Shell's LNG Outlook 2024 report forecasts a significant increase in global liquefied natural gas (LNG) demand, driven by industrial coal-to-gas switching in China and economic development in South Asia and South-east Asia. The report estimates a more than 50% rise in LNG demand by 2040, with trade reaching 404 million tonnes in 2023. The demand for natural gas is expected to continue rising globally, reaching around 625-685 million tonnes a year in 2040.
China is anticipated to lead LNG demand growth, aiming to reduce carbon emissions by transitioning from coal to gas. This shift is crucial for addressing significant carbon emissions from the country's coal-based steel sector. Additionally, declining domestic gas production in parts of South Asia and South-east Asia is expected to drive a surge in LNG demand, necessitating significant investments in gas import infrastructure.
The report also highlights the complementary role of gas in countries with high levels of renewables in their power generation mix, providing short-term flexibility and long-term security of supply. Furthermore, it emphasizes the vital role of LNG in European energy security, particularly following a decline in Russian pipeline exports to Europe in 2022. Despite a well-supplied global market in 2023, the lack of Russian pipeline gas supply to Europe and limited LNG supply growth means that the global gas market remains structurally tight.
The report also notes that European LNG imports remained at similar levels to 2022, despite an overall decline in European gas demand in 2023. Factors such as mild winter temperatures, high gas storage levels, stronger nuclear power generation, and a modest economic recovery in China helped balance the global gas market in 2023, leading to a decrease and stabilization of gas prices in key importing regions compared to the record highs and volatility seen in previous years.
In conclusion, the Shell LNG Outlook 2024 provides valuable insights into the projected growth of global LNG demand, the role of LNG in addressing carbon emissions, and its significance in ensuring energy security, particularly in Europe. The report underscores the need for continued investment in LNG infrastructure to meet the rising demand and address the evolving dynamics of the global gas market.