The LNG market will be well supplied in the second half of
the decade, he added. The CEO of rival TotalEnergies on Monday warned of
near-term tightness in the LNG market that would not abate until 2026.
LNG shipping has seen little impact from attacks by Houthi
rebels in the Red Sea, Sawan said.
The voracious energy appetite of Asian markets - including
developing countries within Southeast Asia - will gobble up liquefied natural
gas (LNG) supply between now and onward to 2040, according to Shell CEO Wael
Sawan.
Speaking at the ongoing CERAWeek by S&P Global, he
emphasized that “there will be a huge demand for off-take (volume purchases) in
places like India and places like Southeast Asia and China.”
The LNG shifts of many Asian countries, he said, are
anchored on multiplicity of factors – including replacement for the vast coal
fleets of many countries in the region; then as ‘flexible generation’ to
backstop the intermittent nature of
renewables and as reinforcement to the overall energy security and energy
transition goals of these energy markets; plus bridging the gap on the
disrupted gas supply to Europe due to the interminable Russia-Ukraine war.
“We see a lot of that growth coming in particular in Asia –
whether it is the coal-to-gas switching or in certain countries like Vietnam,
Bangladesh and others for the current infrastructure because of domestic
production in the past. As those reserves started to decline, LNG can allow
those countries to fully utilize the infrastructure while bringing in LNG,” he
stressed.
Relative to the energy transition pathways that have also
been driving the energy future of these Asian countries, Sawan conveyed “we
continue to see the complementarity of LNG with the intermittent nature of the
grid as we move toward more and more renewable generation.”
He expounded “at the end of the day, the real intent here is
to be able to bring that multi-dimensional nature of the energy transition and
move this dialogue that seems to fixate: is it oil and gas or is it solar and
wind? It’s all - and we need them in abundance.”
Taking cue from recent developments across markets, the
Shell chief executive reiterated that “LNG will continue to have a strong
growth. Today, we have 13% of the overall gas sales – we see it growing around
20% in the coming 15 to 20 years.”
Moving forward to 2040, Sawan highlighted that the LNG
demand acceleration may even go beyond 50% from current levels.
On the supply side, he specified that at least two giant gas
players – United States and Qatar – will be the key producers that will be
quenching the LNG thirst of markets.
“Roughly 50% plus growth against the levels where we are
today – anywhere between 650 to 700 million tonnes per annum by then (2040).
You'll have supply coming out of the United States; and supply coming out of
Qatar. These are the two big giants in that space for now,” he noted.
Sawan, nevertheless, acknowledged that the disturbing
precept to the projected LNG demand escalation will be the price points, with
him specifying that the growth momentum will be sustained depending on cost
swings -- especially with any portended impact of the decision of the US to
‘pause’ on any expansion for its LNG exports.
“The key point will be on the prices of LNG of course…and
you see, as gas prices have come below $10 over the last few weeks, you can see
the huge pickup in demand again by price sensitive customers and we’re starting
to see that floor very quickly to establish itself,” he stated.
In Shell’s case, he indicated that the continuing trajectory
will be to grow across the supply chain of its businesses; all that while also
pursuing strategies to concretize its 2050 net zero goal; and to deliver on its
committed level of emissions reduction by 2030.