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Global LNG demand set to rise by more than 50% by 2040: Shell

LNG demand is set to grow strongly. (Image source: Adobe Stock)


Global demand for LNG is forecast to rise by more than 50% by 2040, according to Shell’s LNG Outlook 2024 

The main factors behind the forecast growth are China’s progress in switching from coal to gas and South Asian and South-east Asian countries requiring more LNG to fuel their economic growth.

Global trade in LNG reached 404mn tonnes in 2023, up from 397mn tonnes in 2022, with tight supplies of LNG constraining growth while maintaining prices and price volatility above historic averages. Demand for natural gas has already peaked in some regions but continues to rise globally, with LNG demand expected to reach around 625-685mn tonnes a year in 2040, according to the latest industry estimates.

China dominates demand growth

“China is likely to dominate LNG demand growth this decade as its industry seeks to cut carbon emissions by switching from coal to gas,” said Steve Hill, executive vice president for Shell Energy. “With China’s coal-based steel sector accounting for more emissions than the total emissions of the UK, Germany and Turkey combined, gas has an essential role to play in tackling one of the world’s biggest sources of carbon emissions and local air pollution."

Over the following decade, declining domestic gas production in parts of South Asia and South-east Asia could drive a surge in demand for LNG given their need of fuel for gas-fired power plants or industry. However, these countries would need significant investments in gas import infrastructure.

The Shell LNG Outlook 2024 shows that gas complements wind and solar power in countries with high levels of renewables in their power generation mix, providing short-term flexibility and long-term security of supply.

The global gas market remains structurally tight, according to the report, due to the lack of Russian pipeline gas supply to Europe and a limited amount of LNG supply growth over the last year. In terms of supply, the US will lead LNG supply growth in 2024, according to the report, with significant LNG supply coming onstream but start-up timings uncertain. Qatar and US deals dominate long-term contracting, and buyers pursue long-term supply for energy security.