LNG market supply-demand balance to remain tight in 2022, says Shell

LONDON, Feb 21 (Reuters) – The global liquefied natural gas (LNG) market is expected to remain tight this year after last year’s volatility, which saw demand rise 6% and gas prices hit an all-time high , Shell (SHEL.L) said on Monday.

Worldwide natural gas prices rose at the end of last year due to short supply, weak renewable energy generation and strong post-Covid-19 growth.

“The high prices we are seeing at the moment are driven by fundamentals, low storage levels and supply uncertainty,” said Steve Hill, executive vice president of energy marketing.

Register now for free unlimited access to Reuters.com

register

Other reasons behind the tight market are the lack of new supplies and lack of investment in LNG, he said.

Shell, the world’s biggest buyer and seller of LNG, said earlier on Monday that global trade in liquefied natural gas (LNG) rose 6% year-on-year to 380 million tonnes in 2021 as economies recover from the effects of the COVID-19 pandemic. . read more

LNG demand is expected to nearly double to 700 million tonnes by 2040, Shell said in its annual LNG market outlook, adding that liquefied gas has an important role to play as a back-up in the event of intermittent renewable supply.

Rising gas prices have put about 30 British energy suppliers out of business, while some heavy industry companies have cut production in energy-intensive sectors.

LNG prices rose from a record low of $2 per mmBtu in 2020 to a high of $56 in October 2021.

Benchmark prices are currently around $25 per mmBtu.

“Last year demonstrated how important gas and LNG are in providing energy to communities around the world,” said Val Savon, director of integrated gas, renewable and energy solutions at Shell.

The world’s No. 2 business energy company said more investment is needed to meet growing LNG demand, especially in Asia, with a supply-demand gap forecast particularly in mid-2020.

China and South Korea led the growth in LNG demand in 2021. China increased its LNG imports by 12 million tonnes to 79 million.

Last year Chinese LNG buyers signed long-term contracts for more than 20 million tonnes a year.

Global LNG exports grew in 2021 despite outages affecting the availability of LNG for delivery. The Shell report said the United States led the export growth with an increase of 24 million tonnes on a year-on-year basis.

The US Energy Information Administration estimates that US LNG exports will reach 11.5 billion cubic feet per day (bcfd) in 2022, making it the world’s largest LNG exporter, ahead of Australia and Qatar. read more

Register now for free unlimited access to Reuters.com

register

Reporting by Marva Rashad and Ron Busso; Editing by Jason Neely, David Goodman and Susan Fenton

Our Standards: Thomson Reuters Trust Principles.

Source