Canada’s LNG Pivot: Infrastructure, Diversification, and the Shifting Dynamics of North American Energy Dependence

Canada is entering a critical phase in the expansion of its liquefied natural gas (LNG) export capacity. The inauguration of the LNG Canada facility in Kitimat, British Columbia, marks a significant shift for a country whose energy exports have long been defined by near-exclusive reliance on the United States. By opening direct access to overseas markets, this project represents a structural departure from Canada’s traditional dependence on its southern neighbour.

The launch of LNG Canada Phase I, as well as the advancement of several additional projects, coincides with a broader reassessment of Canada’s position in the global economy. In the context of U.S. industrial reshoring and a retreat from long-standing neoliberal commitments, recent American tariffs have underscored the risks of over-concentration in a single export market. As a result, Canada’s emerging LNG capacity is not merely an economic development: it carries geopolitical implications as the country seeks to diversify its trade relationships and strengthen ties with Asian and European markets.

Privileged with nearly every natural resource which is sought after, none has been as valuable and important to Canada as natural gas. With 87 trillion cubic feet of proven reserves at the time of writing, Canada has enormous natural gas reserves, ranking globally as the fifth largest natural-gas producer. Notwithstanding this immense source of wealth and energy security, Canadian energy exports are characterized by their quasi-total reliance on the United States. 39 pipelines connecting the two countries have meant that Canadian energy exports are tied to the ebbs and flows of their southern neighbour’s demand for gas and consequently are vulnerable to political crises and trade barriers. However, this paradigm is now finally shifting, and with the construction and planned development of multiple LNG export facilities, Canada has begun showing signs of wanting to take its destiny into its own hands.

Canada still has a lot to do if it intends to catch up with other LNG-exporting nations. Dependent as it has been on US exports, almost all of its gas export infrastructure is geared towards cross-border transit with the United States. In 2023, the United States received approximately 84 billion cubic metres of natural gas from Canada. Until 2025, Canada had no infrastructure to export LNG beyond the United States. Limited market access to has meant that in the past Canadian producers have had to trade natural gas at a discount compared to their American counterparts, with no other available buyers to be reached. These exports in turn have had to compete with a United States which in recent years has increased its domestic gas production, displacing Canadian natural gas and adding downward pressure on Canadian export prices. Exacerbated by the recent tariff war with the American administration and encouraged by the growing demand for LNG from Asian and European countries, Canada has been forced to reckon with its flagrant vulnerabilities and seek to shield itself by expanding its LNG-export infrastructure. On the 13^th of November, Canadian Prime Minister Mark Carney unveiled a second tranche of major projects, with LNG infrastructure figuring among the projects which aim to strengthen the Canadian economy.

Currently, seven projects in different stages of development are aimed at solving the problem of overreliance on American exports and strengthening Canada’s position as an energy producing nation. The first facility to have been completed this year is known as LNG Canada Phase I, located on Canada’s west coast. With completion of the other facilities expected between 2027 and 2030, the Canadian government anticipates it will be able to produce 50.3 million tonnes of LNG per year.

This shift in exporting capacity comes at a time when countries around the world are working assiduously on reducing energy dependencies and other strategic vulnerabilities. Russia’s invasion of Ukraine in 2022 fundamentally reshaped the global gas market in this regard. Before the war, over 40% of Europe’s natural gas imports came from Russia via pipelines. Sanctions and import bans have since cut pipeline exports from Russia to the European Union by roughly 80%, forcing European states to turn rapidly towards LNG imports. By the end of 2022, Russia’s share of EU gas imports fell from more than 40% to under 15%. It was during this period that the United States emerged as Europe’s primary LNG supplier, with EU imports of U.S. LNG nearly tripling and accounting for almost half of the bloc’s purchases.

