Shell (SHEL.L) anticipates its Australian supplies of liquefied natural gas (LNG) to play a crucial role in meeting the burgeoning demand from emerging markets in south and southeast Asia. These regions are expected to absorb a significant portion of the uptick in global supplies towards the end of this decade.
Asian spot LNG prices surged last week to their highest levels since January, driven by hot weather across the region that spurred demand for the super-chilled fuel. “That combination of decarbonisation and declining domestic production will drive LNG demand growth,” Cecile Wake, Country Chair at Shell Australia, told Reuters on the sidelines of the Australian Energy Producers Conference on Wednesday.
Key Demand Growth Markets
Wake identified the Philippines, Thailand, Vietnam, and Bangladesh as pivotal demand growth markets. “I think we describe it as latent demand in south and southeast Asia,” she noted, adding that global LNG markets were “finely balanced” this year.
Shell’s internal assessment of demand prospects in Asia underscores its deep commitment to the Australian market. “We see ourselves competitively positioned to Asian markets. It is about maintaining that supply position, ensuring that we’ve got high utilization and high reliability of our LNG assets here,” Wake emphasized.
Floating LNG Facility: Prelude
Wake expressed satisfaction with the performance of Shell’s flagship floating LNG facility, Prelude, following its statutory shutdown in Australia. Prelude, whose deck spans longer than four soccer fields, was the world’s first floating LNG facility and is estimated to have cost over $12 billion. Despite a series of outages since it began production in June 2019, including a fire that caused a full power loss in December 2021, the facility has shown marked improvement.
“The volumes this year are of course anticipated to be higher than last year because it doesn’t have a statutory turnaround. It has come out of that statutory shutdown with both higher reliability and a much tighter band of where we think the performance range is,” Wake said. She added, “There’s no major statutory shutdowns this year or next. The next major shutdown will not be until 2026, at this stage.”
