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Global Demand Bolstering LNG's Growing Role

Global Demand Bolstering LNG's Growing RoleGlobal Demand Bolstering LNG's Growing Role

Global demand for LNG grew by 12.5% to 359 million tons in 2019, according to Royal Dutch Shell’s latest annual LNG Outlook, bolstering LNG’s growing role in the transition to a lower-carbon energy system.
Last year saw some key developments that are helping to reshape the industry, one of which was an industry record of 40 million tons of additional supply becoming available and being consumed by the market, Bloomberg reported.
Moreover, the growing role of gas in improving air quality through coal-to-gas switching in the power and industrial sectors kept rising, with coal generation phase-out announcements more than tripling.
Natural gas emits between 45 and 55% fewer greenhouse gas emissions and less than one-tenth of the air pollutants than coal when used to generate electricity.
“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.” 
Europe absorbed the majority of 2019 supply growth as competitively-priced LNG furthered coal-to-gas switching in the power sector and replaced declining domestic gas production and pipeline gas imports.
New spot-trading mechanisms and a wider variety of indices used for long-term contracts point towards LNG becoming an increasingly flexible commodity.

 

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