Strong demand for cleaner-burning fuel continued to drive rapid growth in LNG use in 2018, with global demand rising by 27 million metric tons to 319 million metric tons, according to Shell's latest annual LNG Outlook. Shell expects demand to reach roughly 384 million metric tons in 2020.
Global LNG supply is set to rise by 25 million metric tons in 2019. A rebound in new long-term LNG contracting in 2018 could revive investment in liquefaction projects. Based on current demand projections, Shell still expects supplies to tighten in the mid-2020s.
LNG has played an important role in the global energy system over the past few decades, as an increasing number of countries have turned to natural gas to meet their growing energy needs. LNG trade increased from 100 million metric tons in 2000 to 319 million metric tons in 2018.
New LNG projects typically require long-term sales agreements to secure financing. From 2014-2017, LNG buyers had increasingly been looking to sign shorter, smaller and more flexible contracts. Shell warned in its 2018 LNG Outlook that this mismatch between supplier and buyer needs would have to be resolved to enable developers to go ahead with new projects.
Encouragingly for the long-term health of the global LNG market, the average length of contracts signed more than doubled from around six years in 2017 to about 13 years in 2018. Meanwhile, the total contracted volume more than doubled to almost 600 million metric tons in 2018.
For more information, visit www. shell.com/lngoutlook or call (888) 467-4355.
