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Investing.com -- Global demand for liquefied natural gas (LNG) is set to rise by approximately 60% by 2040, primarily driven by Asia’s economic growth, decarbonisation in industry and transport, and the impact of artificial intelligence, according to Shell’s LNG Outlook 2025.
Shell (LON:SHEL) forecasts global LNG demand to reach between 630 million and 718 million tonnes annually by 2040, a higher forecast than the previous year.
“Upgraded forecasts show that the world will need more gas for power generation, heating and cooling, industry and transport to meet development and decarbonisation goals,” said Tom Summers, Senior Vice President for Shell LNG Marketing and Trading.
Despite a sluggish 2-million-tonne growth in global LNG trade in 2024, the lowest increase in a decade, Shell said more than 170 million tonnes of new LNG supply is expected by 2030.
However, the oil and gas giant notes that uncertainties remain over project start-up timelines.
China and India are expanding their natural gas infrastructure to meet growing demand, states Shell.
They explain that China is boosting LNG import capacity and aims to add piped gas connections for 150 million people by 2030.
“India is also moving ahead with building natural gas infrastructure and adding gas connections to 30 million people over the next five years,” adds the firm.
Shell adds that the shipping sector is also set for a 60% increase in LNG demand by 2030, driven by a growing fleet of LNG-powered vessels.
Meanwhile, Europe’s reliance on LNG is expected to persist into the 2030s, supporting renewable energy and energy security.
On the supply side, Shell says Qatar and the U.S. will lead global LNG production growth, with U.S. exports projected to reach 180 million tonnes annually by 2030, making up a third of global supply.
Reacting to the report, analysts at RBC Capital said, "Shell’s presentation points to various themes at play in the LNG market last year."
"In a recent meeting with CEO Wael Sawan and CFO Sinead Gorman, Shell pointed to continued growth in the LNG market, where it has a #1 presence among peers," said the bank. "The next leg of the story here is the start-up of LNG Canada phase 1 in the coming months and the sanctioning of phase 2, with both key not only for the investment case, but also broader market balances."
"While opinions remain split on demand-supply balances, the growth of the LNG market remains undisputed and Shell appears set to continue being a key player."