Shell expects lower LNG liquefaction volumes in Q4, ahead of published results on January 30.
While LNG volumes totalled 7.5 MT in Q3 2024, it expects to round off the year with volumes in the 6.8-7.2 MT range, according to an outlook update. It attributed the drop to lower feedgas and fewer cargoes ‘due to the timing of liftings’.
The chemicals sub-segment is expected to post a loss in Q4 with margins falling from $164 a tonne in Q3 to $138 a tonne in the final quarter. Chemicals utilisation is expected to be in the $73-77 range for Q4.
Net debt is expected to include $4-6bn of new lease liabilities in recognition of the LNG Canada pipeline liability.
Source: Shell LNG Outlook 2024
Global demand for LNG is estimated to rise by more than 50% by 2040, as industrial coal-to-gas switching gathers pace in China, and South Asian and South-east Asian countries use more LNG to support economic growth.
Source: Shell LNG Outlook 2024
Global trade in LNG reached 404 million tonnes in 2023, up from 397 million tonnes in 2022, with tight supplies constraining growth.
In the medium term, Shell believes latent demand for LNG – especially from Asia – is set to consume new supply that is expected to come on stream in the second half of the 2020s, although commentators have warned a supply glut is set to persist well into the 2030s.
The Institute for Energy Economics and Financial Analysis (IEEFA) expects global LNG supply capacity to rise to 666.5 MTPA by the end of 2028, which exceeds International Energy Agency (IEA) demand scenarios.
Last month Equinor UK and Shell UK announced they are combining their UK offshore oil and gas assets under a new 50:50 joint venture company. With the North Sea basin now maturing and production declining, the combination of portfolios and expertise will allow continued economic recovery of resources via a more ‘agile and cost competitive’ company.
Completion of the transaction remains subject to approvals and is expected by the end of 2025.
Equinor will retain its hydrogen, carbon capture and storage, power generation, battery storage and gas storage assets while Shell remains technical developer of Acorn, Scotland’s largest carbon capture and storage project.
Read more: Shell and Equinor form largest UK independent oil and gas company
