Rising Power Consumption, Coal-to-Gas Transition and Expanding Data Centre Infrastructure Expected to Drive Long-Term Demand for Liquefied Natural Gas

Global demand for Liquefied Natural Gas (LNG) is projected to increase by nearly 65% by 2050, reaching close to 700 million metric tonnes annually, according to Shell’s 2026 LNG Outlook. The report paints a strong long-term outlook for the global gas industry, highlighting Asia as the principal driver of future demand as countries pursue cleaner energy sources, strengthen energy security and meet rapidly growing electricity requirements.

Despite ongoing geopolitical disruptions in West Asia that have temporarily affected global LNG trade, Shell believes the market remains fundamentally strong and is expected to resume its growth trajectory over the coming years.

Asia to Account for the Largest Share of Future LNG Demand

Asia is expected to remain at the heart of global LNG consumption over the next three decades.

Rapid economic development, industrial expansion, urbanisation and rising living standards are significantly increasing electricity demand across emerging Asian economies.

Governments in countries such as India, Vietnam, Bangladesh, Indonesia and the Philippines are gradually replacing coal-based power generation with natural gas to reduce emissions while ensuring reliable electricity supply.

Shell estimates that South and Southeast Asia alone could account for nearly 40% of global LNG imports by 2050, making the region the most important growth market for international LNG producers.

Energy Transition Continues to Support LNG

As countries work towards reducing carbon emissions, LNG is increasingly being viewed as a transitional fuel that can support cleaner power generation without compromising grid stability.

Compared with coal, natural gas produces significantly lower carbon dioxide emissions while offering reliable, round-the-clock electricity generation.

Many governments are therefore integrating LNG into their long-term energy transition strategies as they expand renewable energy capacity.

Industry experts believe LNG will continue playing a crucial role in balancing renewable sources such as solar and wind, whose output depends on weather conditions.

Artificial Intelligence and Data Centres Create New Demand

One of the most significant emerging demand drivers highlighted in Shell's report is the rapid expansion of data centres.

The widespread adoption of artificial intelligence (AI), cloud computing, digital services and high-performance computing is dramatically increasing global electricity consumption.

Modern data centres require uninterrupted, high-quality power, creating additional demand for stable energy sources such as natural gas.

In mature markets including Japan, LNG-fired power generation is expected to support growing digital infrastructure while complementing renewable energy generation.

As AI technologies continue expanding worldwide, electricity demand from digital infrastructure is expected to become an increasingly important contributor to global energy consumption.

West Asia Conflict Creates Temporary Disruptions

Although long-term demand remains strong, the LNG industry has faced considerable challenges during 2026 due to geopolitical tensions in West Asia.

Disruptions to shipping through the Strait of Hormuz, one of the world's busiest energy corridors, have temporarily affected global LNG supplies.

The waterway normally handles approximately one-fifth of global LNG shipments, making any disruption a significant concern for international energy markets.

Higher freight costs, delayed cargo movements and temporary supply shortages have contributed to increased market volatility during the year.

Market Resilience Improves Compared to Previous Crises

Despite these challenges, Shell believes the global LNG market has demonstrated much greater resilience than during previous energy crises.

Several factors have helped stabilise supplies, including:

• Increased LNG production in North America

• Expansion of regasification terminals

• Improved efficiency at existing liquefaction facilities

• Diversification of supply sources

• Moderating LNG imports in certain Asian markets

These developments have reduced dependence on individual export regions and improved the flexibility of the global LNG supply chain.

New Production Capacity to Enter the Market

Shell expects approximately 180 million tonnes per year of additional LNG production capacity to come online by 2030.

Major projects currently under development in North America, the Middle East and other producing regions are expected to improve supply availability and moderate long-term price volatility.

Greater production capacity will also help emerging economies secure affordable access to cleaner energy while supporting industrial growth and electricity generation.

Europe Continues to Depend on LNG

Although Asia will dominate future demand growth, Europe is expected to remain an important LNG market.

Following the restructuring of global energy supply chains over recent years, European countries continue to diversify their natural gas imports through LNG.

The fuel is expected to remain essential for ensuring energy security while supporting electricity generation during periods when renewable output is insufficient.

Natural gas also provides operational flexibility that helps maintain grid reliability as renewable energy penetration increases.

Massive Investment Needed Across the Supply Chain

Meeting projected demand will require significant capital investment over the coming decades.

Shell estimates that the global LNG industry will require approximately 200 million tonnes per year of additional export capacity beyond projects already under construction.

Investment opportunities are expected across the entire value chain, including:

• LNG export terminals

• Liquefaction facilities

• LNG carriers

• Regasification infrastructure

• Storage facilities

• Pipeline networks

• Supporting engineering and logistics services

These investments will play a critical role in ensuring long-term supply security and meeting growing global demand.

Implications for India and Global Energy Markets

For India, one of the world's fastest-growing energy consumers, rising global LNG availability could support efforts to increase the share of natural gas in the country's energy mix.

Expanded LNG infrastructure would help meet growing industrial demand, support city gas distribution networks and strengthen energy security while reducing dependence on more carbon-intensive fuels.

Globally, the report reinforces LNG's position as a key component of the evolving energy landscape, particularly as countries seek practical pathways toward lower-carbon economic growth.

Outlook

Shell's latest outlook indicates that despite short-term geopolitical disruptions and market volatility, the long-term fundamentals of the LNG industry remain exceptionally strong.

Driven by Asia's economic expansion, rising electricity consumption, accelerating artificial intelligence adoption and the global transition away from coal, LNG demand is expected to continue growing steadily through 2050.

While achieving this growth will require substantial investment in production capacity and infrastructure, the industry's improving resilience and expanding global supply network position LNG as a critical pillar of future energy security.

As governments balance economic development with climate objectives, liquefied natural gas is expected to remain an essential bridge fuel—supporting industrial growth, digital transformation and cleaner energy systems across both developed and emerging economies.