Shell Finance Chief flags unpredictability in the timing of global LNG supply

Shell, the largest LNG trader in the world, announced on Thursday that there is uncertainty regarding the long-term supply of LNG due to the uncertain timing of new LNG projects around the globe.

Shell CFO Sinead Gorman's comments suggest caution, as forecasts indicate ample LNG supplies in the future. However, she wasn't concerned by the European Union’s decision this month to prohibit Russian liquefied gas (LNG), imports, from January 2027. This is a year sooner than originally planned.

According to some estimates, LNG supply will have risen by many times by 2030, mainly due to the U.S.A. and Qatari volumes. The International Energy Agency estimates that global LNG net supply will increase by 184 million tons per annum in 2030.

We understand the reasons for the EU proposals, but we also think that the LNG market will be resilient regardless of the rules in place. Gorman, speaking on a Shell media call following the company's third-quarter earnings beat expectations, said: "We believe that the market will eventually find balance."

The construction costs of new LNG projects have risen, and U.S. LNG companies are seeking to renegotiate contracts to cover the higher costs. Some large LNG projects, such as those in Mozambique, are also being delayed because of security concerns.

"Supply Growth on the Horizon and these Timings are Uncertain." Gorman noted that you've seen these moves quite a number of times in the past.

Shell anticipates that the global demand for LNG will grow 60% by 2040. It wants to increase its LNG sales 4%-5% per year during this decade. Shell sold 65 million metric tonnes of LNG last year.

Gorman stated that prices between $11 and $12 per million British Thermal Units (MMBTU) in the third quarter allowed Europe to replenish its gas stocks.

TotalEnergies has said that it expects European gas prices to remain at $11 per MMTBU for the rest of winter, despite having sold 28 million metric tonnes of LNG so far this year.

The finance chief for Equinor in Norway, which will overtake Russia as Europe's largest gas supplier by 2022, stated on Wednesday that the European gas market is tighter this winter than most people think.

Equinor has lowered its long term gas price forecast to $8 per MMBTU by 2030, from $9 per MMBTU. This is due to its expectation of new volumes entering the market.

(source: Reuters)