Key Takeaways:
Shell's latest LNG Outlook warns the world faces a structural supply deficit by the late 2030s unless investment accelerates, even as the industry proves it can weather a major Middle East crisis.
Global liquefied natural gas demand will rise about 65% to nearly 700 million metric tons a year by 2050, driven by Asian economic growth and coal-to-gas switching, Shell said in its 2026 LNG Outlook published Tuesday. The projection comes as the Strait of Hormuz disruption — which has shut in roughly one-fifth of monthly LNG supply since late February — keeps global trade on track to flatline this year.
"The conflict created a system-wide shock with disruption cascading across all segments of the economy, but the LNG industry has proved resilient and able to adapt to changing market conditions," Cederic Cremers, president of Shell Integrated Gas, said in the report.
LNG trade reached 422 million tons in 2025. Shell said 2026 volumes could match that level if Hormuz shipping returns to normal by the third quarter, but a prolonged disruption through year-end would produce the first annual contraction in more than a decade. Asian LNG imports for the first half of 2026 fell nearly 4% to 127.70 million tons from a year earlier, according to data from analytics firm Kpler. Spot prices in Asia peaked above $20 per million British thermal units during the crisis but have since retreated to $15.35, a near four-month low, as markets price in hopes of a peace deal.
The report's most critical warning centers on the supply trajectory. About 180 million tons per year of new liquefaction capacity is expected online by 2030, driven largely by U.S. projects. But Shell's modeling shows global supply beginning to fall short of demand around 2037, with the deficit widening to between 100 million and 300 million tons annually by 2050 depending on how aggressively new projects are sanctioned. An additional 200 million tons per year of supply beyond what is already under construction will be needed through the 2030s and 2040s, the report said.
Asia's Demand Engine and the Looming Deficit
South and Southeast Asia will account for roughly 40% of global LNG imports by 2050 as countries replace coal with gas for power generation, Shell said. In mature markets such as Japan, data centers are emerging as a new source of electricity demand. LNG use as a marine fuel is expected to increase sevenfold to 27 million tons a year by 2035.
The supply gap Shell projects is the predictable consequence of years in which investment signals were muddied by regulatory uncertainty and policy whiplash, particularly in the U.S., where a pause on new LNG export approvals during the Biden administration was reversed under President Donald Trump. The U.S. is on track to deliver more than 1,300 cargoes annually by the mid-2030s, the report said, but sustaining that growth requires permitting reform and predictable environmental reviews.
The last time the LNG market faced a comparable supply shock was Russia's invasion of Ukraine in 2022, which sent European gas prices to record highs and triggered a wave of long-term contracting. Asian spot prices this year peaked above $20/mmBtu — well below the 2022 spike above $70 — reflecting the market's improved resilience from diversified supply sources and a larger share of term contracts, Shell said.
Investment Needs and the African Opportunity
Africa has already attracted more than $50 billion in LNG investment in 2026, according to the African Energy Chamber. Mozambique is advancing Coral Norte, a floating LNG facility expected online in 2028 with a record capacity of 6 million tons a year. Nigeria LNG, in which Shell is a shareholder, has been exporting for more than two decades, while Algeria operates four terminals with combined capacity of 25.3 million tons a year.
"While more investment in both supply and demand infrastructure is needed, the long-term outlook remains strong and LNG will continue to be a stabilising force in the global energy system," Cremers said.
The report's findings carry direct implications for energy security. Europe, which rushed to build regasification capacity after the 2022 crisis, now faces declining domestic gas production and will remain reliant on LNG imports to balance intermittent renewable generation. For Asia's emerging economies, the choice is starker: affordable LNG or a return to coal, with the attendant consequences for air quality and emissions targets.
This article is for informational purposes only and does not constitute investment advice.
