According to Shell’s annual report released on Tuesday, global demand for liquefied natural gas (LNG) is projected to increase by approximately 60% by 2040, primarily fueled by economic growth in Asia, advancements in artificial intelligence, and efforts to reduce emissions in heavy industries and transportation.
Key Highlights:
Demand Projections:
Shell estimates that LNG demand will reach between 630 million and 718 million metric tons annually by 2040, an upward revision from last year’s forecast of 625 million to 685 million tons.
Tom Summers, Shell’s senior vice president for LNG marketing and trading, stated, “Upgraded forecasts show that the world will need more gas for power generation, heating and cooling, industry, and transport to meet development and decarbonisation goals.”
Regional Drivers:
China and India are leading the growth in LNG imports, with China expected to see an increase in natural gas imports this year due to economic stimulus plans boosting industrial demand.
In 2022, China recorded total natural gas imports of 131.69 million tons, with 76.65 million tons being LNG.
The International Energy Agency predicts that India’s natural gas consumption will surge by 60% between 2023 and 2030, necessitating a significant increase in LNG imports as domestic production lags.
Emerging Markets:
Countries like Algeria, Egypt, Malaysia, and Indonesia are experiencing rising gas demand due to their young populations and economic growth. However, domestic production in these regions is expected to decline by up to 50 million tons over the next 15 years.
Supply Challenges:
To meet the growing demand, over 170 million tons of new LNG supply is anticipated to be available by 2030. However, uncertainty surrounds the start-up timings of new projects due to geopolitical tensions, regulatory issues, labor shortages, and supply chain bottlenecks, which have delayed approximately 30 million tons of new supply until 2028.
In 2024, global LNG trading saw a modest increase of only 2 million tons, reaching 407 million tons, marking the smallest annual growth in the past decade.
European Demand:
The report indicates that Europe’s LNG demand is expected to grow from 2025 onward, as the continent continues to integrate intermittent renewable energy sources into its power sector. Existing natural gas infrastructure may eventually be repurposed for bio-LNG, synthetic LNG, or green hydrogen imports.
Major Suppliers:
Significant growth in LNG supply is anticipated from the United States, which could reach 180 million tons annually by 2030, potentially accounting for one-third of global supply.
Analysts predict that combined with Qatar’s North Field expansion project, set to commence in 2026, the U.S. and Qatar could provide around 60% of global LNG supply by 2035.