According to the latest annual LNG Outlook from Shell, the global trade in LNG increased 6 per cent to 380 million tonnes during 2021 amid supply constraints and volatile prices.
Shell says that these conditions (rising demand and supply constraints) caused LNG prices to remain volatile throughout the year. Prices reached record levels in October 2021. This is when Europe, with record low storage levels, struggled to secure LNG cargoes for the winter.
The volatility highlighted the need for a more strategic approach to secure reliable and flexible supply. Shell says an LNG supply-demand gap is to emerge in the mid-2020s. This calls to attention the need for more investment to increase supply and meet rising LNG demand, especially in Asia.
“As countries develop lower-carbon energy systems and pursue net-zero emissions goals, focusing on cleaner forms of gas and decarbonisation measures will help LNG to remain a reliable and flexible energy source for decades to come , ” said Wael Sawan from Shell.
LNG exports grew in 2021 despite the troubles. The U.S. led export growth with a year-on-year increase of 24 million tonnes. Also, it is expected to become the world’s largest LNG exporter in 2022.
On the other hand, China and South Korea led the growth in LNG demand in 2021. China increased its LNG imports by 12 million tonnes to 79 million tonnes. Therefore, it surpassed Japan and become the world’s largest LNG importer.
In 2021 Chinese LNG buyers signed long-term contracts for more than 20 million tonnes a year.
Overall, global LNG demand is expected to cross 700 million tonnes a year by 2040; a 90 per cent increase on 2021 demand. Asia is to consume the majority of this growth.
LNG has a key role to play to further the use of renewable energy. For example, Brazil tripled imports of LNG during 2021 as persistent dry weather led to weaker hydropower generation.
Momentum builds in decarbonising the LNG value chain in 202; Shell In 2021, momentum picked up for decarbonising the LNG value chain with several announcements around investments to address emissions.