is Right to Focus on LNG Canada
Mitsubishi’s CEO is correct to prioritize LNG Canada’s completion. Key reasons include:
- Low-Risk, High-Reward Asset: LNG Canada’s Phase 1 has secured long-term offtake agreements with Asian buyers, ensuring steady revenue once operational. Its low-emission profile aligns with Japan’s 2040-41 Strategic Energy Plan, targeting 53–74 million mt/year of natural gas demand.
- Cost Synergies: Expanding Phase 2 using existing infrastructure reduces upfront costs, a critical factor given rising EPC prices.
- Strategic Flexibility: Delaying Alaska LNG allows Mitsubishi to avoid a multi-decade financial commitment until market conditions stabilize.
In contrast, Alaska LNG’s $50 billion price tag and competition from cheaper projects make it a high-risk, low-priority venture. Even if Mitsubishi invests, returns would be decades away, diverting capital from surer bets.
Investor Takeaways
- Monitor LNG Canada’s FID Timeline: A late-2025 decision on Phase 2 will hinge on Indigenous agreements and LNG price recovery.
- Watch Asian Demand Trends: Growth in AI/data center energy needs and coal-to-gas switching in Asia could boost LNG Canada’s profitability.
- Avoid Overhyping Alaska LNG: Mitsubishi’s involvement remains exploratory; focus on its core projects for near-term returns.
Conclusion
Mitsubishi’s strategic focus on LNG Canada reflects a disciplined approach to capital allocation. With LNG Canada’s Phase 1 on track for mid-2025 production and its low-emission advantages, the project is poised to deliver $13–18 billion in annual revenue by the late 2020s, assuming full capacity utilization. Meanwhile, Alaska LNG’s staggering costs and timeline make it a distant second priority.
Investors should prioritize Mitsubishi’s ability to secure Phase 2 FID and navigate Indigenous partnerships, while remaining cautious about Alaska’s speculative allure. As the CEO’s statement underscores, success in Canada is not just a priority—it’s the foundation of Mitsubishi’s LNG future.
