Prices of the supercooled fuel were volatile in 2021, reaching record highs at the end of the year, and emphasising a need for a better approach to secure reliable and flexible supplies
GLOBAL LNG DEMAND IS FORECAST TO INCREASE 90% ON 2021 DEMAND.
GLOBAL liquefied natural gas demand is projected to surpass 700m tonnes a year by 2040, but expect a supply-demand gap in the middle of this decade, says Shell in its LNG Outlook.
The market is expected to remain tight in the near term, with a shortfall forecasted to emerge around 2025.
LNG has and will continue to play a key role in the transition to a decarbonised world. Demand for the supercooled fuel grew to 380m tonnes last year, an increase of 21m tonnes compared to 2020.
China and South Korea lifted demand in 2021. China increased its imports to 79m tonnes, making it the largest LNG importer.
Chinese buyers closed long-term contracts for more than 20m tonnes of LNG a year, indicating the importance of the fuel in China’s efforts to be carbon neutral.
Source: Shell interpretation of IHS Markit, Wood Mackenzie, FGE and Poten & Partners 2021 and 2022 data
“Last year showed just how crucial gas and LNG are in providing communities around the world with energy they need as they strived to get back on track following the difficulties caused by the Covid-19 pandemic,” said Wael Sawan, integrated gas, renewables and energy solutions director at Shell. “As countries develop lower-carbon energy systems and pursue net-zero emissions goals, focusing on cleaner forms of gas and decarbonisation measure will help LNG to remain a reliable and flexible energy source for decades to come.”
The US is expected to become the world’s largest LNG exporter in 2022 as its liquefaction capacity rises. Its exports grew by 24m tonnes last year.
LNG prices were volatile in 2021 and reached record levels towards the end of the year with European gas inventories at historic lows and Russian gas uncertainty.
Extreme price volatility emphasises the need for a more strategic approach to secure reliable and flexible gas supply in future to avoid exposure to price spikes, says Shell.
Global LNG demand is projected to nearly double over the next 25 years, according to the energy giant.
Asia will lead the majority of this growth as domestic gas production slows, regional economies grow and LNG replaces higher-emissions energy sources.
The shipping industry is integrating LNG in efforts to shrink its carbon footprint.
There are 403 LNG-fuelled vessels on order with another 251 on the water, says Shell.
A total of 30% of new vessel orders, measured by gross tonnage, are LNG-fuelled.
Source: Shell interpretation of DNV GL 2020 data, World Fleet Register, Clarksons, Total Orderbook – Jan 2022 and various news reports . **Only larger size vessels: containers >12000TEU, tankers >85000DWT, bulkers >65000DWT
