Feb 14, 2025 (Baystreet.ca via COMTEX) --
The world's top LNG trader, Shell, expects global demand for liquefied natural gas to jump at least through 2030 in all scenarios it has modeled in a new energy security report.
The 2025 Energy Security Scenarios, which the supermajor says are not expressions of Shell's strategy or business plan, show that LNG demand is set for significant growth in the near term in all three scenarios.
Most analysts expect that by 2030, LNG demand will be fueled by growing consumption of LNG in Europe to offset the loss of Russian pipeline gas supply and ensure enough gas in storage for winter heating seasons, as well as rising demand in Asian economies, to replace part of the coal-fired power generation and to use more gas in industrial production.
Supply, on the other hand, is also set to grow, especially after 2027--thanks to major new expansion projects in the world's second-largest LNG exporter, Qatar, and to new projects launching in the world's biggest exporter, the U.S.
Shell's Three Scenarios of the Future of Energy
In all three of Shell's scenarios, LNG shows significant growth in the near term, fuelled by ongoing projects in Qatar and the USA, reaching around 550 million tonnes per year (mtpa) by the end of the decade.
"Divergence between the scenarios is a function of project timelines up until about 2030, but after that, the scenarios diverge significantly as the different scenario drivers take hold," the supermajor said in the report.
Shell has modeled its new energy security expectations with the rise of AI in mind. The three scenarios are dubbed Surge, Archipelagos, and Horizon and reflect different economic, geopolitical, and energy transition assumptions for the near future and the long term.
In Surge, Shell assumes that AI technologies take root and lead to a period of stronger economic growth and a surge in energy demand globally.
The Archipelagos scenario assumes that the security mindset that is very visible today becomes entrenched worldwide, with national self-interest prevailing. In this scenario, Shell expects global sentiment to shift away from managing emissions towards resource, border, and trade security.
Finally, the Horizon scenario assumes that the world reaches net-zero CO2 emissions by 2050 and delivers a global average temperature rise below 1.5 degrees Celsius by 2100.
Surge is the most bullish scenario for energy and LNG demand and supply growth, with LNG supply continuing to grow, reaching 700 mtpa. Most of the additional supply would come from new projects in North America, some of which will involve new field production and new LNG facilities. LNG's market share of overall global gas demand would reach around 25% by 2050, up from around 14% in 2024, Shell says.
Heightened focus on energy security in the Archipelagos scenario will have a net effect of a well-balanced and stable LNG market throughout the 2030s, plateauing at around 600 mpta.
In Horizon, the net-zero scenario, global gas demand would need to begin declining this decade for net zero in 2050. This would begin to affect LNG, with demand peaking in the early 2030s. This results in existing infrastructure operating at low utilization rates as demand falls faster than the natural decline rate of the assets.
Actual global economic and political developments and demand for fossil fuels, including LNG, will certainly be somewhere between these scenarios. Currently, the world appears closest to the Archipelagos model, with energy and trade security at the top of buyers' minds.
Oil Demand
Shell's scenarios also include estimates of peak oil demand, depending on the scenario. But in all three models, electrification of road transport is the main reason for the world reaching peak oil demand, which is after 2030 in Archipelagos and Surge and before 2030 in the net-zero Horizon model.
However, demand for oil is not going away, and it will be there in the 22nd century, Shell says, noting that in Horizon, oil is used solely for petrochemicals by 2100.
Shell also stressed in its report that global oil demand is likely to grow by 3?5 million barrels per day (bpd) into the early 2030s, with a long but slow decline after that as petroleum remains an affordable and convenient fuel, particularly in transport, and an important feedstock for the petrochemical industry.
Finally, Shell highlights that continued oil and gas investment will be needed in all three scenarios, including Horizon.
"Upstream investment is currently around $600 billion a year. This will be required for decades to come as the rate of depletion of oil and gas fields is two to three times the potential future annual declines in demand," Shell said.
The supermajor, along with the other European oil and gas giants such as BP and Equinor, has recently announced a return to the basics, targeting to boost hydrocarbon production and scaling back investments and targets in the renewable energy sector. The pivot has not been only dictated by the heightened energy security and affordability issues since 2022, but also by Big Oil's charm offensive to offer compelling returns to shareholders.
By Tsvetana Paraskova for Oilprice.com
COMTEX_462776892/2559/2025-02-14T06:57:26
