Shell forecasts 60% rise in LNG demand by 2040

Shell forecasts that global demand for LNG will rise by around 60% by 2040, in its newly-issued Shell LNG Outlook 2025

LNG demand is now expected to reach 630-718mn tonnes a year by 2040, largely driven by economic growth in Asia, the need to decarbonise heavy industry and transport and the impact of energy-intense artificial intelligence.

Global LNG trade grew by only 2mn tonnes in 2024, the lowest annual increase in 10 years, to reach 407mn tonnes, due to constrained new supply development. New LNG supply is limited until the second half of 2025, but more than 170mn tonnes of new LNG supply is set to be available by 2030, helping to meet stronger gas demand, especially in Asia. However, start-up timings of new LNG projects are uncertain, with new projects facing multiple challenges, such as regulatory uncertainty, geopolitical tensions and supply chain issues.

“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,” Tom Summers, senior vice president for Shell LNG Marketing and Trading, said.

“LNG will continue to be a fuel of choice because it’s a reliable, flexible and adaptable way to meet growing global energy demand.”

China is significantly increasing its LNG import capacity and aims to add piped gas connections for 150mn people by 2030 to meet increasing demand. India is also moving ahead with building natural gas infrastructure and connecting 30mn people over the next five years.

In the marine sector, a growing order book of LNG-powered vessels will see demand from this market rise to more than 16mn tonnes a year by 2030, up 60% from the previous forecast, with around half the vessels on order in the international maritime market being LNG fuelled. Longer term, existing gas infrastructure could be used to import bio-LNG or synthetic LNG and also repurposed for the import of green hydrogen. LNG is becoming a cost-effective fuel for shipping and road transport, bringing down emissions today and offering pathways to incorporate lower-carbon sources such as bio-LNG or synthetic LNG; around one in five trucks sold in China today are LNG-fuelled.

Europe will continue to need LNG into the 2030s to balance the growing share of intermittent renewables in its power sector and to ensure energy security. In the longer term, existing natural gas infrastructure could be used to import bio-LNG or synthetic LNG and be repurposed for the import of green hydrogen.

Significant growth in LNG supply will come from Qatar and the USA. The USA is set to extend its lead as the world’s largest LNG exporter, potentially reaching 180mn tonnes a year by 2030 and accounting for a third of global supply. Qatar and the USA are together likely to account for 60% of global supply by 2025.

Shell to step up liquefaction capacity

At the International Energy Week (IE Week) Conference hosted by the Energy Institute in London, Cederic Cremers, executive director at Shell, highlighted the increasing importance of LNG in the company’s own portfolio, saying that between now and 2030, Shell is growing its liquefaction capacity by 20-30%, the fastest it has ever grown in a five-year period. The company is progressing projects in Canada, where it is aiming to start LNG exports from its LNG Canada project this year, Nigeria, and Qatar. The company is also a partner in the Ruwais LNG project in the UAE. Between 2030 and 2040 Shell is looking at a potential next phase at LNG Canada, as well as a fourth train in Oman with the government and partners, on the back of new gas discoveries. Shell also in December signed a project development agreement with Argentina’s state-run oil company YPF to advance the development of the Argentina LNG project. Other options are also on the cards, Cremers said.

The importance of LNG as a transition fuel was a key theme at IE Week. Dr Fatih Birol, executive director of the IEA, commented that the huge amount of LNG set to come on to the market between 2026 and 2028, mainly from the USA and Qatar, is likely to result in the gas market shifting from a sellers’ to a buyers’ market.