By Christie U. Omonigho
Global demand for liquefied natural gas (LNG) is forecast to rise by around 60% by 2040, to be driven, largely, by economic growth in Asia, emissions reductions in heavy industry and transport as well as the impact of artificial intelligence, according to Shell’s LNG Outlook 2025.
Industry forecasts now expect LNG demand to reach 630-718 million tonnes a year by 2040, a higher forecast than last year.
Global LNG trade grew by only 2 million tonnes in 2024, the lowest annual increase in 10 years, to reach 407 million tonnes due to constrained new supply development. More than 170 million tonnes of new LNG supply is set to be available by 2030, helping to meet stronger gas demand, especially in Asia, but start-up timings of new LNG projects are quite unclear.
“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 was quoted to have 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 according to the report is increasing significantly its LNG import capacity and aims to add piped gas connections for 150 million people by 2030 to meet increasing demand. This is as India is reported to be moving ahead with building natural gas infrastructure and adding gas connections to 30 million people over the next five years.
Within the marine sector, the outlook reveals a growing advance booking of LNG-powered vessels, seeing demand from this market rise to more than 16 million tonnes a year by 2030, up 60% from the previous forecast. According to the forecast, LNG is becoming a cost-effective fuel for shipping and road transport, bringing down emissions today while offering pathways to incorporate lower-carbon sources such as bio-LNG or synthetic LNG.
Europe will continue to need LNG into the 2030s to balance the growing share of intermittent renewables in its power sector to ensure energy security. It adds that 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.
Qatar and the USA are expected to bring more LNG into the market than any other country into the market. The news is everywhere that the USA is set to extend its lead as the world’s largest LNG exporter, potentially reaching 180 million tonnes a year by 2030 and accounting for a third of global supply.
Recall that the early part of 2024 saw spot LNG prices fall to their lowest level, even since early 2022, however prices recovered by mid-year which analysts pushed to delays in the development of new supply capacity.
Strong demand was noticed in Asia during the first half of 2024 as China took advantage of lower prices, importing, reports revealed, 79 million tonnes during the year. India bought record volumes to help meet stronger power demand due to hotter weather in early summer and pushing rise in its import activities to 27 million tonnes, seen as a 20% increase from 2023.
Notwithstanding the central role of LNG in the European energy security drive in 2024, imports were recorded to have fallen by 23 million tonnes, or 19%, due to strong renewable energy generation and a limited recovery in industrial gas demand.
Reports however showed that cold winter temperatures and certain percentage level of low wind power generation witnessed at the end of the year drove strong gas storage withdrawals which, combined with the expiry of Russian pipeline gas flows to Europe through Ukraine on Dec 31, 2024, drove up prices.
Europe is expected to increase imports of LNG in 2025 to refill its gas storage.