Global demand for liquefied natural gas (LNG) is expected to rise by over 50% by 2040, fueled by China’s gas switch and economic growth in South and Southeast Asian countries, according to Shell’s LNG Outlook 2024 on Wednesday.
‘Demand for natural gas has already peaked in some regions but continues to rise globally, with LNG demand expected to reach around 625–685 million tonnes a year in 2040,’ oil major Shell said in its latest industry estimation.
The company said that global trade in LNG reached 404 million tonnes in 2023, up from 397 million tonnes in 2022, with tight supplies limiting further growth while keeping prices and volatility high.
‘China is likely to dominate LNG demand growth this decade as its industry seeks to cut carbon emissions by switching from coal to gas,’ said Steve Hill, executive vice president for Shell Energy.
Shell predicts that declining domestic gas production in South Asia and Southeast Asia will drive a surge in LNG demand for the industrial sector, requiring major investments in import infrastructure.
On Europe’s energy security, the company said that LNG filled Europe’s energy gap in 2023, offsetting plunging Russian pipeline exports with new regasification.
Mild winter temperatures, high gas storage levels, stronger nuclear power generation and a modest economic recovery in China balanced the global gas market in 2023, it added.
According to Shell, the global gas market is still structurally tight, even though it was well supplied in 2023, due to the lack of Russian pipeline gas supply to Europe and the slow growth in LNG production over the past year.
By Handan Kazanci