Page 4 - GLNG Week 09

GLNG COMMENTARY GLNG
Long-term optimism, short-term worries
In the long term, there is more confidence in LNG demand growth, as illustrated by Royal Dutch Shell’s latest LNG Outlook
PERFORMANCE
WHAT:
Shell expects LNG demand to double to 700mn tonnes by 2040.
WHY:
The company believes natural gas will play a growing role in shaping a lower-carbon energy system.
WHAT NEXT:
The forecast comes as the short-term outlook for LNG is increasingly gloomy.
THE short-term outlook for the global LNG market is increasingly bleak as the coronavirus (COVID-19) outbreak hits demand. But this has not stopped more confident predictions of LNG’s long-term potential from emerging.
In late February, Royal Dutch Shell released its latest annual LNG Outlook – a report it has been publishing since 2017. Shell’s findings on LNG trends over the course of last year – as well as its expectation for future years – illus- trate the growing role the fuel is playing in the global energy mix. And Shell appears to expect that in the long run, demand for cleaner-burn- ing energy will help the LNG market to grow further still.
Looking back
Shell said in its report that global demand for LNG grew by 12.5% to 359mn tonnes in 2019. This marked a “significant increase”, bolstering the role of LNG in the energy transition, it noted.
On the supply side, 40mn tonnes came online in 2019 – an industry record – and confidence in long-term demand was further illustrated by a wave of final investment decisions (FIDs) on a combined 71mn tonnes of new liquefaction capacity. Indeed, the amount of capacity to be
approved was also at a record high last year. “The global LNG market continued to evolve in 2019, with demand increasing for LNG and natural gas in power and non-power sectors,” Shell’s director of integrated gas and new ener- gies, Maarten Wetselaar, said in a statement. “Record supply investments will meet people’s growing need for the most flexible and clean-
est-burning fossil fuel.”
Shell found that Europe absorbed the major-
ity of last year’s supply growth, while imports to Asia only rose modestly compared with 2017 and 2018. This was attributed to a combination of factors. In Europe, the growing availability of cheap LNG accelerated coal-to-gas switch- ing. The trend was boosted by the decline of domestic European gas production, as well as pipeline imports, and led to imports of LNG to the region rising by 74%.
In Asia, meanwhile, mild weather and an increase in nuclear generation in Japan and South Korea – two of the leading LNG import- ers globally – served to dampen appetite for the super-chilled fuel. However, demand rose 14% in China in 2019, as the country contin- ued its efforts to improve air quality. In addition, demand increased in South and Southeast Asia,
On the supply side, 40mn tonnes came online in 2019 – an industry record.
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w w w . N E W S B A S E . c o m Week 09 05•March•2020