Supply investments are required to meet global long-term demand growth in LNG as strong fundamentals exceeded expectations in 2017, a Shell spokesperson announced on Tuesday.
She explained that the external environmental context is creating more opportunities for gas and LNG, but added that supply investments are required to meet long-term demand.
The official said in Shell's latest 2018 LNG Outlook report released on Monday that a supply shortage in mid-2020s is a possibility based on current demand projections unless new LNG production project commitments are made soon.
'However, this is the headline of the report. The report goes into quite extensive detail and data to back up our view of the LNG outlook,' she said.
Shell has been a pioneer in LNG for more than 50 years, she stressed based on the fact that the company is involved at every stage of the LNG value chain: finding the fields and extracting gas, liquefying gas and shipping it, then turning the LNG back into gas and distributing it to customers.
Many reputable forecasters for years have anticipated an LNG supply glut. One of these includes Marco Giuli, a policy analyst from the Brussels-based European Policy Center, who said in mid-2016 that an LNG glut is coming as liquefaction facilities amounting to about 200 billion cubic meters (bcm) per year are coming onstream by 2025, notably in the U.S. and Australia.
In addition, Robin Mills, a non-resident fellow for Energy at the Brookings Doha Center said in mid-2016 again that new U.S. LNG would further add to the oversupply.
The oversupply in LNG, and the period of low prices could even be lower and longer than for oil, Mills predicted.
Furthermore, Italian energy company Snam said in its Global Gas Report 2017 that an LNG glut has begun to take shape.
Contrarily, in accordance with Shell's report, Royal Dutch Shell CEO Ben van Beurden said at the beginning of February that there is little evidence of an LNG oversupply.
On the question of Qatar holding its top position as the leading LNG exporter country, she said the answer depends on whether Qatar can produce any new capacity for an increasingly competitive market place.
Qatar currently is the leading LNG exporter, accounting for around 30 percent of global trade by exporting 77.2 million tonnes. It is followed by Australia and Malaysia.
- Report says LNG market set to expand
Shell said in its latest report that the LNG market would continue to defy the expectations of many market observers, with demand growing by 29 million tonnes to 293 million tonnes in 2017.
According to the company's report, Japan remained the world’s largest LNG importer in 2017, while China moved into second place as Chinese imports overtook South Korea’s.
Total demand for LNG in China reached 38 million tonnes, a result of continued economic growth and policies to reduce local air pollution through coal-to-gas switching, the report showed.
The report also added that demand for LNG in transport is growing globally as diverse marine segments are choosing LNG at a time when the LNG bunkering network is developing globally.
- Shell in the LNG market
Shell is one of the world’s largest LNG shipping operators. The company directly manages around 40 LNG carriers and charters more than 50 others on long-term time charters.
Collectively, this makes up around 20 percent of the global LNG fleet. Shell's trading operation buys and sells LNG to and from Shell, its partners and third parties.
Shell has LNG supply projects throughout the world, as well as interests in and long-term capacity access to regasification plants.
The company has six regasification terminals in the U.S., two in Mexico, and one each in Spain, India, Singapore, the U.K. and the Netherlands.
Shell's LNG liquefaction plants in operation are located in Norway, Brunei, Malaysia, Oman, Russia, Australia, Egypt, Nigeria, Peru and Trinidad and Tobago.
The Dutch company is also constructing two LNG liquefaction plants in Australia.
Its total LNG liquefaction volume was 30.9 million tonnes at the end of 2016.
By Murat Temizer
Anadolu Agency
energy@aa.com.tr