Global demand for liquefied natural gas is on course to increase by more than 50% by 2040 as China and other Asian economies switch from more heavily polluting coal, according to a new report from Shell.
In Shell’s LNG Outlook 2024, the Anglo-Dutch oil major said surging demand for natural gas in Asia will drive up demand for LNG, and offset falling demand in regions where gas consumption has already peaked, such as in Europe, Australia, and Japan.
This surging demand for natural gas in China, South East Asia, and South Asia – for use in powering industry and gas-fired power plants – will see worldwide LNG consumption hit highs of 625-685 million metric tons a year by 2040, with LNG set to meet 75% of increasing gas demand.
The increase would mark a more than 50% uptick on the 404 metric tons of LNG consumed worldwide in 2023, which was a 1.8% increase on the 397 metric tons of the liquified fuel consumed worldwide in 2022.
This increase in 2023 was largely driven by higher LNG demand in Europe, which saw 124 metric tons of the fuel, as European countries boosted consumption and even built out new LNG terminals in their efforts to switch away from using Russian pipeline gas.
Europe’s push to reduce its reliance on Russia led to sharp upticks in LNG imports in Germany (+4.6 mt), the Netherlands (+4.1 mt), Italy (+1.7 mt) and Finland (+1.1 mt), following the buildout of new infrastructure in those countries
China, which has now overtaken Japan as the world’s biggest LNG importer, saw its overall natural gas consumption increase by 8% in 2023, in an uptick that saw the country import an additional 7.9 mt of LNG in order to meet the surging demand.
The U.S. and Qatar are now set to become the main beneficiaries of increasing global demand, with the two countries set to account for 80% of new supply through to 2030.
The U.S. is, meanwhile, set to see its own natural gas consumption peak in the 2030s, Shell’s report says. The country is already the world’s top exporter of LNG, ahead of both Australia and Qatar, having shipped 80 mt of the liquified fuel in 2023 alone.
Shell’s outlook follows the International Energy Agency forecasts in its 2023 World Energy Outlook that global fossil fuel consumption could peak by 2030, as a result of developments in renewable technologies and growing political momentum around climate change.
The IEA’s report warns that the fast-paced buildout of LNG infrastructure, in line with efforts to switch consumption away from Russia, could lead to a glut in supply of the liquified fuel, that would see LNG prices drop.
In January, the Biden administration announced plans to pause approvals for permits to build out new LNG infrastructure in the U.S. pending a review of the fuel’s economic and environmental impacts.
The U.S. House of Representatives is this week set to pass a bill to overturn Biden’s temporary embargo which could otherwise last well into 2025.
Natural-gas futures
NG00,
have skidded by 34% over the last 52 weeks.
Last year, Shell
SHEL,
produced 28 million metric tons of LNG.
