Report highlights Asia’s importance in global LNG demand . . .
A new industry report by Shell forecasts that global liquefied natural gas (LNG) demand will double by 2040, with Asia expected to drive 75 per cent of the growth. The report also notes that China and India led the increase in demand in 2020, both importing 11 per cent more than the previous year. Asia already accounts for about 70 per cent of global LNG imports, with Japan, China, South Korea, and India the four main importers. The industry expects these countries to continue driving global demand as they rely increasingly on LNG for electricity generation in their energy mix to reduce carbon emissions.
Increasing demand, tight supply . . .
Global demand for LNG increased only slightly in 2020, but demand in Asia is expected to bounce back strongly in 2021 for two reasons. Unseasonably cold temperatures in many parts of the region this winter created a spike in demand, and later this year, vaccination campaigns are expected to boost economic recovery. The demand from other regions is, however, expected to remain reasonably stable. But pandemic-induced market volatility slowed down LNG project approvals, with only a fraction of planned production capacity added in 2020, prompting analysts to warn of a potential supply-demand gap in the coming years.
Japan seeking to diversify supply . . .
As the world’s largest consumer of LNG, Japan is now seeking to diversify its suppliers. Following bitter cold temperatures in January, Japan faced high prices and LNG shortages to fuel its power plants. This highlighted the vulnerability of Japan’s power grid. Tokyo is now looking to broaden its LNG procurement to include more Asian producers, which often lack sufficient infrastructure to export. With an increased number of players in the global LNG market, Japan hopes to stimulate the shift from coal to LNG for power generation in Asia and to establish a more flexible global LNG market to its benefit.
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