• Shell projects global LNG demand could rise as much as 60% by 2040, potentially reaching 718 million tons annually. This contrasts with the IEA’s 2023 assessment, which suggested gas demand could peak before 2030.
• The company attributes past slowed growth to supply constraints and says decarbonization efforts are increasing LNG demand for energy stability.
• Uncertainties remain over whether supply can meet demand due to geopolitical tensions, regulatory challenges and supply chain constraints.

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One of the world’s largest fossil fuel companies is projecting a substantial increase in global liquefied natural gas (LNG) consumption over the next 15 years. According to Shell’s annual industry report, worldwide LNG demand could rise by as much as 60% by 2040, potentially reaching 718 million tons per year.

“Upgraded forecasts show that the world will need more gas,” said Tom Summers, senior vice president for Shell LNG marketing and trading. “LNG will continue to be a fuel of choice because it’s a reliable, flexible and adaptable way to meet growing global energy demand.”

How does this differ from previous estimates?

Shell’s forecast contrasts with the 2023 assessment from the International Energy Agency (IEA), which suggested that global gas demand could peak before 2030 in alignment with the Paris Climate Agreement’s goals. This estimate had been supported by a 2024 drop-off in LNG trade growth, which slowed to less than half a percent, marking the lowest annual rate recorded in a decade.

However, Shell attributes this slowdown to constraints in new supply development rather than a long-term shift in market direction. The company states that decarbonization efforts are driving increased LNG demand, as natural gas is being used to support fluctuations in renewable energy sources.

What is driving this increase in projected LNG use?

According to the report, LNG consumption is expected to rise in power generation, heating, cooling, industrial applications, and transportation. Shell also highlighted potential demand growth in China and India, where a combined 180 million people are projected to gain access to the gas network over the next five years. Additionally, Europe is anticipated to maintain reliance on LNG imports to stabilize intermittent energy production from renewables.

What happens next?

Despite these projections, uncertainties remain over whether global supply can meet the expected rise in demand. Factors such as geopolitical tensions, regulatory challenges, supply chain constraints, and civil unrest have contributed to delays in LNG development.

These challenges raise questions about whether the global industry can produce the additional 311 million tons of LNG that Shell estimates could be needed annually by 2040.