Shell’s latest LNG Outlook predicts that a looming liquefied natural gas (LNG) supply-demand gap will occur sooner and be larger than previously forecast following last year's volatility.
Additionally, Wood Mackenzie's The Edge recently reported that the threat of military escalation in Ukraine could cause a domino effect on gas and LNG. "Any disruption to pipeline volumes could lead to energy chaos in Europe and ripple out into global gas and power markets."
All this volatility emphasizes the need for a more strategic approach to secure reliable and flexible gas supply in the future to avoid exposure to price spikes, said Shell. An LNG supply-demand gap is forecast to emerge in the mid-2020s and focuses attention on the need for more investment to increase supply and meet rising LNG demand, especially in Asia, the company added.
“Last year showed just how crucial gas and LNG are in providing communities around the world with energy,” said Wael Sawan, integrated gas, renewables and energy solutions director at Shell.
Prices reached record levels in October 2021 as Europe, with historically low storage levels, struggled to secure LNG cargoes to meet expected winter gas demand.
China and South Korea led the growth in LNG demand in 2021. China increased its LNG imports by 12 million tonnes to 79 million. Last year Chinese LNG buyers signed long-term contracts for more than 20 million tonnes a year.
Global LNG exports grew in 2021 despite outages that dented availability of LNG for delivery. The United States led export growth with a year-on-year increase of 24 million tonnes, Shell's report said.
LNG demand is expected to almost double to 700 mln tonnes by 2040, Shell said, adding that liquefied gas has a key role to play as a back-up in the event of intermittent renewable supply.
The U.S. Energy Information Administration projects that this year U.S. LNG export capacity will become the world's largest LNG exporter, exceeding that of the two current largest global LNG exporters, Australia and Qatar.
