Imports jumped 60% in 2022, the energy giant reports
The EU and UK significantly increased liquefied natural gas (LNG) imports last year and the trend is expected to continue, causing structural shifts in the global energy market, British energy giant Shell reported in its LNG Outlook for 2023, published on Thursday.
According to Shell, the EU and UK imported 121 million tons of LNG in 2022, an increase of 60% compared to 2021, as they struggled to find supplies after effectively losing pipeline gas flows from Russia.
Europe secured LNG supplies due to a drop in demand from China and a decrease in South Asia’s imports. However, according to Shell, “Europe’s rapidly rising appetite for LNG” will intensify competition on the global market for limited new supplies over the next two years.
The report noted that increased European demand has already pushed Asian spot LNG prices to record highs near $70.5 per million British thermal units (mmBtu), generating “volatility in energy markets around the world.”
“The war in Ukraine has had far-reaching impacts on energy security around the world and caused structural shifts in the market that are likely to impact the global LNG industry over the long term. It has also underscored the need for a more strategic approach – through longer-term contracts – to secure reliable supply to avoid exposure to price spikes,” said Steve Hill, Shell’s executive vice president for energy marketing.
Global LNG trade hit 397 million tons in 2022, an increase of 16 million tons compared to 2021. Shell expects the global LNG market to remain tight to the mid-2020s as Europe and Asia compete for supply.
“In the near term, the global LNG market is expected to remain tight and exposed to supply and demand shocks, with limited new supply coming online. More investment in supply will be needed to meet future LNG demand… LNG is becoming an increasingly important pillar of European energy security, supported by the rapid development of new regasification terminals,” according to the report.
Shell expects global LNG demand to jump to 700 million tons by 2040 and a supply-demand gap to emerge by the late 2020s.
