Shell plc SHEL recently reported its 2025 LNG outlook, which states that the demand for liquefied natural gas (LNG) is expected to rise by 60% by 2040, with Asia at the forefront of this growth.
Shell anticipates that the world will need more gas for power generation, heating and cooling, industry and transport to meet development goals and LNG will continue to be the preferred choice because of its reliability, flexibility and adaptability to meet growing global energy demand. According to the company, the LNG demand will reach 630-718 million tons/year by 2040, highlighting an upward trend as compared to the previous estimates.
The huge boost in LNG demand highlights its crucial role in bridging the energy gap for developing economies while supporting decarbonization goals.
The shoot-up in LNG demand through the next decade and a half can primarily be attributed to economic expansion in Asia, emission-reduction efforts in heavy industry, transportation, and the growing impact of artificial intelligence.
Countries like China and India are expanding their gas infrastructure to meet surging energy needs while reducing carbon emissions. China is rapidly increasing its LNG import capacity and enhancing its pipeline network to connect 150 million more people by 2030. Similarly, India plans to extend gas access to 30 million additional consumers over the next five years.
Since LNG is a cost-effective option for shipping and road transport that reduces emissions, the marine sector is making a quick shift to LNG adoption by increasing the number of LNG-powered vessels and is also expecting to drive annual LNG demand to more than 16 million tons by 2030, marking a 60% increase from previous forecasts.
In Europe, the LNG demand will remain critical through 2030, helping it to repurpose the existing gas infrastructure and import bio-LNG, synthetic LNG, or even green hydrogen.
2024 saw the smallest annual growth in LNG trade, which expanded by just 2 million tons, reaching only 407 million tons. The limited new supply development was the primary cause of the slowdown in LNG trade growth in 2024, accompanied by the geopolitical tension between Russia and Ukraine leading to the expiration of Russian pipeline gas flows that further tightened the market, pushing the prices up.
During the first half of 2024, the LNG prices dropped to their lowest level since 2022, but the prices bounced back by mid-year because the supply capacity could not keep up with the rising demand. Taking advantage of the lower prices in the first half, China imported 79 million tons and India’s imports scaled up to 27 million tons, a 20% year-on-year increase driven by stronger power needs amid hot summer conditions.
Comparatively, LNG imports in Europe declined by 19% due to strong renewable energy generation and sluggish recovery in industrial gas demand.
In 2025, Europe is expected to increase LNG imports in order to replenish its gas storage levels. By 2030, the United States is set to increase its LNG exports to 180 million tons per year, positioning itself as the world’s largest LNG exporter and accounting for roughly one-third of global supply. Qatar is also expected to significantly expand its LNG supply in the future. However, uncertainties regarding the timeline for new LNG project start-ups remain.
London-based Shell plc is one of the primary oil supermajors — a group of the U.S. and Europe-based big energy multinationals with operations that span almost every corner of the globe. Currently, SHEL has a Zacks Rank #3 (Hold).
Investors interested in the energy sector might look at some top-ranked stocks like Repsol, S.A. REPYY, Prairie Operating Co. PROP and Gulfport Energy Corporation GPOR.While Repsol and Prairie Operating currently sport a Zacks Rank #1 (Strong Buy) each, Gulfport Energy carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Repsol explores, develops and produces crude oil products and natural gas, transports petroleum products and liquified petroleum gas and refine petroleum. REPYY’s expected EPS (earnings per share) growth rate for the next year is 17%, which aligns favorably with the industry growth rate of 13.10%.
Houston-based Prairie Operating is an independent energy company engaged in the development and acquisition of proven, producing oil and natural gas resources principally in the United States. The Zacks Consensus Estimate for PROP’s 2024 earnings indicates 81.19% year-over-year growth.
Gulfport Energy is an independent natural gas and oil company focused on the exploration and development of natural gas and oil properties in North America. The Zacks Consensus Estimate for GPOR’s 2024 earnings indicates 108.53% year-over-year growth.
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