LNG market will recover to pre-virus levels, says Shell CEO

Bloomberg

Royal Dutch Shell Plc, the world’s largest liquefied natural gas (LNG) trader, expects buying and selling of the fastest-growing fuel to recover to levels seen before the pandemic.
Global LNG demand took a severe hit when nations imposed lockdowns to combat the spread of the coronavirus, impacting the fuel’s use in everything from power plants to transport and factories. That came on top of the biggest glut of the fuel the world has ever seen, helped by two mild winters in a row.
“We still very much believe that with the current supply-demand outlook, this is a fundamentally strong sector that will grow at a rate that is close to 4% per year, Ben van Beurden, Shell’s CEO, said.
His comments show that Shell is sticking to the optimism showed in its annual LNG Outlook in February, before the Covid-19 pandemic started to ravage markets on a global scale.
In its outlook, Shell said it expects annual LNG demand to double to 700 million tons by 2040. Consumption increased by a record 13% to 359 million tons in 2019.
The International Energy Agency (IEA) expects LNG, the main driver of international gas trade, to expand by 21% in 2019-2025, reaching 585 billion cubic meters annually. The growth will come from China and India, the IEA said in its Gas 2020 report published Wednesday. Trade will increase at a slower pace than liquefaction capacity additions, limiting the prospects of a tighter market, it said in the report.
But even the global leader will feel some pain in the short term. Shell warned in April that its gas liquefaction volumes may fall in the second quarter. The company and its peers slashed spending to cope with the collapse in oil prices. International majors have cut capital spending by 20% to 30% with projects being put on hold or shelved altogether.

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