Shell Forecasts 60pct Surge in Global LNG Demand by 2040
Shell forecasts a 60pct surge in global LNG demand by 2040, driven by Asian economic growth, decarbonisation efforts and the expanding tech sector. China and India are significantly increasing import capacity, while Europe continues to rely on LNG for energy security. New supply, mainly from the US, faces regulatory and cost risks. According to our data, LNG exporters supplied 417 million tonnes last year, closely matching Shell's findings.
Global demand for liquefied natural gas is forecast to surge 60 per cent by 2040 due to faster economic growth in Asia and the race to decarbonise industry, Shell has said. The energy major's widely followed annual LNG outlook is 10 percentage points higher than what was predicted last year for the same period, reflecting anticipated demand growth from India and China.
"The global trade in LNG is set to rise significantly by 2040, driven by Asian economic growth, the need to decarbonise heavy industry and transport and the emerging growth in the energy-intense tech sector", the company said. Shell is the world's biggest LNG trader, shifting roughly 60mmt every year from its global portfolio.
Transition-fuelled demand
Market players are keen to position natural gas and LNG as a cleaner alternative to coal and a transition fuel for the world to decarbonise. Global demand in LNG would increase to between 630 and 718mmt by 2040, up from 407mmt last year, Shell said in its market outlook. According to our data, available to subscribers, exporters supplied 417 million tonnes last year.
Insatiable appetite
China, the world's largest LNG importer, was "significantly increasing" its import capacity to provide gas for 150 million people by 2030, whilst India was improving its infrastructure to connect 30 million people over the next five years, Shell said. In Europe, LNG has become increasingly important since Russia invaded Ukraine in 2022. The region has become a big importer as it sought to replace plummeting flows of Russian pipeline gas, putting it in increased competition with Asian countries to secure limited shipments. According to Shell, Europe would continue to need LNG into the 2030s as will have to balance intermittent supply from a growing share of renewables in its power sector to ensure energy security as it moves towards net zero. Cederic Cremers, executive vice-president for LNG at Shell said speaking to the Financial Times that gas provides a "crucial back-up".
Energy lifeline
European countries, especially Germany, have invested heavily in LNG import infrastructures during the energy crisis sparked by the war in Ukraine, and those assets may well be used to import bio-LNG, synthetic LNG or green hydrogen, as suggested by information provided by Deutsche ReGas, the owner and operator of the Mukran/Lubmin FSRU terminal on Germany’s Baltic Coast.
Supply scramble
Shell's outlook last year pegged 2040 demand at between 625 million and 685 million tonnes. More than 170 million tonnes of new LNG supply capacity is expected to come online by 2030 to meet rising demand, the company added. A significant volume of the new supply was set to come from the US, but further growth in the country came "with risks" such as regulatory uncertainty and construction costs, it said.