Will the Germans or South Koreans emerge as Canada’s sub deal winner?

By

Judy Trinh

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Updated: June 29, 2026 

OTTAWA -- Choosing the winning bid for Canada’s next generation submarine fleet is coming down to the wire. Analysts say the race between the two contenders, German-Norwegian consortium ThyssenKrupp Marine Systems (TKMS) and South Korea’s Hanwha, is too close to call.

Prime Minister Mark Carney has previously said that a decision would be made before the end of June, but sources tell CTV News that the announcement will be delayed a few days. It will likely come before Carney leaves for the July 7 NATO leaders’ summit in Ankara, Türkiye.

The HMCS Chicoutimi seen departing Thursday, March 2, 2017, during then-prime minister Justin Trudeau's visit to CFB Esquimalt in Esquimalt, B.C. THE CANADIAN PRESS/Chad Hipolito

The members of the alliance are under pressure from the United States to map out how they will reach the new defence spending target of five per cent of their gross domestic product by 2035. Earlier in June, U.S. Secretary of War Pete Hegseth said NATO partners must show a “credible plan” at the summit of how they will spend at least 3.5 per cent of GDP on core defence such as troops, weapons and equipment.

Only one of the Royal Canadian Navy’s existing four Victoria class submarine is operational. The others are under maintenance.

Canada’s patrol submarine project involves procuring up to 12 submarines and paying for 30-50 years of maintenance. The contract over its entire lifespan has an estimated value of more than $100 billion. The submarines are expected to be a primary example of how Canada plans to increase its spending to reach the new NATO target.

Last week, Defence Minister David McGuinty said it’s unlikely that the submarine contract will be split between the two competitors because it would make it more expensive and harder to manage.

“If you split a fleet of any kind, you end up in many ways with compounding costs. You need to service, you need to maintain, you need to sustain two different fleets. That’s a more complicated matter for any country,” McGuinty said from Tokyo, where he was participating in a trade mission. “But we’re evaluating all these things, and we’ll see when we get there.”

Dan Kerry, a defence analyst with Deloitte, calls this a “procurement with purpose.”

“We’re looking not just to purchase a submarine, but we’re entering into a long-term economic and military engagement,” Kerry said in a Zoom interview.

“I would say that the reason we haven’t had a winner yet is because it’s incredibly close. Both are incredibly capable submarines, and both companies have put on very strong economic and political offers to Canada.”

Prime Minister Mark Carney climbs out of a 212A class submarine under maintenance as he tours ThyssenKrupp Marine Systems (TKMS), a submarine building facility in Kiel, Germany, on Tuesday, Aug. 26, 2025. THE CANADIAN PRESS/Christinne Muschi

How will they be judged?

The Defence Investment Agency, a newly created body, is responsible for evaluating the two bids.

Doug Guzman is the agency’s CEO. He was appointed by the prime minister and has three decades of experience in the global banking and financial sectors but does not have procurement experience.

The federal government’s evaluation criteria is divided into four sections:

• Submarine platform, weighted 20 per cent. This would pertain to the technical aspects of the vessel.
• Sustainment, weighted 50 per cent and includes the maintenance plans over the submarine’s lifespan.
• Financial, weighted 15 per cent and includes how much it would cost to build the submarine.
• Strategic and Economic Partnerships, weighted 15 per cent.

Guzman has said that the two foreign competitors need to put as many Canadian elements in their bids as possible if they want to win.

TKMS and Hanwha submitted their bids on March 2. The two suppliers were then given an extension until April 29 to sweeten their bids.

“We’re starting at the pointy end of the spear, which is the folks that are trying to sell us stuff, and we’re looking them in the eye and saying ‘you need to make that as Canadian as you can if you want to be favoured in the process,’” Guzman said during his April appearance before the House Standing Committee on National Defence.

Prime Minister Mark Carney smiles as he climbs down a ladder into a submarine during a tour of the Hanwha Ocean Shipyard in Geoje Island, South Korea, on Thursday, Oct. 30, 2025. THE CANADIAN PRESS/Adrian Wyld

Who can deliver the subs faster?

