Shell Predicts Demand for Gas to Soar in Latest LNG Global Outlook

(Photo credit: Photographic Services, Shell International Ltd.)

Demand for gas is expected to almost double by 2040 led by China’s energy needs and the global push for decarbonization, predicts Shell in its latest LNG Global Outlook 2022.

The company says that demand for liquified natural gas (LNG) is expected to cross 700 million tonnes a year by 2040, a 90% increase on 2021 demand. That comes after a strong finish to the year with trade in LNG increasing 6% over 2020 for a total of 380 million tonnes.

Natural gas is seen as a key part of the push to reduce global carbon emissions. It is a cleaner fuel than high emission sources such as coal but is still widely and reliably available to ensure grid stability and continuity of supply.

“As countries develop lower-carbon energy systems and pursue net-zero emissions goals, focusing on cleaner forms of gas and decarbonisation measures will help LNG to remain a reliable and flexible energy source for decades to come,” said Wael Sawan, Integrated Gas, Renewables and Energy Solutions Director at Shell in a media release about the report.

Shell believes that LNG will play a large role in helping meet the twin requirements of decarbonization and reliable energy in fast growing Asian economies by “replacing declining domestic gas production, enabling coal-to-gas switching and supporting economic growth.” China, Japan, and South Korea were the largest LNG importers in 2021.

The report comes amid high tensions between Russia and the West over Russia’s troop build up on the border with Ukraine and support for separatists in two territories in the eastern part of the country.  Russia is a key gas supplier to European markets and prices hit record high in October 2021 as the hostilities began. Industry experts expect prices to rise again if diplomacy fails and Russia proceeds with a full-blown military invasion.

“All of the ingredients — surging world demand, underperformance within the OPEC cartel, rising inflation for all elements of the petroleum supply chain — will impact prices in the first half of 2022,” said Tom Kloza, global head of energy analysis for the Oil Price Information Service quoted in a USA Today article.