Shell has downgraded its forecast for long-term global LNG demand until 2040

Shell has downgraded its forecast for long-term demand for gas and, in particular, LNG in the world until 2040. The company estimates that demand for LNG, although expected to grow by more than 50%, will be 625-685 million tons, up from 700 million tons in last year’s forecast. Gas demand growth overall will be only about 13% over this period. The main points of demand growth, Shell expects, will be China and South Asia. However, even there, according to the company, demand will reach a historic peak in the 2040s, as has already happened in Europe and Japan and will happen in North America in the next ten years.

Shell, the company with the world’s largest portfolio of LNG projects, worsened the prognosis on long-term demand for liquefied gas. It estimates it will grow by more than 40% to 625-685 million tonnes by 2040, up from a range of 650-700 million tonnes in the company’s review last year. Growth is expected to come mainly from China as the country transitions away from coal.

However, according to Shell, gas demand has already peaked in the 2010s in Japan, Australia and Europe. The company expects that peak demand could be reached in North America in the 2030s, and in the rest of the world in the 2040s.

“Over the medium term, pent-up demand for LNG, particularly in Asia, will absorb new supplies expected to hit the market in the second half of the 2020s,” the report said.

According to Shell estimates, the global LNG market volume in 2023 reached 404 million tons compared to 397 million tons a year earlier; in 2024, supply volumes could increase by another 7–20 million tons.

The USA became the largest LNG exporter in 2023, delivering about 86 million tons. Approximately 81 million and 80 million tons were exported Australia and Qatarfollowed by Russia and Malaysia.

Europe imported more than 120 million tons of LNG in 2023. Despite the decline in gas demand, the continent will still need spot LNG supplies, which Shell forecasts will be 70 million tonnes in 2025 and 50 million tonnes in 2030. ChinaShell estimates that it has regained its top spot among importers, increasing demand by 7.9 million tonnes year-on-year in 2023. By 2040, gas demand in China will increase by another 50%, Shell expects.

Japanwhich lost its leadership in LNG import volumes, reduced purchases by 6 million tons in 2023. Germany increased purchases in 2023 by 4.6 million tons, Netherlands — by 4.1 million tons, Great Britain reduced LNG imports by 4.3 million tons, and France – by 3.5 million tons.

The growth of global LNG supplies in 2025–2027 will occur mainly due to the commissioning of a second wave of capacity in Qatar and the United States, which could increase the market volume by 40 million tons, or 17%.

Independent expert Alexander Sobko believes that Shell’s forecast looks rather pessimistic for gas in general – suffice it to say that even by 2040, the total demand for gas in the world could grow by only 13%, or 500 billion cubic meters in absolute values. “At the same time, in the electricity generation sector, for which there were certain hopes, there is practically no growth in demand for gas. Probably, renewable energy sources turn out to be a more acceptable solution, while the role of gas here comes down to insurance, a “backup,” he says.

In the LNG sector, where we see demand growth by 2040 of over 50%, or approximately 250 million tons, the situation at first glance looks better, he notes. But at the same time, the main growth in demand will occur in the coming years, and it will be covered by factories already under construction. “For new projects, the main competition will begin after 2030, and it will be quite tough, since the increase in demand in the period after 2030 is expected to be very small,” he concluded.

Tatiana Dyatel