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Shell forecasts potential LNG supply shortage due to surge in global demand

THE HAGUE, NETHERLANDS — Royal Dutch Shell says the global liquefied natural gas market has defied market observers’ expectations as demand grew by 30 percent last year, and added in its annual LNG Outlook that potential shortage could be on the horizon.

According to Shell’s 2018 LNG Outlook, LNG imports grew by 29 million tonnes in 2017 to a worldwide total of 293 million tonnes. Based on current demand projections, Shell said it sees the potential for a supply shortage developing in the mid-2020s unless new LNG production project commitments are made soon.

Japan remained the world’s largest LNG importer in 2017, while China moved into second place as Chinese imports surged past South Korea’s. Total demand for LNG in China reached 38 million tonnes, a result of continued economic growth and policies to reduce local air pollution through coal-to-gas switching.

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“We are still seeing significant demand from traditional importers in Asia and Europe, but we are also seeing LNG provide flexible, reliable and cleaner energy supply for other countries around the world,” said Maarten Wetselaar, Integrated Gas and New Energies Director at Shell. “In Asia alone, demand rose by 17 million tonnes. That’s nearly as much as Indonesia, the world’s fifth-largest LNG exporter, produced in 2017.”

LNG has played an increasing role in the global energy system over the last few decades. Since 2000, the number of countries importing LNG has quadrupled and the number of countries supplying it has almost doubled. LNG trade increased from 100 million tonnes in 2000 to nearly 300 million tonnes in 2017. That’s enough gas to generate power for around 575 million homes.

The report from Shell Canada’s parent company raises hopes that the company will make a positive final investment decision on the proposed LNG Canada facility near Kitimat later this year. LNG Canada, in which Shell holds a 50 percent stake, announced at the beginning of the month that it had narrowed the field to two preferred proponents to conduct engineering, procurement, and construction work on the proposed LNG export facility.

Shell’s full 2018 LNG Outlook can be found here: https://www.shell.com/energy-and-innovation/natural-gas/liquefied-natural-gas-lng/lng-outlook.html

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