Don’t view gas as a transition fuel, argues Shell President

The key role of gas in powering present and future economies means it should not be seen as a transition fuel, according to Cederic Cremers, President of Integrated Gas for Shell.

Speaking at the Gas, LNG and Future of Energy conference in London, he said, “I don’t believe it’s a transition fuel per se. It tends to be an additive story. I don’t think it will be a bridge and then disappear.”

His comments were made in a session exploring the relationship between gas and electrification in the future energy mix. The prevailing narrative is that gas, and LNG in particular, is transitionary and will be phased out once countries fully decarbonise, and renewables and electrification reach scale.

“In the next 10 years, LNG will have the biggest impact in reducing emissions,” he said. “The amount of LNG supply that’s come into the market in the last two years has been historically low, so there’s an element of catch-up there. In India and China, between 80 and 100 million people will get access to the gas grid over the next five years.”

Shell is a large offtaker of US LNG, noted Cremers.

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“We work with a variety of partners that have strong projects – it’s a huge market and will continue to be. We are looking to diversify our portfolio to not only be dependent on the Gulf Coast but other places in North America, which we believe is a more robust strategy.” To that end, LNG Canada cargoes are starting up soon.

“What has changed in our projections, two years ago we saw the power line decline. We’re not sure it’s been increased but it’s definitely going to stay the same, with data centres and hyperscalers driving demand.”

Work on producing low-carbon gas, and setting the platform for de-fossilisation, will intensify, he added. But not all the focus is on new projects.

“Half of the capital that we invest is actually going towards unlocking gas supply into places where LNG plants already exist,” he said.

“Beyond the Middle East and North America, it’s not easy to unlock competitive supplies. East Africa is still an opportunity, [and] Argentina potentially. For the market to grow to the scale we’re talking about, you need a deep and active market, both on the supply and demand side.”