Three people familiar with the process said Apollo Global Management, Blackstone and KKR remain the active bidders competing to acquire a substantial portion of energy major Shell’s interest in LNG Canada. The auction, managed by Shell, attracted attention from other large money managers and infrastructure investors before narrowing to the three asset managers, the people said. Those individuals asked not to be identified because the bidding is confidential.
Sources who spoke on condition of anonymity indicated the transaction could be valued well above $10 billion and may reach up to $15 billion. Any final arrangement would allow Shell to monetize a large part of its 40% holding in LNG Canada while bringing fresh capital into the export facility ahead of any potential expansion plans.
LNG Canada began producing in June and is noted in industry commentary as the first major liquefied natural gas terminal in North America with direct access to the Pacific Ocean, enabling direct shipments to buyers in Asia. Shell has indicated it plans to sell exposure in both the first and second phases of the project to a single bidder, rather than parceling the two phases between separate buyers, according to the sources involved in the process.
Any one of Apollo, Blackstone or KKR could ultimately emerge as the purchaser, or Shell could opt to retain some or all of its stake, the people said. Shell declined to comment. Shell Chief Executive Wael Sawan was quoted this week as saying the company is "very comfortable" with its 40% stake in LNG Canada and that it was "not necessarily looking at reducing our equity interest." At the same time, Sawan said Shell was interested in generating cash from lower-return parts of its business and from assets where it is not the natural owner.
Apollo, Blackstone and KKR declined to comment on the auction, according to the sources. The potential buyers are among the largest global asset managers, and each is reported to be bolstering its bid with capital drawn from affiliated insurance businesses. Specifically, the financing being used includes Apollo’s Athene, Blackstone Credit & Insurance, and KKR’s Global Atlantic, the people said.
Institutional investors have increased the use of insurance assets in recent years as a relatively low-cost source of funding for long-duration investments. The profile of infrastructure assets - characterized by lower risk and extended time horizons - makes them a commonly preferred target for such pools of insurance capital, the sources noted.
LNG Canada’s ownership includes multiple partners alongside Shell: Japan’s Mitsubishi Corp, Malaysia’s Petronas, and MidOcean, a joint venture composed of investment firm EIG and Saudi Aramco. Shell is the largest backer of the project.
Interest in North American energy infrastructure has risen in recent weeks, the sources said, as assets in the region have benefited from the ability to move oil and gas without the constraints affecting Middle Eastern supply chains amid the U.S.-Iran war. That dynamic, according to the people familiar with the auction, has increased the allure of projects like LNG Canada for global investors seeking access to export capacity capable of serving Asian demand.
Shell announced on Monday a separate agreement to buy Canadian natural gas producer ARC Resources for $16.4 billion. That deal, the people said, underscores Shell’s opportunity to reallocate capital by selling a large stake in LNG Canada.
Blackstone has precedent for deploying insurance-backed capital into energy infrastructure. Last year the company used its insurance unit to support a joint venture with EQT that holds a number of stakes owned by natural gas producers across major U.S. pipeline assets. The current auction shows a similar financing pattern, with insurance balance sheets being tapped to support ownership of long-dated infrastructure cash flows.
As the auction proceeds, the final buyer, the price achieved, and how much of the 40% stake Shell ultimately parts with remain uncertain. The transaction, if completed within the indicated range, would represent one of the larger private acquisitions of North American liquefied natural gas export capacity in recent memory and would further highlight the growing role of insurance capital in infrastructure investment.