Shell: LNG demand to grow 50% by 2040

Shell’s LNG Outlook 2024 report posited that China’s coal-based steel production industry, which the company said "accounts for more emissions than the total emissions of the UK, Germany and Turkey, combined", will use LNG to replace coal in a bid to reduce air pollution. 

“China is likely to dominate LNG demand growth this decade as its industry seeks to cut carbon emissions by switching from coal to gas,” Shell Energy vice president Steve Hill said. 

In the 2030s, Shell foresees a decline in domestic gas production capacity in South Asian and Southeast Asian countries that could set up a demand surge for LNG.  

"These economies [would] increasingly need fuel for gas-fired power plants or industry. However, countries in South Asia and Southeast Asia would need significant investments in gas import infrastructure," Shell said.

The oil and gas major also advanced a narrative that LNG "complements" renewable energies such as wind and solar power, for countries "with high levels of renewables in their power generation mix". According to Shell, LNG provides "short-term flexibility and long-term security of supply".

Discussing energy security specifically, the report cited LNG’s continued role in supplanting Russian pipeline natural gas volumes in Europe after Russia invaded Ukraine in 2022. 

The report also acknowledged the "stabilising" role of "milder" temperatures in helping to "balance" the global gas market.  

"This helped bring down and stabilise gas prices in the key importing regions of Europe and east Asia compared with the record highs and unprecedented volatility seen from late 2021 through 2022. However, gas prices and volatility remained significantly higher in 2023 than in the 2017-2020 period. Despite a well-supplied global market in 2023, the lack of Russian pipeline gas supply to Europe and a limited amount of LNG supply growth over the last year mean the global gas market remains structurally tight," the report said.

Global temperature rise is an effect of human-driven climate change resulting in large part from the burning of fossil fuels.

Shell has reached record profits over the period mentioned. Shell reported US$28Bn in annual profits in 2023, a result that was down some 30% from its record-setting profits in 2022.

Shell saw a new chief executive take charge of the company in January 2023 who has promised to shift the company’s strategic focus to high-margin, oil and natural gas production projects.

Shell has recently cut staff and spending, including in the company’s renewables and low-carbon solutions-related divisions.