KEY POINTS
- Global LNG demand is set to rise by 60 percent by 2040.
- The expansion of LNG projects faced delays because of supply chain disruptions.
- The U.S. and Qatar are expected to dominate LNG production by 2035.
Global demand for liquefied natural gas (LNG) is expected to surge by 60 percent by 2040, with Asia leading the expansion, according to Shell’s latest annual report.
The demand is projected to reach between 630 million and 718 million metric tons per year, an increase from last year’s estimate of 625 million to 685 million tons.
China and India are at the forefront of this demand, expanding their LNG import capacity and gas infrastructure to meet growing industrial and energy needs.
China, already the world’s largest LNG importer, recorded 131.69 million tons of natural gas imports last year, of which 76.65 million tons was LNG.
The amount of natural gas consumed in India is expected to grow by 60 percent between 2023 and 2030, which would result in a double increase in LNG import requirements.
Emerging economies such as Algeria, Egypt, Malaysia and Indonesia are facing declining domestic production while their gas demand rapidly increases.
Shell’s analysis projects that exportable gas availability across these markets will decrease by up to 50 million tons over the next 15 years.
LNG supply expansion faces delays
To meet rising demand, more than 170 million tons of new LNG supply is expected to come online by 2030, particularly in Asia.
Shell cautions that delays from geopolitical tension, regulatory obstacles, labor shortages and supply chain disruptions will extend the availability of 30 million tons of LNG production, till 2028.
The global LNG trading market grew minimally by 2 million tons last year to reach 407 million tons. The annual growth reached its lowest point in ten years, as it fell below industry predictions.
According to Reuters, the delayed development of new projects, coupled with ongoing supply chain constraints, has impacted the pace of expansion in the sector.
U.S. and Qatar to dominate LNG supply
United States and Qatar are projected to take control of the LNG market by 2035, through a projected supply of approximately 60 percent of global LNG exports.
The U.S. will enhance its LNG output to 180 million annual tons by 2030, which will represent about thirty percent of worldwide LNG supply.
European demand for LNG is expected to rise beyond 2025, due to the need to find replacements for power sector balancing as renewable energy sources depend on sporadic conditions.
According to the report, the European gas infrastructure could possibly shift to importing clean-energy alternatives including bio-LNG, synthetic LNG and green hydrogen for decarbonization goals.
Shell’s recent outlook demonstrates LNG emerges as a central element for worldwide energy transformation, as it delivers cleaner fuel than coal and oil while promoting developing market economies.
However, potential risks exist to fulfill increasing demand because of supply uncertainties and geopolitical challenges.
