Global LNG demand is forecasted to experience substantial growth beyond 2040, primarily driven by the accelerating trend of industrial coal-to-gas switching in China and the burgeoning economic development in South Asia and Southeast Asia. According to Shell’s LNG Outlook 2024, this surge in demand reflects a shift towards cleaner energy sources and the need for fuel to support expanding industries.
In 2023, global trade in LNG reached 404 million tonnes, a slight increase from the previous year, with tight supplies constraining growth and maintaining prices and volatility above historic averages. Despite some regions reaching peak natural gas demand, the overall global demand is anticipated to rise significantly, with LNG demand projected to reach approximately 625-685 million tonnes annually by 2040.
Declining domestic gas production in parts of South Asia and Southeast Asia is expected to fuel a surge in LNG demand as these regions increasingly rely on gas for power generation and industrial purposes.
The report also emphasizes the complementary role of gas alongside renewable energy sources like wind and solar power, providing flexibility and security of supply in countries with high levels of renewables in their energy mix.
In Europe, LNG played a critical role in ensuring energy security, particularly following a decline in Russian pipeline exports in 2022. Despite stable LNG imports in 2023, European gas prices and volatility remained higher compared to pre-2021 levels due to structural tightness in the global gas market.