The Royal Canadian Navy plans to retire its aging fleet of submarines in 2035. A submarine takes about six years to build.

The South Koreans have already sailed the KSS-III across the Pacific to show it off, while the Type 212-CD has yet to roll off a German assembly line.

Hanwha says it can deliver Canada its first replacement submarine by 2032, and three more by 2035. The company says that each submarine will cost around $2 billion to build, and that early replacement of its aging Victoria class fleet will save taxpayers approximately $1 billion in maintenance costs.

TKMS has not provided CTV News a cost estimate for its vessels but has said it is willing to speed up delivery of the submarines by moving up Canadian orders in its production queue.

The German shipbuilder says it can deliver four submarines to the Canadian navy by 2036.

The Germans and Norwegians are offering to “sail together” on their boats as one NATO allied unit and give Canada access to TKMS facilities in Europe, India and Singapore.

“We make clear this is not only about economic benefits, that this is about strategic advantages,” German Defence Minister Boris Pistorius said during a visit to Ottawa earlier in June.

“It’s all about unity of the fleet – about interoperability.”

Meanwhile, the Republic of Korea Navy has offered to provide 200 Canadian submariners with a training facility equipped with a tactical simulator on its navy base in Jinhae.

Prime Minister Mark Carney, right, and ThyssenKrupp Marine Systems CEO Oliver Burkhardt, centre, speak with Captain Jeremy in front of a 212A class submarine under maintenance as they tour the submarine building facility in Kiel, Germany on Tuesday, Aug. 26, 2025. THE CANADIAN PRESS/Christinne Muschi

Economic impact

Both defence corporations are promising thousands of jobs and billions in economic spinoffs but are using different calculations.

Hanwha says it has signed more than 80 partnerships, which according to accounting firm KPMG could turn into more than $70 billion in economic opportunities, with 430,000 jobs projected to be created from 2026 to 2044.

Over those 18 years, Hanwha’s investments could contribute $96.3 billion to Canada’s gross domestic product.

TKMS also put out its economic projections this week. It has inked 19 memorandums of understanding and says there are more partnerships that it has signed but has yet to make public.

There are several instances of Canadian partners playing both sides and signing MOUs with the South Koreans and the Germans.

TKMS is pledging $160 billion in economic activity, $86 billion in GDP and more than 650,000 jobs over the entire project. However, it did not provide a time frame for its calculations. The lifespan of one submarine can range between 30 and 50 years.

National Defence Minister David McGuinty, back left to right, South Korea Prime Minister Kim Min-seok, Prime Minister Mark Carney and Hahnwa Group Vice-Chariman Kim Dong Kwan speak amongst themselves after touring a submarine at the Hanwha Ocean Shipyard in Geoje Island, South Korea, Thursday Oct. 30, 2025. THE CANADIAN PRESS/Adrian Wyld

Industrial benefits for key sectors

The federal government has been clear that it wants to see economic benefits in the bids that can help the industries hurt most by the U.S. tariff war such as steel, aluminum, autos and forestry.

Industry Minister Melanie Joly has signed similar agreements with both South Korea and Germany to increase collaboration in the auto sector, which includes advancing hydrogen-powered and electric vehicle manufacturing opportunities and battery production.

Sources previously told CTV News that TKMS did not have a vehicle component to its initial bid. It’s unclear if the proposal was revised to include autos after the deadline extension.

Meanwhile, Hanwha has two auto sector lifelines incorporated into its bid.

The South Koreans have offered to build hydrogen trucks and infrastructure in Canada as part of its Project Beaver proposal. The Automotive Parts Manufacturers’ Association (APMA) also entered into a partnership with Hanwha to build armoured vehicles. The agreement gives the APMA 51 per cent ownership and would use materials from Algoma steel in constructing the howitzers.

Both the Germans and the Koreans are proposing to manufacture torpedoes in Canada and buy billions in liquified natural gas.

