The global trade in liquefied natural gas (LNG) increased by 6% to 380 million tonnes during 2021 as many countries recovered from the economic impact of the COVID-19 pandemic, Shell announced in its latest annual LNG Outlook.
According to the report, the rise in LNG demands with limitations in supply caused volatility in gas and LNG prices during the year. Moreover, prices soared to high levels in October 2021 as Europe, with notably low storage levels, struggled to amass sufficient LNG cargoes to satisfy the expected winter gas demand.
“The volatility emphasizes the need for a more strategic approach to secure reliable and flexible gas supply in future to avoid exposure to price spikes,” it said in a statement from Shell. “An LNG supply-demand gap is forecast to emerge in the mid-2020s and focuses attention on the need for more investment to increase supply and meet rising LNG demand, especially in Asia.”
“Last year showed just how crucial gas and LNG are in providing communities around the world with energy they need as they strived to get back on track following the difficulties caused by the COVID-19 pandemic,” said Wael Sawan, Integrated Gas, Renewables and Energy Solutions Director at Shell.
“As countries develop lower-carbon energy systems and pursue net-zero emissions goals, focusing on cleaner forms of gas and decarbonization measures will help LNG to remain a reliable and flexible energy source for decades to come,” he added.
Shell noted that in 2021 LNG exports grew despite a number of unexpected outages that dented LNG available for delivery led by the U.S., China, and South Korea.
The statement from Shell pointed out that during 2021 Chinese LNG buyers signed long-term contracts for more than 20 million tonnes a year. This indicated an ongoing role for LNG in coal-to-gas switching in powering key sectors and helping to achieve its carbon-neutral ambitions by 2060.
The report predicted also that the global LNG demand will cross 700 million tonnes a year by 2040, a 90% increase on 2021 demand. It added that Asia is expected to consume the majority of this growth as domestic gas production decreases, regional economies experience growth, and LNG replaces higher-emissions energy sources, which will help in addressing air quality concerns and support progress towards carbon emissions targets.