Energy giant Shell sees global demand for liquefied natural gas rising by more than 50% by 2040.
In its 2024 Outlook for LNG, it cites as reasons industrial coal-to-gas switching to generate power, a switch that is gathering pace in China and South Asian and South-east Asian countries.
At the same time, though, Shell’s forecasts have been reduced since its 2023 outlook, and Shell sees peak demand coming down the road. “Demand for natural gas has peaked in some regions and globally is set to peak after 2040.”
(We sometimes see people taking ”peak demand” to mean “the end of demand.” Not so; demand continues after the peak, but no longer climbs.)
Shell now says world demand is expected to reach around 625-685 million tonnes per year in 2040. That is slightly lower than Shell’s Outlook 2023 estimates of a global demand increase to 700 million tons by 2040.
Meanwhile, Europe’s demand for LNG is forecast to peak in 2025, according to a report from the U.S.-based Institute for Energy Economics and Financial Analysis. It says this is due to improved efficiency measures, and deployment of renewables.
All that said, Qatar clearly has an optimistic outlook. It has signed a series of deals to provide European and Asian partners with LNG from its huge North Field expansion project, and is about to announce even more. And Qatar plans to book up to 10 more giant Q-Max LNG carriers from China, as part of a massive expansion of its fleet.
Meanwhile, the US Energy Information Administration sees natural-gas consumption more than tripling in India by 2050. That would be more than twice the growth rate of gas consumption in China, the next-fastest-growing country. “We expect India’s net natural gas imports to grow even faster than domestic production.”
Shell says rising global demand for LNG is expected to keep pace with new supply in the second half of the 2020s, but “significant infrastructure investment will be needed” to produce LNG to offset falling domestic gas production in South-east Asia.
Shell reports that global trade in LNG reached 404 million tonnes in 2023, up from 397 million tonnes in 2022, with tight supplies of LNG constraining growth.
But more supplies now are available, and more are coming, despite U.S. President Joe Biden’s current freeze (reportedly of 10-14 months) on approvals for new projects. Shell says significant LNG supply is coming but start-up timings are uncertain.
LNG Canada, for one, is in testing stages and start-up activities at its Kitimat export plant, and “we remain well-positioned to deliver our first cargoes of lower-carbon, made-in-B.C. LNG by the middle of this decade.”
And Woodfibre LNG is looking at 2027 to complete the world’s first net zero LNG export facility.
(Shell has also agreed to buy 2 million tonnes of LNG per year from the Nisga’a Nation’s proposed Ksi Lisims LNG project, in a 20-year LNG agreement.)
Shell’s 2024 outlook will be carefully eyed as LNG Canada’s joint-venture partners consider Phase Two expansion that would double its output to 28 million tonnes of LNG a year. (Shell is the largest partner at 40%, followed by Petronas, 25%; PetroChina, 15%; Mitsubishi, also 15%; and Korea Gas, 5%.)
More points from Shell’s latest outlook for LNG:
- China, which in 2023 overtook Japan the world’s top LNG importer, is likely to dominate LNG demand growth this decade as its industry seeks to cut carbon emissionsby switching from coal to gas, “China‘s long-term gas and LNG demand outlook is strong.”
- (“China is the market that we are most bullish about this decade,” Steve Hill, executive vice president for Shell Energy, told analysts. And one of the reasons for that is the massive amount of new gas infrastructure that is coming on stream at the moment.”)
- South and Southeast Asia are emerging as major LNG import regions. “Vietnam, Philippines started importing LNG to backfill domestic gas declines.”
- The U.S. became the largest LNG exporter in 2023, followed by Australia, Qatar, Russia and Malaysia.
- China retook the top importer spot, followed by Germany, Netherlands, Thailand, India and Italy. Japan’s gas demand declined as more nuclear plants restarted.
- European gas demand fell in 2023: “Demand destruction continued due to lower supplies and elevated prices.” But Europe will still need LNG despite declining gas demand.
- Industry and buildings will be key demand-drivers in emerging Asia, with LNG expected to meet more than 75% of this growth.
The outlook also included this note of caution: “Industry must address CO2 emissions. . . . LNG decarbonisation pathways need to be explored together, to address emissions today and progress zero-emission options.”
And on renewable energies: “Renewables, supported by gas, erode coal’s role in Asia. Gas provides grid stability, enabling a higher share of renewables in generation.”
As well, Shell added, the marine sector continues, through LNG to reduce emissions from ships at sea.
- Video: Shell’s Cederic Cremers, executive vice president of LNG, discusses the LNG outlook, and what role gas plays in countries that are targeting net zero: https://ow.ly/k1SV50QFp3f
(Posted here 21 February 2024)
