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Shell’s Ambitions for Asian LNG Demand Face Hurdles

LNG

Shell’s Forecast That Global Demand for LNG will surge by over 50% by 2040 has some key underlying assumptions not supported by current trends, according to Reuters.

  • Shell’s forecast is based on robust demand growth in Asia, particularly in China.
  • While China is currently building new natural gas infrastructure, e.g. 51.5 GW of new gas power plants, that is low in comparison to the 139.9 GW oof coal-fired capacity being built.
  • China has an operating fleet of 1,136.7 GW of coal-fired generation, but just 121.1 GW of gas- and oil-fired generation, according to the GEM.
  • Reuters said that despite expected rising consumption of natural gas in China, coal will remain the core of power generation for decades to come.
  • Cost of LNG will also be an issue. Even if LNG averaged $10/MMBtu, the historic range in the past decade, thermal coal prices from Indonesia are around $5/MMBtu.
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