Shell: Global LNG demand to hit 700 mln tonnes by 2040

The Hague-based LNG giant Shell expects the global LNG demand to double to 700 million tonnes by 2040, as gas’ role in shaping the lower-carbon energy system grows. 

In 2019, the global demand for liquefied natural gas (LNG) grew by 12.5 percent to 359 million tonnes according to Shell’s annual LNG Outlook, a significant increase that bolsters LNG’s growing role in the transition to a lower-carbon energy system.

Shell noted in its outlook that an industry record of 40 million tonnes of additional supply became available in 2019, and the year also saw record investment decisions in liquefaction capacity of 71 million tonnes.

“The global LNG market continued to evolve in 2019 with demand increasing for LNG and natural gas in power and non-power sectors,” said Maarten Wetselaar, Integrated Gas and New Energies director at Shell. “Record supply investments will meet people’s growing need for the most flexible and cleanest-burning fossil fuel.”

“While we see weak market conditions today due to record new supply coming in, two successive mild winters and the Coronavirus situation, we expect equilibrium to return, driven by a combination of continued demand growth and reduction in new supply coming on-stream until the mid-2020s,” Wetselaar said.

Europe absorbed the majority of 2019 supply growth as competitively-priced LNG furthered coal-to-gas switching in the power sector and replaced declining domestic gas production and pipeline gas imports.

New spot-trading mechanisms and a wider variety of indices used for long-term contracts point towards LNG becoming an increasingly flexible commodity.

There was a modest rise in imports to Asia in 2019, compared to the previous two years, a result of mild weather and rising electricity generation from nuclear power in Japan and South Korea, two of the three largest global importers.

In China, LNG imports increased by 14 percent in 2019 as efforts continued to improve urban air quality. Also notable was LNG demand growth in South Asia. In total, Bangladesh, India and Pakistan imported 36 million tonnes, an increase of 19 percent over last year, pointing to emerging growth countries in Asia.

Asia is expected to remain the dominant region in the decades to come, with South and South-east Asia generating more than half of the increased demand.