Notwithstanding evident European demand for LNG, the location of Canada’s export facilities on the west coast makes evident Canada’s intention of accessing Asian markets, where it enjoys significant advantages compared to other countries. Decisively closer to Asia than other major exporters, LNG shipments from Canada’s West Coast to Asia takes on average 10 days, half of what is required to deliver LNG from the US Gulf Coast. There is also price advantages associated with importing Canadian LNG compared to other nations, as lower ambient temperatures in its western region reduce the energy required for liquefaction, thereby lowering costs. LNG from British Columbia enjoys an advantage in efficiency of over 26% when compared with American LNG liquefaction processes, rising to 32% and 34% when compared with Qatar and Australia respectively. Asian nations represent the largest importers of LNG, representing 65% of total LNG imports in 2023. Moreover, the demand for LNG in Asian countries is forecast to increase in coming years, thereby reinforcing the advantages Canada has in pursuing a diversified export strategy.

The recent bellicose attitude displayed by the United States in regard to Canada has meant that there has seldom been a more decisive moment to address the structural asymmetry Canadian exports face with their natural gas. LNG export capacity offers a concrete pathway to rebalance this relationship. Canadian LNG facilities on its Pacific Coast allow gas to be shipped directly to Asia, bypassing chokepoints such as the Panama Canal and competing with U.S. Gulf Coast routes that require longer journeys and higher shipping costs. Policy analysts have explicitly recommended expanding exports to Europe and China as a means of reducing reliance on U.S. refiners and increasing Canada’s global leverage. Similarly, the Canada Global Affairs Institute has argued that LNG exports represent a strategic opportunity to treat Canada’s natural resources as a geopolitical asset rather than just a commodity. Diversifying into long-term supply contracts with European and Asian buyers would lessen market-concentration risk, allow Canadian gas to be priced against global LNG benchmarks instead of solely U.S. hubs, and support a more autonomous foreign policy.

For decades, the North American energy system entrenched a pattern in which Canada relied heavily on a single buyer and accepted structural discounts as the cost of access. However, the global economy is increasingly shaped by geoeconomic competition: tariffs, sanctions, control over trade routes, and strategic resources have become instruments of statecraft. In this novel global context, exporters must seek not only revenue but also leverage and economic resilience. Canada’s increasing LNG export capacity, combined with projects like the Trans Mountain Pipeline expansion, is part of a broader attempt to move towards a more assertive global position.

Significantly for the Americans on the other hand, it signals that even close allies are hedging against U.S. policy volatility and looking to reduce their vulnerability to American economic coercion and domestic political swings. This shift mirrors patterns elsewhere: European efforts to reduce reliance on Russian gas, Asian diversification among suppliers, and the rise of alternative groupings such as BRICS, all point towards an increasing multipolar world, where interactions between states will be more transactional and subject to national security considerations. Looking toward 2030 and beyond, Canada’s LNG trajectory will depend on whether it can convert its evident resource and geographic advantages into timely, competitive projects. The current slate of projects on its West Coast, centred on LNG Canada, Woodfibre, Cedar LNG, Ksi Lisims, Tilbury Phase 2, and others, represents a potential paradigm shift for Canadian foreign policy and economic security.

Risks are equally clear. The Institute for Energy Economics and Financial Analysis anticipates a global LNG supply glut in the second half of this decade, led by an increase in production capacity in Qatar and the United States, which could depress prices and threaten project economics. Domestic regulatory uncertainty, climate policy constraints, and environmental opposition could further slow or shrink the build-out. In this context, policy stability, streamlined approvals, and a clear national strategy for LNG will be decisive for its success.

Canada’s LNG pipeline and export-terminal build-out marks an important inflection point in the country’s energy strategy. After years of stalled projects and missed opportunities, the first large-scale LNG exports from Kitimat have begun to leave the shore, and a broader set of West Coast projects is moving forward. These developments are not solely about volume or price, they are about rebalancing a structural dependence on the United States that has left Canada exposed to trade disputes, policy shocks, and persistent discounts.

By leveraging its natural gas endowment, geographic advantages, and emerging LNG infrastructure, Canada has the opportunity to reposition itself within a more multipolar and contested global energy system. The core geopolitical implication is clear: even close allies are seeking diversification, resilience, and reduced single-market exposure. Whether Canada can seize this moment depends on its willingness to treat energy as a strategic asset and to align domestic policy with that ambition.