Shell Expects to Bank On LNG Exporters Turning Into Importers

Energy major Shell expects several traditional LNG exporter nations to turn into net importers, driving demand for the super chilled fuel and potentially easing concerns that the industry faces oversupply from a raft of planned new projects.

Cederic Cremers, Shell's president for integrated gas, told Reuters that Indonesia, Malaysia, and Algeria are likely to become net import markets in the future as their domestic gas demand is rising while production is declining.

"Our prediction is that between now and 2040 that's pretty much close to 50 million tons of additional draw on the LNG market," he said on the sidelines of the World Gas Conference.

These LNG exporters are likely to join Egypt, which became a net LNG importer last year.

Egypt is in talks with energy firms and trading houses to buy 40-60 LNG cargoes amid a worsening energy crunch ahead of peak summer demand. Earlier, the country had signed deals worth about $3 billion with Shell and TotalEnergies to secure LNG.

Meanwhile, LNG projects are facing challenges stemming from project delays during the COVID pandemic that limited new supply in 2023 and 2024, bottlenecks in global supply chains and labour shortages on the U.S. Gulf Coast.

"The net increase in supply capacity in 2024 was only about 2 mtpa (million metric tons per annum) ... because a number of projects that were supposed to come online have been delayed," Cremers said.

"The new capacity coming from all these projects may be a bit more phased than all coming at the same time as some of the industry analysts may have been reporting," he said.

"So we may see a little bit of a softer landing in terms of the supply coming onto the market."

Other producers including Diamond Gas International and TotalEnergies have said they expect a LNG supply glut around 2027 or 2028.

Major projects include QatarEnergy's North Field East natural gas expansion project which will begin production in mid-2026. Companies in the U.S., the world's largest exporter, are planning to approve over 90 million metric tons per year of new LNG production capacity this year.

Cremers said latent demand and increased infrastructure investment in Asia will help to soak up the new supply.

Shell has forecast that global demand for LNG will rise by around 60% by 2040, driven largely by economic growth in Asia, power-thirsty AI and efforts to cut emissions in heavy industries and transportation.

However, Asian demand is sensitive to prices, Cremers said.

"We saw that spot prices towards Q2 dropped below $10 (per MMBtu), and at that point in time you saw a real strong demand response from a number of customers in Asia."