27 February 2018, Sweetcrude, Lagos – The Royal Dutch Shell says the world could face a shortage of liquefied natural gas, LNG, within a decade due to underinvestment in new projects.
Shell, in its recently-released LNG Outlook 2018, said the demand for LNG is growing faster than expected, forecasting a supply shortage by the mid-2020s.
The global liquefied natural gas (LNG) market has continued to defy expectations of many market observers, with demand growing by 29 million tonnes to 293 million tonnes in 2017, the company said in a press statement on Monday.
Based on current demand projections, Shell sees the potential for a supply shortage developing in the mid-2020s, unless new LNG production project commitments are made soon.
The report is coming on the heels of a new Energy Information Administration (EIA) brief that confirms China surpassed South Korea last year to become the world’s second largest LNG importer, behind Japan. Its appetite for LNG is only expected to grow.
LNG projects around the world were put on the back burner in recent years thanks to a sharp drop in oil prices, and new supplies of LNG coming onto the market, mainly from Australia and, more recently, the U.S.
Analysts predicted that new LNG supplies coming online would create a temporary glut. But Shell’s latest outlook suggests Asian buyers are absorbing new supplies of LNG as soon as they come onto the market.
“Based on current demand projections, Shell sees potential for a supply shortage developing in mid-2020s, unless new LNG production project commitments are made soon,” the company said.