Shell Sees No Glut of Liquified Natural Gas as Demand Rises
21 February 2017 - 12:53AM
Dow Jones News
By Sarah kent
LONDON-- Royal Dutch Shell PLC said Monday there is no evidence
of a glut in liquefied natural gas supply, taking a contrarian view
on a market in which the Anglo-Dutch energy giant is one of the
largest operators.
In its new LNG outlook, Shell said demand for the supercooled
natural gas kept pace with a strong increase in supply last year,
dismissing concerns that a wave of giant projects coming into
production is swamping the market.
"There's been a perception and quite a few headlines of the LNG
market being oversupplied," said Maarten Wetselaar, Shell's head of
integrated gas. "In 2016 you didn't find any proof of that."
The company has doubled down on LNG, following its acquisition
of BG Group last year. The deal was a roughly $50 billion bet,
staking the company's future on natural gas and huge deep-water
prospects offshore Brazil.
Shell is gambling that demand for LNG will grow strongly in
coming years, benefiting from government policies that favor
lower-carbon fuels. It is projecting natural gas consumption will
rise by 2% a year between 2015 and 2030, and demand for LNG will
increase at a rate of 4%-5% a year.
That increased demand is expected to mitigate the effect of new
projects scheduled to bring vast new supplies, with just over a
third of anticipated new volumes already up and running.
"What's different to many people's expectation is we've seen an
equally strong demand growth--potentially even a more strong demand
growth," said Steve Hill, vice president for gas trading . "That's
a key message because we still keep reading about the oversupply in
the industry and we just don't see it."
The company said there is a need for investment in new LNG
projects to meet demand in the years after 2020 as global
consumption is expected to continue to grow.
Write to Sarah Kent at sarah.kent@wsj.com
(END) Dow Jones Newswires
February 20, 2017 08:38 ET (13:38 GMT)
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