Shell lowers LNG growth view as demand set to peak in 2040s

Still, global demand for LNG is expected to rise by more than 50 per cent by 2040, even as gas consumption starts to peak, Shell said. Global trade in the fuel reached 404 million tonnes in 2023, up from 397 million tonnes a year earlier.

Europe in particular has relied heavily on LNG imports after Russia cut most pipeline supplies in the fallout of the war in Ukraine, and the region has added multiple supply contracts to ensure the fuel flows beyond 2050.

Shell was among companies committing to a 27-year supply deal with QatarEnergy last year. Despite declining gas demand in Europe, the region’s contracted LNG volumes won’t be sufficient, Shell estimates. The market will require about 70 million tonnes per year of spot supply by 2025 and 50 million tonnes by 2030.

Europe also competes with Asia for volumes. China is switching away from more carbon-intensive coal, with gas satisfying industrial demand and complementing solar and wind power for grid stability. That view supports investments in the biggest-ever wave of LNG mega-projects in the US and Qatar, which are expected to begin operations in the coming years, helping to lower prices.

The LNG market “will continue growing into the 2040s, mostly driven by China’s industrial decarbonisation and strengthening demand in other Asian countries”, Shell’s report said.

Demand from emerging markets and shipping needs will also increase, while so-called security-driven demand will taper off after 2030, the company forecast.

Shell expects domestic gas production in South-East Asia to decline. New LNG supply that is set to come online in the second half of the 2020s will be absorbed after what it described as a “structurally tight” gas market.


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