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Global liquefied natural gas demand is forecast to surge 50 per cent by 2040 as the world transitions to cleaner fuel, Shell said in its latest annual LNG outlook.
Demand for natural gas globally will then peak after 2040, although appetite for LNG will continue growing as China and developing Asian nations switch from dirtier coal to the comparatively cleaner fuel.
The growth forecast is slightly lower than predictions last year, but energy majors still expect a strong rise in LNG demand as the world’s economies target net zero carbon emissions by 2050.
LNG has grown in importance since Russia’s full-scale invasion of Ukraine as the Kremlin slashed its pipeline gas supplies to Europe, prompting the region to secure the supercooled fuel to replace the lost volumes.
“The global LNG market will continue growing into the 2040s, mostly driven by China’s industrial decarbonisation and strengthening demand in other Asian countries,” Shell said on Wednesday.
The oil major added that demand for natural gas “has peaked in some regions and globally is set to peak after 2040”.
LNG is natural gas liquefied by cooling it to minus 162C. Like many other energy majors, Shell, the world’s largest private LNG trader, is keen to position natural gas as a transition fuel as the world aims to decarbonise.
Although natural gas is cleaner than other fossil fuel alternatives, it still releases substantial amounts of carbon dioxide when burnt. Natural gas is also mostly composed of methane, which generates more warming than carbon dioxide but is shorter-lived.
Cutting methane emissions is regarded by scientists as among the cheapest and quickest ways to tackle global climate change.
Shell said LNG demand was expected to reach 625mn to 685mn tonnes in 2040, from 404mn tonnes in 2023. This is lower than its forecast a year ago, when it predicted LNG demand to reach 650mn to 700mn tonnes.
China was likely to dominate LNG demand growth this decade, while over the following decade, south Asia and south-east Asia would drive sales as they increasingly needed fuel to power their gas-fired power plants, Shell said.
The company added that LNG continued to play a “vital role” in Europe’s energy security last year, with imports remaining at similar levels to the record highs in 2022 following Russia’s war in Ukraine, despite an overall decline for gas demand in the region.
The global gas market remained structurally tight, owing to the lack of Russian pipeline gas supply to Europe, Shell said.
Source: Economy - ft.com
