Global LNG demand expected to almost double by 2040: Shell

FILE PHOTO: A liquefied natural gas (LNG) tanker is tugged towards a thermal power station in Futtsu, east of Tokyo, Japan November 13, 2017. REUTERS/Issei Kato/File Photo

LONDON (Reuters) - Global liquefied natural gas (LNG) demand is expected to almost double to 700 million tonnes by 2040, Royal Dutch Shell said in its annual LNG market outlook.

Demand was 360 million tonnes last year, up slightly from 2019’s 358 million tonnes, despite volatility caused by lockdowns during the coronavirus pandemic.

Global LNG prices hit a record low early in 2020 but ended the year at a six-year high as demand in parts of Asia recovered and winter buying increased amid tightened supply, Shell said.

Asia is expected to drive nearly 75% of LNG demand growth to 2040 as domestic gas production declines and LNG substitutes higher emission energy sources.

Last year, China and India led the recovery in demand for LNG following the outbreak of the pandemic. China increased its LNG imports by 7 million tonnes to 67 million tonnes in 2020, an 11% increase from the year before.

China’s target to become carbon neutral by 2060 is expected to continue driving up its LNG demand.

India also increased imports by 11% in 2020 as it took advantage of lower-priced LNG to boost its domestic gas production.

A gap between supply and demand is expected to open in the middle of this decade with less new production coming on stream than previously projected, the outlook showed.

Only 3 million tonnes of new LNG production capacity was announced in 2020, down from an expected 60 million tonnes.

Reporting by Nina Chestney; editing by Jason Neely and Emelia Sithole-Matarise