During 2021 global trade in liquefied natural gas (LNG) jumped 6% to 380m tonnes due to the economic rebound following the Covid-19 pandemic, according to Shell’s LNG Outlook 2022 report.
Published today (21st February 2022), the report also detailed the highly volatile nature of gas and LNG prices, contributed to by rising demands and supply constraints.
Record highs of gas prices combined with historically low storage levels have contributed to this volatility – an indicator that methods must be developed to secure a more reliable and flexible gas supply to avoid exposure to price spikes.
“Last year showed just how crucial gas and LNG are in providing communities around the world with energy they need as they strived to get back on track following the difficulties caused by the Covid-19 pandemic,” said Wael Sawan, Integrated Gas, Renewables and Energy Solutions Director, Shell.
The report emphasised the importance of investing in the supply of LNG due to an anticipated supply-demand gap in the mid-2020s.
Sawan added, “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.”
The growth of LNG is particularly notable in the Asia Pacific (APAC) region, with China and South Korea leading the growth in LNG demand in 2021.
Export growth was led by the USA, which saw a year-on-year increase of 24m tonnes.
By 2040 forecasts show global LNG demand more than 700m tonnes a year, a 90% increase on 2021 demand.
In addition to providing a steppingstone to fully renewable alternative fuels such as green hydrogen, LNG can also be used to provide energy as a backup in the event of intermittent supply.
This was shown in Brazil where – in 2021 – LNG imports were tripled to over 7m tonnes as long periods of dry weather led to weaker hydropower generation.