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Shell warns more LNG projects needed ahead of supply crunch

Big ships moored
A Shell LNG shipping centre

Global supply of liquefied natural gas (LNG) will tighten next year despite more being produced, according to the latest forecast from Shell.

In its 2019 Outlook for LNG, Shell said demand will continue to rise next year, with “supplies to tighten in the mid-2020s”.

Shell warned that more new projects are needed.

Demand for cleaner fuels to improve air quality in Asia saw demand rise by 27million tonnes to 319million in 2018, with demand expected to reach around 384million tonnes in 2020.

Supply is expected to rise by 35million tonnes this year but it will not be enough to offset demand, with the additional supply to be absorbed completely by Asia and Europe.

China’s LNG imports increased by 16million tonnes, or 40%, last year compared to 2017 in a bid to improve air quality.

On the supply side, Australia caught up with Qatar as the leading exporter of LNG towards the end of 2018.

Its exports are expected to rise another 10million tonnes this year, with both countries “well-positioned” to supply rapidly developing economies in Asia, displacing coal-fired power and heating.

Maarten Wetselaar, Integrated Gas and New Energies Director at Shell, said: “The continued surge in Chinese LNG imports has helped improve air quality in some of its biggest cities over the last few years.

“China’s success in making the air cleaner for millions of people shows the critical role that natural gas can play in providing more and cleaner energy around the world.

“We saw Asian LNG demand growth exceed expectations again in 2018 and we expect this strong growth to continue. Investment in new supply projects is picking up, but more will be needed soon.”

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