LNG Trade Could Match 2025 despite Mideast Crisis, Shell Says
If shipping through the Strait of Hormuz normalizes this summer, traded volumes of liquefied natural gas (LNG) could still be at the level of last year despite impact from the Middle East war, according to Shell PLC.
"The ramp up of new liquefaction facilities in North America, improved performance at existing plants and slower Asian imports of LNG have partially offset the impact of reduced supply from the Middle East", the British energy giant said in its annual LNG outlook Tuesday.
This year was expected to outperform the 422 million metric tons recorded for 2025. "However, severe disruption to shipping through the Strait of Hormuz has shut in around one fifth of the world’s monthly LNG supply since the conflict started, pushing up prices on the spot market and adversely affecting some countries in Asia", Shell said. Spot prices for LNG in Asia rose to over $20 per million British thermal units (MMBtu) at the peak of the crisis, it said.
Nonetheless the LNG sector showed greater resilience compared to 2022 in the aftermath of Russia's invasion of Ukraine, Shell noted.
"With long-term supply agreements accounting for around two-thirds of total LNG trade, the average price that buyers paid for LNG in May was around $11-12 per MMBtu, compared to $7-11 in January before the conflict began", it said.
Shell expects the trade in LNG to return to growth next year, toward an increase to nearly 700 million metric tons a year by 2050.
"About 180 million tonnes of annual new supply is forecast to enter the market by 2030, improving the availability and affordability of gas and opening up demand in new markets", it said.
"However, the ability to benefit from new supply will depend on the availability of infrastructure in importing countries, including regasification capacity and pipeline connectivity, especially in South and Southeast Asia.
"Forecasts show that those regions will account for around 40 percent of global LNG imports by 2050 to meet rapidly growing demand for energy with lower emissions than coal. In more mature Asian markets such as Japan, data centers are emerging as a new source of power demand.
"Emerging segments of demand are also growing rapidly. According to forecasts, LNG bunkering will grow seven-fold to 27 million tonnes by 2035, more than the amount of LNG imported by India last year.
"LNG will continue to have a vital role to deliver energy security to Europe, to balance intermittent renewables as domestic gas production declines.
"To meet the growing demand, significant additional investment will be needed in new LNG liquefaction plants through the 2030s and 2040s, with around 200 million tonnes a year of new supply needed, in addition to projects already under construction".
Last year Shell's LNG sales increased 11 percent to 72.9 million metric tons, according to the company's annual report. Its liquefaction volumes totaled 28.4 million metric tons. Shell aims to increase its LNG sales by 4-5 per year through 2030, as announced on investor day in 2025.
To contact the author, email jov.onsat@rigzone.com
What do you think? We’d love to hear from you, join the conversation on the
Rigzone Energy Network.
The Rigzone Energy Network is a new social experience created for you and all energy professionals to Speak Up about our industry, share knowledge, connect with peers and industry insiders and engage in a professional community that will empower your career in energy.