According to CBC News, the German government is backing major investments in the Port of Churchill in Manitoba to help get critical minerals and LNG to market. It also wants to invest in a carbon capture facility in Alberta.

The Royal Canadian Navy hosts the Republic of Korea Navy KSS-III submarine, known as Dosan Ahn Chang-ho, and the ROKS Daejeon frigate during a welcome ceremony at CFB Esquimalt in Esquimalt, B.C., on Monday, May 25, 2026. THE CANADIAN PRESS/Chad Hipolito

NATO and Europe vs. Indo-Pacific

While the focus of the federal government during this trade war has been on economic benefits, analysts say Carney may make his final decision based on a political calculation. Does he go with what is tried and true, or does he chart a new course?

David Perry, president of the Canadian Global Affairs Institute, says that the German-Norwegian proposal has the advantage of “familiarity from the NATO context and of what Canada works with in terms of that operational interoperability framework.”

Perry says the German-Norwegian consortium provides an opportunity to have more ready access towards northern operations, which is important to Canada’s arctic defence strategy.

However, Perry points out that if the government were to select Hanwha, it would be a “tangible expression of a really concrete defence linkage across the Pacific.”

“If we were to get a major source of supply from Korea, that would really go a long way to putting some significant teeth into our Indo-Pacific strategy.”

Perry said choosing the Korean bid would also provide greater access to Asia-Pacific region where the economy is expanding at  faster rates.

The International Monetary Fund projects growth across the Indo-Pacific region between four and six per cent compared to the sluggish EU at 1.3 per cent.

Regardless of which company is chosen, whether TKMS or Hanwha, Perry says Canadians will benefitOpens in new window

Judy Trinh

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Senior Correspondent, CTV National News

Blockbuster $22B Shell-ARC deal bodes well for expansion to LNG Canada, experts say

ByThe Canadian Press

Published: April 28, 2026

Wudang, a liquefied natural gas (LNG) tanker, fills up at an LNG Canada facility, in an aerial view, in Kitimat, B.C., on Thursday, Nov. 13, 2025. THE CANADIAN PRESS/Ethan Cairns

CALGARY — Global energy heavyweight Shell PLC's plan to buy one of Canada's biggest natural gas producers bolsters the likelihood an expansion of the LNG Canada plant will move ahead, industry experts say.

The deal to buy Calgary-based ARC Resources Ltd. is valued at $22 billion, accounting for the target company's debt. It gets Shell access to ARC's holdings in the prolific Montney shale formation that last year produced 374,000 barrels of oil equivalent per day.

And that means a steady supply to feed into the LNG Canada facility in Kitimat, B.C., where gas piped from northern B.C. and Alberta is chilled into a liquid state, loaded onto specialized tankers and sent to high-demand Asian markets.

"It's a good signal for the second phase of that LNG project that the government is looking to speed-track," said Tom Pavic, president of Sayer Energy Advisers in Calgary, calling the Montney a "world-class" resource with attractive economics.

Shell owns 40 per cent of LNG Canada alongside Japanese, Malaysian, Chinese and South Korean partners. The first phase of the project — the first of its kind in Canada — started up last summer. The consortium is contemplating doubling its capacity in a second phase, but a final investment decision has not yet been taken.


Phase 2 of LNG Canada has been referred to the federal major projects office, which was set up last year to speed along approvals for projects deemed in Canada's national interest. A project description on the office's website says an expansion would make LNG Canada the largest facility of its kind in the world and bring in $33 billion in private-sector capital to Canada.

Prime Minister Mark Carney called Shell's deal for ARC a "vote of confidence in Canada" as he headed to a cabinet meeting on Tuesday morning.

However, environmental advocates have decried the federal government's focus on fossil fuels in its push for "nation building" infrastructure.

The acquisition would elevate Shell from the seventh-biggest producer in the Montney to the No. 2 spot, behind Denver-based Ovintiv Inc., Andrew Dittmar, principal analyst at Enverus Intelligence Research, wrote in a report.

Ovintiv itself bulked up in the Montney earlier this year, closing its $3.8-billion acquisition of NuVista Energy Ltd.

