Friday, April 19, 2024

Shell forecasts global LNG demand to reach 685 million tons

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Audina Nur

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Shell’s LNG market outlook predicts a 50 percent increase in liquefied natural gas demand by 2040 as the coal-based industry transitions to gas in China and some countries in South and Southeast Asia.

Shell projects LNG demand in 2040 to range from 625 million tons to 685 million tons annually after 2040. Shell noted that global LNG trade totaled 404 million tons in 2023, a significant increase from trade throughout 2022 at 397 million tons. However, demand for natural gas in several countries has peaked, although an upward trend is projected to continue until 2040.

“China seems poised to dominate LNG demand growth this decade as industries strive to reduce emissions by switching to gas,” Shell Energy Vice President Steve Hill said in a media statement on Thursday, February 15, 2024.

He added that the decline in domestic gas production in several countries in South and Southeast Asia would boost LNG demand for decarbonization efforts from several developing countries in the future. However, countries in South and Southeast Asia will need massive investments to build future gas import infrastructure.

On the other hand, Shell projects that countries with renewable energy sources (RES) such as wind and solar panels are still not flexible enough to rely entirely on clean power plants at present. With the increasing import demand for LNG from China, South Asia, and Southeast Asia, Japan has shown a declining trend in LNG imports since 2011 amid an increase in nuclear power plant capacity in the region. LNG imports from Japan reached around 60 million tons in 2023, significantly down from around 100 million tons of LNG purchases in 2011.

“Input related to LNG supply and demand globally and in Asia is being studied and discussed,” Steve said.

As previously reported, the Japanese oil giant, Inpex Corporation, is currently seeking long-term gas buyers for the Abadi LNG project in the Masela Block. Inpex, along with partners PT Pertamina Hulu Energi Masela and Petronas Masela Sdn. Bhd., has recently been focusing on the growing LNG market in Asia, projected to significantly expand until 2040.

President & CEO of Inpex, Takayuki Ueda, stated that they have received initial interest from several buyers in Asia, outlined in letters of intent (LoI). The potential gas demand gathered so far amounts to approximately 25 million tons per year (mtpa).

“So the challenge ahead is how, together with Pertamina and Petronas, we must convert this non-binding interest into binding gas sales agreements,” Takayuki said during the 2023 financial results press conference on Thursday, February 15, 2024.

Takayuki mentioned that the LNG market in Asia has recently shown promise in absorbing liquefied natural gas supplies from the Masela Block. Inpex has been coordinating with Pertamina and Petronas regarding the possibility of long-term LNG contracts from the Abadi gas field.

“Without long-term LNG sales contracts, the financing of the [Masela Abadi] project will face difficulties in the future, so we are looking for contracts that extend over 10 years,” he added.

Audina Nur

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Editor

 

Interview

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