Shell Predicts 50% Surge in Global LNG Demand by 2040
Global demand for liquefied natural gas (LNG) is projected to surge by over 50% by 2040, driven by increasing industrial coal-to-gas transition in China, along with elevated usage of LNG in South Asian and South-east Asian nations to bolster economic expansion, as per Shell’s LNG Outlook 2024.
Trade in LNG hit 404 million tonnes in 2023, marking an increase from 397 million tonnes in 2022. Tight LNG supplies have constrained growth while maintaining prices and price volatility above historical norms. Predictions indicate LNG demand reaching approximately 625-685 million tonnes annually by 2040.
Steve Hill, Shell Energy’s Executive Vice President, notes that China is poised to lead LNG demand growth in the upcoming decade, aiming to reduce carbon emissions by transitioning from coal to gas. This shift is vital considering China’s coal-based steel sector generates more emissions than the combined total of the UK, Germany, and Turkey.
Forecasts suggest declining domestic gas production in parts of South Asia and South-east Asia may lead to heightened LNG demand as these regions increasingly require fuel for gas-fired power plants or industrial use. However, significant investments in gas import infrastructure will be necessary for countries in these regions.
The Shell LNG Outlook 2024 emphasizes gas’s role alongside wind and solar power in nations with substantial renewable energy presence, offering short-term flexibility and long-term supply security.
European energy security
In 2023, LNG remained pivotal in European energy security, especially after a decline in Russian pipeline exports to Europe in 2022. New regasification facilities bolstered energy supply security, maintaining European LNG imports at levels similar to 2022 despite an overall dip in European gas demand.
Balanced global gas markets in 2023, supported by mild winter temperatures in gas-dependent countries, ample gas storage, increased nuclear power generation, and modest economic rebound in China, contributed to stabilizing gas prices in key importing regions compared to the highs and volatility seen in 2021-2022. However, gas prices remained notably higher in 2023 compared to the 2017-2020 period.
Despite a well-supplied global gas market in 2023, the absence of Russian pipeline gas supply to Europe and limited LNG supply growth in the past year have maintained structural tightness in the global gas market.
