According to Shell’s LNG Outlook 2023, Europe’s increasing demand for liquefied natural gas (LNG) will increase rivalry with Asia for the limited amount of additional supply that will be available over the next two years. The paper claimed that the decline in Russian pipeline gas imports following Russia’s invasion of Ukraine was due to the increasing demand for LNG from Europe, especially the UK. In 2022, 121 million tonnes of LNG were imported into European nations, an increase of 60 percent from 2021. The worldwide LNG market was, however, hit by a 15 million tonne decline in China imports as well as a decline in South Asian consumers’ purchases.
As Europe searches for alternate energy supplies in the wake of curtailed Russian pipeline gas flows, the region’s growing need for LNG has emerged as a critical component of the continent’s energy security. A further factor supporting the rising LNG demand is the quick development of new regasification terminals in northwest Europe.
According to Steve Hill, Executive Vice President for Energy Marketing at Shell, “the war in Ukraine has had far-reaching effects on energy security around the world and produced fundamental alterations in the market that are likely to damage the global LNG business over the long term.”
LNG prices have reached record highs due to rising demand, which has caused instability in the world’s energy markets. In order to protect against price increases, the research emphasises the necessity for a more strategic approach to secure a sustainable supply through longer-term contracts.
In 2022, there were 397 million tonnes of LNG traded globally. According to industry predictions, demand for LNG would increase to 650–700 million tonnes yearly by 2040. According to the analysis, further funding for liquefaction projects is required to prevent a supply-demand mismatch that is predicted to materialise by the late 2020s.
In order to strengthen its position in the energy transition, the report’s conclusion emphasised the need for a variety of new technologies to reduce emissions from gas and LNG supply chains. In order to ensure more sustainable energy security in the future, there is also a growing industry focus on the research and application of decarbonised gases, including renewable natural gas, synthetic natural gas, hydrogen, and ammonia.
A strategic approach to energy supply is necessary in light of the significant issue presented by the expanding demand for LNG in Europe and its effects on the worldwide market. In order to avoid future supply-demand gaps, the paper emphasises the necessity for investments in liquefaction facilities. It also stresses how crucial it is to reduce emissions throughout the LNG supply chain in order to achieve sustainability targets.
