Global LNG trade increased to 360 mn tons in 2020: Shell

Shell LNG

Global liquefied natural gas (LNG) trade increased to 360 million tons in 2020 from 358 million tons in 2019, according to Shell’s latest annual LNG Outlook.

Though marginal, the increase in volume reflects the resilience and flexibility of the LNG market in 2020. The year 2020 saw losses to global GDP of several trillion dollars as economies large and small struggled to contain the COVID-19 outbreak.

Global LNG prices hit a record low early in the year but ended the 12-month period at a six-year high as demand in parts of Asia recovered and winter buying increased against tightened supply.

“LNG provided flexible energy which the world needed during the COVID-19 pandemic, demonstrating its resilience and ability to power people’s lives in these unprecedented times,” said Maarten Wetselaar, Integrated Gas, Renewables and Energy Solutions Director at Shell.

Countries and companies, including Shell, are adopting net-zero emissions targets and seeking to create lower-carbon energy systems. Natural gas and LNG are one of the cleanest-burning fossil fuels.

Natural gas emits between 45 percent and 55 percent fewer greenhouse gas emissions and less than one-tenth of the air pollutants than coal when used to generate electricity.

China increased its LNG imports by 7 million tons to 67 million tons, an 11 percent increase for the year.

China’s announcement of a target to become carbon neutral by 2060 is expected to continue driving up its LNG demand through the key role gas can play in decarbonising hard-to-abate sectors, namely buildings, heavy industry, shipping and heavy-duty road transport.

India increased imports by 11 percent in 2020 as it took advantage of lower-priced LNG to supplement its domestic gas production.

Two major Asian LNG-importing countries – Japan and South Korea –announced net-zero emissions targets in 2020. To meet its net-zero target, South Korea aims to switch 24 coal-fired power plants to cleaner-burning LNG by 2034.

Demand in Europe, alongside flexible US supply, helped to balance the global LNG market in the first half of 2020. However, supply outages in other basins, structural constraints and extreme weather later in the year resulted in higher prices.

LNG market to 2040

Global LNG demand is estimated to hit 700 million tons by 2040. Asia is expected to drive nearly 75 percent of this growth as domestic gas production declines and LNG substitutes higher emission energy sources, tackling air quality concerns and meeting emissions targets.

China’s duty transport sector consumed nearly 13 million tons of LNG in 2020, almost doubling from 2018, to serve the fleet of well over 500,000 LNG-fuelled trucks and buses. LNG-fuelled shipping vessels are expected to more than double and global LNG bunkering vessels set to reach 45 by 2023.

Three million tons in new LNG production capacity was announced in 2020 as against an expected 60 million tons.

More than half of future LNG demand will come from countries with net-zero emissions targets. The LNG industry will need to innovate at every stage of the value chain to lower emissions and play a key role in powering hard-to-abate sectors.