According to the LNG Outlook 2023, the heightened demand for liquefied natural gas (LNG) in Europe in the long term will likely lead to intense competition with Asia for supplies in the short term.
Pipeline gas supplies from Russia to Europe dropped by 53% last year compared to 2021, leading to European countries, including the UK, increasing their imports of LNG to 121 million tons, a year-on-year rise of 60%. Fortunately, this coincided with a 19% drop in Chinese demand due to the country’s zero-covid policy. Overall, the world’s trade in LNG rose by 16 million tons to 396 million tons last year.
Executive Vice President for Energy Marketing at Shell, Steve Hill, said in a press release that the ongoing war between Russia and Ukraine has affected:
“…energy security around the world and caused structural shifts in the market that are likely to impact the global LNG industry over the long term. It has also underscored the need for a more strategic approach—through longer-term contracts—to secure reliable supply to avoid exposure to price spikes.”
Shell, which also makes industrial fluids like gear oil and commercial vehicle oil, is the biggest trader of LNG in the world. It says it believes LNG may become a core resource for ensuring energy security in Europe. Nevertheless, it says that new LNG supply will be limited until the middle of the decade, with the United States and Qatar accounting for the vast majority of this new supply.