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Global LNG demand is set to grow significantly beyond 2040, driven by Far East markets; plus African project news
21/2/2024
Gas is forecast to be a key bridging fuel on the road to net zero. According to the latest analysis from oil and gas major Shell, global LNG demand is expected to rise by more than 50% by 2040 as industrial coal-to-gas switching gathers pace in China, while south and south-east Asian countries use more LNG to support their economic growth.
Shell’s LNG Outlook 2024 report notes that global trade in LNG reached 404mn tonnes in 2023, up from 397mn tonnes in 2022, with tight supplies of LNG constraining growth while maintaining prices and price volatility above historic averages. Demand for natural gas has already peaked in some regions but continues to rise globally, with LNG demand expected to reach around 625–685mn t/y in 2040, according to the latest industry estimates.
‘China is likely to dominate LNG demand growth this decade as its industry seeks to cut carbon emissions by switching from coal to gas,’ comments Steve Hill, Executive Vice President for Shell Energy. ‘With China’s coal-based steel sector accounting for more emissions than the total emissions of the UK, Germany and Turkey combined, gas has an essential role to play in tackling one of the world’s biggest sources of carbon emissions and local air pollution.’
Over the following decade, declining domestic gas production in parts of south and south-east Asia could drive a surge in demand for LNG as these economies increasingly need fuel for gas-fired power plants or industry. However, countries in the region would need significant investments in gas import infrastructure, notes the study.
The report states that gas complements wind and solar power in countries with high levels of renewables in their power generation mix, providing short-term flexibility and long-term security of supply.
Looking to Europe, LNG continued to play a vital role in the region’s energy security in 2023, following a slump in Russian pipeline exports to Europe in 2022, with new regasification facilities helping to improve security of energy supplies. European LNG imports remained at similar levels to 2022, despite an overall decline in European gas demand in 2023.
Relatively mild winter temperatures in countries that rely on gas for heating, combined with high gas storage levels, stronger nuclear power generation and a modest economic recovery in China, all helped balance the global gas market in 2023, according to the report.
This helped bring down and stabilise gas prices in the key importing regions of Europe and East Asia compared to the record highs and unprecedented volatility seen from late 2021 through 2022. However, gas prices and volatility remained significantly higher in 2023 than in the 2017–2020 period.
Despite a well-supplied global market in 2023, the lack of Russian pipeline gas supply to Europe and a limited amount of LNG supply growth over the last year mean that the global gas market remains structurally tight, concludes the study.
West African LNG project reaches major milestone
In other gas news, the floating LNG (FLNG) vessel that is a core component of the Greater Tortue Ahmeyim (GTA) LNG project has arrived at its destination on the Mauritanian and Senegalese maritime border.
Capable of storing up to 125,000 m3 of LNG, the Gimi FLNG vessel lies at the heart of the GTA Phase 1 development, operated by BP with partners Kosmos Energy, Petrosen and SMH.
GTA Phase 1 is set to produce around 2.3mn t/y of LNG for more than 20 years.
With wells located in water depths of up to 2,850 metres, the project has the deepest subsea infrastructure in Africa to date.
New gas joint venture
Meanwhile, ADNOC and BP have unveiled plans to form a new gas joint venture in Egypt.
As part of the agreement, BP (51%) will contribute its interests in three development concessions in Egypt – Shorouk (BP 10% interest, containing the producing Zohr field) operated by Belayim Petroleum (Petrobel); North Damietta (BP 100% interest, containing the producing Atoll field) operated by Pharaonic Petroleum Company (PhPC); and North El Burg (BP 50% interest, containing the undeveloped Satis field) operated by PhPC – as well as its stakes in the North El Tabya, Bellatrix-Seti East and North El Fayrouz exploration concession agreements.
ADNOC (49%) will make a proportionate cash contribution.
According to Musabbeh Al Kaabi, ADNOC Executive Director for Low Carbon Solutions and International Growth, the new venture partnership is expected to ‘enhance Egyptian energy security and the economic potential of the region’s most populous Arab country’.