Shell's interest in LNG Canada is an "important strategic component of the deal" as it would help get more Montney gas to global markets that would pay a premium price, wrote Dittmar.

"LNG Canada is geographically advantaged for shipping LNG to Asian markets that gives it a competitive edge over U.S. Gulf Coast competitors," he wrote.

The deal comes as the war in the Middle East rattles global energy markets. The fighting has knocked out production from Qatar, one of the world's biggest LNG players, and countries in Asia and Europe have seen massive natural gas price spikes as a result.

Analysts at CIBC World Markets wrote in a report last week that "Canadian LNG projects look increasingly attractive" amid the war, given this country's relatively low geopolitical risk.

Sanctioning of LNG Canada Phase 2, and the Ksi Lisims LNG plant proposed further up the West Coast near the Alaska border, have a "high likelihood" this year, the CIBC report said.

"The conflict in the Middle East highlights the advantages of Canadian LNG projects as reliable providers of liquefied natural gas from a stable jurisdiction with proximity to Asia."


This report by The Canadian Press was first published April 28, 2026.

Companies in this story: (TSX:ARX)

Lauren Krugel, The Canadian Press

South Korea Has An Oil Problem. Canada Is Helping To Fix It

By Andrew Topf - Apr 15, 2026

• The Strait of Hormuz blockade and failed Iran talks are triggering global fuel shortages, forcing rationing in multiple countries and driving up energy costs.
• 
  
• Major importers like South Korea are scrambling to diversify supply, with Canadian crude emerging as a competitive alternative due to price and availability.
• 
  
• Canada’s Trans Mountain pipeline is enabling a major shift in global oil flows, boosting exports to Asia and reducing reliane on the U.S. market.

Negotiations for an end to the Iran war have so far failed, and the Strait of Hormuz remains effectively closed. 

On Monday, the US military started blockading ships entering and exiting Iranian ports. President Trump said Iranian ships would be “immediately eliminated” if they approach the blockade, which is meant to force Tehran back to negotiations.

At least five countries — Sri Lanka, Myanmar, Cambodia, Bangladesh, and Slovenia — are rationing fuel and implementing mandatory purchase limits to conserve supply.

Major oil-importing nations are seeking Middle East workarounds to preserve a steady supply of oil and natural gas.

Wood Mackenzie, a commodities consultancy, estimates the biggest loser from the Hormuz closure will be South Korea, the world’s fourth largest oil importer, while Italy will be the hardest hit in Europe.

If the war continues and fuel costs remain high all year, South Korea would face a 74% increase in the cost of a kilowatt-hour of electricity, while Italy would see an 80% jump, CBC News reports. Japan and the UK, respectively, could face a 41% and a 27% increase.

Until recently, the United States was the only destination for Canadian crude, buying an eye-popping 96%.

The reason Canada had one single customer for its oil was not out of choice but because most oil pipelines run north-south, to refineries in the US Midwest and the Gulf Coast.

Attempts to build pipelines east to west — Energy East, a proposed line to move Alberta crude to New Brunswick and Quebec, along with the Northern Gateway pipeline that would have run across northern Alberta and British Columbia to tidewater — both failed due to local opposition.

The Americans effectively held Canadian oil hostage. Alberta crude, which is heavy and contains impurities like sulfur, was sold at a discount to the US benchmark WTI, sometimes up to $20 a barrel less.

As a video explains, Billions of dollars evaporated every year, simply because Canada had no exit. That’s the problem Trans Mountain was built to solve.

Everything changed in 2024 with the completion of the Trans Mountain Expansion Project, a twinned pipeline that extended from Edmonton, Alberta, to the Westridge Marine Terminal in Burnaby, a suburb of Vancouver.

When it came online in May 2024, TMX pushed capacity from 300,000 to 890,000 barrels per day. For the first time, Canadian oil could reach the Pacific coast at genuine commercial scale.

Skeptics complained that the ballooning cost of the pipeline — nearly CAD$34 billion — and projected lower demand for oil due to electrification and renewables — would make TMX a white elephant.

