Global LNG Demand Up 12.5% in 2019

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Written by Martin Lynch, European News Editor for Industrial Info (Galway, Ireland)--Global demand for liquefied natural gas (LNG) grew by 12.5% to 359 million tons in 2019, with Europe absorbing the majority of that growth.

The figures from the annual LNG Outlook by Royal Dutch Shell plc (NYSE:RDS.A) (The Hague, Netherlands) highlighted how competitively priced LNG furthered coal-to-gas switching in Europe's power sector as well as replacing declining domestic gas production and pipeline gas imports. Last year saw an "industry record" of 40 million tons of additional supply becoming available and being consumed by the global market. Shell pointed to the growing role of gas in improving air quality through coal-to-gas switching in the power and industrial sectors, "with coal generation phase-out announcements more than trebling." Many of Europe's leading countries have pledged to end the use of coal-fired power while many coal-fired projects are finding it increasingly difficult to find funding. Last week, Industrial Info reported that the future of the last coal-fired power plant project to be built in Poland had its funding suspended by key backers. For additional information, see February 26, 2020, article--<Funding Halts for Poland's Last Coal-Fired Power Plant.

- insert story link "The global LNG market continued to evolve in 2019 with demand increasing for LNG and natural gas in power and non-power sectors," said Maarten Wetselaar, integrated gas and new energies director at Shell. "Record supply investments will meet people's growing need for the most flexible and cleanest-burning fossil fuel. While we see weak market conditions today due to record new supply coming in, two successive mild winters and the coronavirus situation, we expect equilibrium to return, driven by a combination of continued demand growth and reduction in new supply coming on-stream until the mid-2020s."

The outlook stated that "the belief in long-term demand growth has triggered record investment decisions in liquefaction capacity of 71 million tonnes." There has also been an increase in diversity of contractual structures, providing a wider range of options to LNG buyers.

Looking ahead, Shell expects the LNG sector to thrive, with global LNG demand expected to double to 700 million tons by 2040. Asia will remain the dominant region in the decades to come, Shell stated, with south and southeast Asia generating more than half of the increased demand.

In 2019, there was only a modest rise in imports to Asia compared to the previous two years, thanks to mild weather and rising electricity generation from nuclear power in Japan and South Korea, two of the three largest global importers. In China, LNG imports increased by 14% in 2019 as efforts continued to improve urban air quality. Also notable was LNG demand growth in South Asia. In total, Bangladesh, India and Pakistan imported 36 million tonnes, an increase of 19% over last year, pointing to emerging growth countries in Asia.

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