Shell: Demand for LNG will increase by more than 50% by 2040

Shell expects global demand for liquefied natural gas (LNG) to increase by more than 50 percent by 2040.

The FTSE 100-listed oil giant said the switch from industrial coal to gas is accelerating in China and South Asian and South East Asian countries.

Shell’s LNG forecasts are slightly lower than last year and the group expects natural gas demand to peak after 2040. In some regions, demand for natural gas has already peaked.

Steve Hill, executive vice-president of Shell Energy, said: ‘China is likely to dominate LNG demand growth this decade as Chinese industry looks to reduce CO2 emissions by switching from coal to gas.

‘With China’s coal sector responsible for more emissions than the total emissions of Britain, Germany and Turkey combined, gas has a vital role to play in tackling one of the world’s largest sources of carbon emissions and local air pollution.’

Shell added: ‘Over the next decade, declining domestic gas production in parts of South Asia and South East Asia could drive a surge in demand for LNG as these economies increasingly require fuel for gas-fired power stations or industry .

“However, countries in South Asia and Southeast Asia would require significant investments in gas import infrastructure.”

Shell said LNG demand is expected to be around 625 million to 685 million tonnes per year in 2040, compared with 404 million tonnes last year.

Last year, Shell said demand for LNG would be between 650 million and 700 million tonnes.

Shell said LNG continued to play a “critical role” in European energy security last year, following a slump in Russian pipeline exports to Europe in 2022.

European LNG imports remained at similar levels to 2022, despite an overall decline in European gas demand in 2023, Shell said.

LNG is natural gas that has been brought to a liquid state through a cooling process.

According to National Grid, LNG produces 40 percent less carbon dioxide than coal and 30 percent less than oil.

Shell’s profits fell by almost 30 percent last year, but the energy giant still earned more than £22 billion.

A sharp fall in oil and gas prices saw profits fall by almost a third, from a record £31.6 billion in 2022 to £22.4 billion in 2023.

But the oil giant still beat analyst expectations of £21.2bn for the year, while posting a profit of £60m a day. Greenpeace activists held a mock ‘profit party’ outside Shell’s London headquarters in protest.

Shell shares rose 0.92 percent or 23.00p to 2,511.50p on Wednesday afternoon.