“We’re obviously going to tailor our investment program to align with what we think the industry will be going for, but the company’s profitability and outlook for this business is going to be as good as what you’ve seen before the pandemic, “said van Beurden. Bloomberg.
Before the pandemic wiped out much of the demand for LNG, Shell said in its annual LNG Outlook 2020 report in February that long-term demand is expected to double to 700 million tonnes by 2040, while In the short term, equilibrium would be restored by 2021 due to slower growth in supply.
Even though short-term forecasts have been totally disrupted by the coronavirus pandemic, Shell “still firmly believes that with current supply and demand prospects, this is a fundamentally strong sector that will grow at a rate close to 4% per year, “van Beurden told Bloomberg.
But after the oil crash, Shell recalibrated some of its LNG plans and left the Lake Charles, Louisiana LNG project in late March, citing initiatives “to preserve liquidity and strengthen the resilience of our business.”
Van Beurden’s optimism in the LNG market contrasts with a more pessimistic view of the recovery in oil demand.
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“We are considering destroying the major demand which we do not even know will come back,” said the manager when Shell called the results in late April.
In the LNG market, the industry is poised to weather its first seasonal contraction in demand this summer since 2012, said Wood Mackenzie earlier this month.
“In general, a return to stronger growth is not expected until mid-2021,” said Wood Mackenzie research director Robert Sims.
By Charles Kennedy for Oilprice.com
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