Asia wants to cut emissions, so why is it still buying so much Australian gas?
Australia’s biggest oil and gas exporters forecast a significant lift in demand for liquefied gas over the next decade, even as debate continues about the role of the fossil fuel in the transition to cleaner energy.
Shell, which produces natural gas off the coast of Western Australia and in Queensland, bumped up its long-term demand predictions last week, saying it now expects the world’s consumption of liquefied natural gas (LNG) to increase 60 per cent by 2040 amid faster economic growth in Asia.
Australian LNG exports are expected to rake in $64 billion in the 2024-25 financial year.Credit: AP
The energy giant’s revised outlook for LNG is 10 percentage points higher than at the same time last year
“China is significantly increasing its LNG import capacity and aims to add piped gas connections for 150 million people by 2030 to meet increasing demand,” Shell said. “India is also moving ahead with building natural gas infrastructure and adding gas connections to 30 million people over the next five years.”
Woodside, the largest Australian LNG producer, said Asian population growth, economic development and rising living standards would underpin a demand increase of at least 50 per cent by 2034. At the same time, a wave of new LNG projects threatening to cause a glut in coming years was unlikely to materialise as quickly as first thought because of delays faced by developers, the company said.
“Asia is going to be the engine room for LNG growth,” Woodside chief executive Meg O’Neill said.
LNG – natural gas super-chilled down to a liquid so it can be loaded onto special ships – is one of Australia’s biggest exports, raking in at least $64 billion in revenue this financial year. Demand and prices for Australia’s LNG, which is mainly sold to Japan, China, Taiwan and South Korea, surged following Russia’s invasion of Ukraine in 2022 as efforts to replace Russian piped gas to Europe unleashed a global scramble for spare shipments of the fuel to keep lights and heaters on.
While gas remains widely used in electricity generation, heating and manufacturing, its longer-term demand could vary significantly depending on how aggressively the world decides to ratchet up goals to slash planet-heating greenhouse gas emissions.
According to some forecasts of how the energy transition could play out, gas demand may be driven sharply higher for its use as a “transition” fuel – one that’s cleaner than coal, but can still be used to back up intermittent renewables during periods of low wind and sunlight.
