Global demand for liquefied natural gas (LNG) is projected to rise by approximately 60% by 2040, primarily fuelled by economic expansion in Asia, according to Shell's LNG Outlook 2025 report.

The report highlights the increasing demand for natural gas as the world transitions to cleaner energy sources.

The impact of AI and efforts to reduce emissions in heavy industries and transportation will also contribute to the demand, the report stated.

Industry forecasts predict LNG demand will reach between 630 million tonnes per annum (mtpa) and 718mtpa by 2040.

This projection surpasses last year's forecast, which estimated global LNG demand in 2040 to be between 625mtpa and 685mtpa.

Shell senior vice-president for LNG marketing and trading Tom Summers said: "Upgraded forecasts show that the world will need more gas for power generation, heating and cooling, industry and transport to meet development and decarbonisation goals.

“LNG will continue to be a fuel of choice because it is a reliable, flexible and adaptable way to meet growing global energy demand.”

China, the leading LNG importer, and India are expanding LNG import capacity and related infrastructure to accommodate the growing demand, Shell noted.

LNG demand in Asia grew in the first half of 2024, as China capitalised on lower prices, importing 79 million tonnes (mt) during the year.

India also bought record amounts to meet higher power demand caused by hotter weather in early summer, with its imports rising by 20% to 27mt compared with 2023.

Shell has indicated that, in response to the increasing demand, particularly in Asia, more than 170mt of additional LNG supply is projected to be available by 2030.

However, the start-up timings of new LNG projects remain uncertain, with several projects experiencing delays over the past two years due to geopolitical tensions, regulatory hurdles, labour shortages and supply chain bottlenecks.

These challenges have postponed the availability of approximately 30mt of new LNG supply, equivalent to India's LNG imports, to 2028.

According to the report, global LNG trading grew by just 3mt to reach 407mt in 2024, the smallest annual increase in the past decade, largely due to limitations in the development of new supply.