Shell Releases Report: Global Liquefied Natural Gas Demand to Grow by 65%

Recently, Shell released the “Liquefied Natural Gas (LNG) Outlook 2026” report (hereinafter referred to as the “Report”), which projects that, as countries continue to prioritize the flexible and reliable energy security provided by natural gas and LNG, global LNG demand will grow to nearly 700 million tonnes per year by 2050—up roughly 65% from 2025 levels.

The report indicates that global LNG trade volume will reach 422 million tonnes by 2025. However, since severe disruptions to shipping through the Strait of Hormuz earlier this year, roughly one-fifth of the world’s monthly LNG supply has been cut off, driving up spot market prices. Data show that, with long-term supply contracts accounting for about two-thirds of total LNG trade, buyers paid an average of approximately $11 to $12 per million British thermal units in May. By contrast, the average price in January was only $7 to $11 per million BTU.

However, the report also notes that the commissioning of new LNG liquefaction capacity in North America, improvements in the operational efficiency of existing plants, and a slowdown in LNG imports in Asia have partially offset the impact of reduced supply from the Middle East.

“This conflict in the Middle East has triggered systemic shocks, with ripple effects across all sectors of the economy. However, the LNG industry has demonstrated remarkable resilience and the ability to adapt to evolving market conditions,” said Cédric Cremers, President of Integrated Gas at Shell. “Although further investment is still needed to strengthen infrastructure on both the supply and demand sides, the sector’s long-term prospects remain robust, and LNG will continue to serve as a stabilizing force within the global energy system.”

The report projects that, should shipping through the Strait of Hormuz return to normal this summer, global LNG trade volumes could remain on par with last year and are expected to resume growth by 2027.

On the supply side, the report indicates that by 2030, an additional 180 million tonnes per year will enter the market. Among these, South Asia and Southeast Asia will emerge as the primary importers, accounting for roughly 40% of global LNG imports by 2050. However, the report underscores that the ability to capitalize on this new supply will hinge on the availability of infrastructure in importing countries, including regasification capacity and pipeline connectivity.

Meanwhile, demand in emerging sectors is also growing rapidly. The report projects that by 2035, LNG bunkering volumes will increase sevenfold to 27 million tonnes, surpassing India’s total LNG imports last year.

To meet growing demand, the report concludes that, in addition to projects already under construction, substantial additional investment will be required in the 2030s and 2040s to build new LNG liquefaction facilities, with an estimated annual capacity expansion of approximately 200 million tonnes.

Notably, the report also highlights that the current LNG market is more resilient than in the past. Even at the height of the recent crisis in the Middle East, Asian LNG spot prices briefly surged above $20 per million British thermal units, yet this level remained significantly lower than the prices observed during the 2022 Russia-Ukraine conflict, when disruptions to natural gas supplies sent prices soaring.

Source: China Energy News