Why is Shell forecasting such a high increase in LNG demand despite the green transition?

Shell views natural gas as a necessary partner to renewables, providing grid stability when wind and solar are unavailable. Furthermore, many developing nations are switching from coal to gas to reduce immediate carbon emissions while maintaining industrial growth.

How does this forecast affect gas prices in the long run?

While increased demand usually drives prices up, the forecast serves as a signal for producers to increase supply. If new projects in the East Med and elsewhere come online as planned, the market could remain balanced, though geopolitical tensions will continue to provide price floors.

What role does the Eastern Mediterranean play in meeting this projected demand?

The region is one of the few remaining frontiers with significant unexploited gas reserves close to the European market. With global demand rising, the East Med can serve as a reliable, non-Russian source of LNG, provided the necessary infrastructure is built.

Hellenic Shipping News · March 17, 2026 (Mar 17) · 1 min read

Shell forecasts global LNG demand to surge up to 85% by 2050

Shell plc

Isometric technical illustration of offshore oil and gas operations with drillship and support vessel — Illustration: Shell plc

Analysis

AI-assisted analysis · reviewed by Yuri Kan

Shell's latest LNG outlook underscores a robust long-term growth trajectory for natural gas, positioning it as a critical bridge fuel through 2050. Despite global decarbonization efforts, the forecast suggests that infrastructure investment must accelerate to meet a potential 85% increase in demand. This outlook reinforces the strategic value of gas discoveries in the Eastern Mediterranean as Europe seeks diversified and stable supply chains.

Key Facts

Global LNG demand is projected to reach between 650 and 710 million metric tons per annum (MTPA) by 2040.
The baseline demand for 2025 is estimated at 422 MTPA.
By 2050, Shell anticipates a demand surge ranging from 45% to 85% compared to 2025 levels.
The forecast implies a significant gap between current production capacity and future requirements.
Shell's analysis highlights the role of LNG in replacing coal and supporting energy security in Asia and Europe.

Background & Context

The LNG market has undergone a paradigm shift following the disruption of Russian pipeline gas to Europe, leading to a scramble for alternative supplies. Historically, LNG was seen as a niche market, but it has evolved into a global commodity essential for balancing intermittent renewable energy. Shell, as one of the world's largest LNG traders, uses these forecasts to signal investment confidence to shareholders and policymakers regarding the longevity of gas.

Market Impact

This forecast validates the aggressive exploration and development strategies currently seen in the Levant Basin. For major operators, the projected demand justifies the high capital expenditure required for subsea pipelines and liquefaction facilities. However, it also warns of potential price volatility if supply growth fails to keep pace with the 85% demand ceiling. The shift toward LNG as a primary energy source will likely lead to more long-term supply contracts, moving away from the spot-market dominance seen during the recent energy crisis.

What to Watch

Watch for a wave of Final Investment Decisions (FIDs) on new liquefaction projects in the US, Qatar, and potentially the East Med to meet the 2040 targets. Additionally, monitor how European policy evolves regarding long-term gas contracts, which are necessary to secure the infrastructure Shell's forecast demands.

Why This Matters for Cyprus

For Cyprus, this surge in global demand increases the commercial viability of the Aphrodite, Cronos, and Calypso fields, potentially attracting more investment for a regional LNG hub or pipeline to Egypt's liquefaction plants. As Europe looks to secure gas through 2050, Cyprus's untapped reserves become strategically indispensable for EU energy security.

Frequently Asked Questions

Why is Shell forecasting such a high increase in LNG demand despite the green transition?: Shell views natural gas as a necessary partner to renewables, providing grid stability when wind and solar are unavailable. Furthermore, many developing nations are switching from coal to gas to reduce immediate carbon emissions while maintaining industrial growth.
How does this forecast affect gas prices in the long run?: While increased demand usually drives prices up, the forecast serves as a signal for producers to increase supply. If new projects in the East Med and elsewhere come online as planned, the market could remain balanced, though geopolitical tensions will continue to provide price floors.
What role does the Eastern Mediterranean play in meeting this projected demand?: The region is one of the few remaining frontiers with significant unexploited gas reserves close to the European market. With global demand rising, the East Med can serve as a reliable, non-Russian source of LNG, provided the necessary infrastructure is built.

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