That, high shipping fees and the fact that Vancouver’s port could only handle Aframax-class tankers, too small for the VLCC supertankers that Asian markets typically rely on, all seemed to spell doom for TMX.

Then came the re-election of President Donald Trump.

When the mercurial POTUS slapped a 10% tariff on Canadian energy imports in early 2025, it hurt Alberta oil exporters and sent a chill through the Canadian oil patch. Suddenly Canada’s guaranteed energy customer didn’t look so reliable.

Enter TMX, the pipeline many loved to hate, strengthened by a change of direction by the Canadian government in favor of resource development, and diversification of Canadian exports away from the United States.

When the US and Israel attacked Iran on Feb. 28, the Strait of Hormuz, through which 20% of the world’s daily oil supply passes through, was blocked within 72 hours.

South Korea, which gets nearly 70% of its oil supply from the Middle East, suddenly faced an energy crisis. Big Korean refiners like HD Hyundai Oil Bank and SK Energy activated emergency diversification plans. They needed oil, fast. The product needed to be price-competitive, available immediately, and most importantly, didn’t have to run any geopolitical gauntlets.

Canada’s TMX pipeline and the oil stored at Westridge Terminal was seen as a good option because it fit all three criteria. Moreover, Korea was already doing business with the terminal.

To explain, we need to go back to 2023, when Canada exported exactly $0 worth of oil to South Korea — despite sitting on the world’s fourth largest proven oil reserves.  

After the TMX pipeline was completed in May 2024, Asian buyers started making enquiries. South Korea was front of the line.

GS Caltex took the first test cargo back in September 2024, 300,000 barrels shared with Japan's ENEOS. HD Hyundai Oil Bank followed with 548,000 barrels in April 2025. SK Energy is currently in long-term contract negotiations.

Total Canadian oil exports to South Korea from May 2024 through September 2025 reached CAD$411 million — from zero to 411 million dollars in under 17 months.

In TMX's first year of operation, Canadian oil exports to markets outside the United States jumped nearly 60%, hitting a record of roughly 183,000 barrels per day. China overtook the US to become the pipeline's single largest customer.

Japan, India, Brunei, Taiwan are all taking deliveries.

Another video source reports that, in spring 2026, Korean refiners facing the worst Middle Eastern supply disruption in a generation began making phone calls that would have seemed absurd just three years ago. Not to Houston, not to Riyadh, to Calgary. A Korean government official overseeing the country's oil imports confirmed the shift in terms that leaves zero room for ambiguity.

Korean refiners are actively bringing in Canadian crude as an alternative supply amid the current inability to secure Middle Eastern barrels.

Back to the three criteria South Korea was looking for, amid the Middle East oil crisis, Canada’s cheap crude, known as Western Canadian Select, beat its competitors on price.

The landed cost of Canadian crude in Korea was $64.65 per barrel as of 2025. American crude, $73.64. Saudi crude, $73.80. Canadian oil is arriving in South Korea nearly $10 cheaper per barrel than the competition.

A spokesman for HD Hyundai Oil Bank confirmed the company plans to gradually increase Canadian volumes going forward. Two of Korea’s largest energy companies, SK Energy and GS Caltex, are also reportedly actively pushing to secure Canadian supply.

While the amount of oil South Korea is importing from Canada is currently small — only about half a percent of total imports — changing trading partners takes time and shipment volumes are incremental.

Consider: Canadian oil exports to Korea went from zero to 4.54 million barrels in just two years. Within the next several years, Canada could be supplying tens of millions of barrels annually. And then there’s this:

Seoul has authorized its refiners to exchange crude imported from non-Middle Eastern countries for government-held Middle Eastern reserves. 20 million barrels are slated for these swaps, with 2 million already released.

This mechanism essentially gives Korean refiners a financial incentive to buy Canadian. The government is actively subsidizing diversification away from the Middle East, and Canada is positioned to be a primary beneficiary.

By Andrew Topf for Oilprice.com