Shell: Asia will drive LNG growth

Global demand for liquefied natural gas (LNG) is projected to rise by 60% by 2040, driven primarily by Asia’s economic expansion, a global push for emissions reductions in heavy industries and transportation, and the integration of artificial intelligence, according to Shell’s LNG Outlook 2025.

Shell forecasts now estimate LNG demand will reach between 630 million and 718 million tonnes annually by 2040, marking a notable upward revision from last year’s estimates.

Despite this optimistic outlook, global LNG trade saw its slowest growth in a decade in 2024, increasing by just 2 million tonnes to reach 407 million tonnes. This minimal rise was attributed to limited new supply development. However, over 170 million tonnes of additional LNG supply is expected to come online by 2030, alleviating some of the supply constraints and addressing rising demand, particularly from Asia. The exact timing of these new LNG projects, however, remains uncertain.

Tom Summers, Senior Vice President for Shell LNG Marketing and Trading, noted that updated forecasts indicate a growing need for natural gas to meet global energy demands for power generation, heating, cooling, industry, and transportation.

“LNG will continue to be a fuel of choice because it’s a reliable, flexible and adaptable way to meet growing global energy demand,” Summers said.

China and India are spearheading LNG infrastructure expansions to support their growing energy needs. China plans to significantly increase its LNG import capacity and add piped gas connections for 150 million people by 2030. Similarly, India is investing in its natural gas infrastructure, aiming to connect 30 million people to gas over the next five years.

In the marine sector, LNG demand is also set to rise as more LNG-powered vessels come online. Demand from this sector is expected to increase by 60% to over 16 million tonnes annually by 2030. LNG’s cost-effectiveness as a fuel for both shipping and road transport is contributing to its adoption, as it reduces emissions today and offers potential pathways to incorporate lower-carbon alternatives like bio-LNG or synthetic LNG.

In Europe, LNG will remain essential to balancing the growing share of intermittent renewable energy and ensuring energy security through the 2030s. In the longer term, existing LNG infrastructure could be repurposed for importing bio-LNG, synthetic LNG, or even green hydrogen.

The USA and Qatar are poised to drive significant growth in LNG supply. The USA, in particular, is set to expand its lead as the world’s largest LNG exporter, potentially reaching 180 million tonnes annually by 2030, accounting for a third of global supply.

As for market conditions in 2024, spot LNG prices fell to their lowest levels since early 2022 before recovering mid-year, driven by delays in the development of new supply capacity. LNG demand surged in Asia, with China and India taking advantage of lower prices. China imported 79 million tonnes, while India saw a 20% increase in imports, totaling 27 million tonnes, driven by a hot summer that spurred power demand.

In contrast, Europe’s LNG imports declined by 19% in 2024, down 23 million tonnes, due to strong renewable energy generation and a slow recovery in industrial gas demand. However, colder winter temperatures and low wind power generation later in the year led to significant gas storage withdrawals, pushing up prices. With Russian pipeline gas flows to Europe ceasing by the end of 2024, Europe is expected to increase LNG imports in 2025 to replenish gas storage levels.

As the global energy landscape shifts, LNG is expected to continue playing a crucial role in meeting the world’s energy and decarbonization goals, with increased supply and infrastructure development paving the way for the fuel’s broader adoption.