Global liquefied natural gas (LNG) demand is expected to almost double to 700 million tonnes by 2040, Royal Dutch Shell said in its annual LNG market outlook.
Demand was 360 million tonnes last year, up slightly from 2019's 358 million tonnes, despite volatility caused by lockdowns during the coronavirus pandemic.
Global LNG prices hit a record low early in 2020 but reached record highs at the start of this year due to high winter demand, supply outages and infrastructure bottlenecks.
"While COVID-19 derailed expected forecasts...the industry reacted swiftly to changing market conditions, diverting cargoes to shifting demand centers and through adjusting supply," the outlook said.
Asia is expected to drive nearly 75% of LNG demand growth to 2040 as domestic gas production declines and LNG substitutes higher emission energy sources.
Last year, China and India led the recovery in demand for LNG following the outbreak of the pandemic. China increased its LNG imports by 7 million tonnes to 67 million tonnes in 2020, an 11% increase from the year before.
China’s target to become carbon neutral by 2060 is expected to continue driving up its LNG demand.
India also increased imports by 11% in 2020 as it took advantage of lower-priced LNG to boost its domestic gas production.
Globally, the number of LNG-fuelled vehicles and demand from the marine sector for LNG is also growing.
Shell said it expects the gap between supply and demand is expected to open in the middle of this decade with less new production coming on stream than previously projected and LNG demand expected to rebound.
Lockdowns around the world have delayed construction and timelines for new LNG liquefaction plants which could have an effect on the market in the medium term.
Only 3 million tonnes of new LNG production capacity was announced in 2020, down from an expected 60 million tonnes.
(Reporting by Nina Chestney; editing by Jason Neely and Emelia Sithole-Matarise)