Global LNG prices have decreased significantly but remain high historically, leading to demand challenges, particularly in Asia, according to a senior Shell executive.
In a recent statement, Steve Hill, the executive vice president of Shell, emphasized that while the global liquefied natural gas (LNG) market has witnessed a notable reduction in prices, it still grapples with high costs compared to historical standards. Speaking at the Gastech conference, Hill addressed the current market sentiment and the potential fragility of prevailing conditions.
Market Sentiment Improving, Yet Fragile
Hill acknowledged that market sentiment has improved over the past year, bringing about lower LNG prices and a greater sense of stability. However, he also cautioned that the LNG market still faces challenges due to its vulnerability.
“Prices are lower, there is more comfort in the market, and sentiment is definitely much better than it was last year, but the market conditions may still be pretty unstable.,” he said.
He further noted the impact of Russian gas not flowing to Europe, which has contributed to tightening the overall market situation.
Shell’s Expansion Plans
Despite the market uncertainties, Shell is ambitiously looking to expand its LNG volumes by 20% to 30% by the end of the decade, as highlighted by Cederic Cremers, the executive vice president of Shell’s LNG business. This expansion primarily involves several projects, including phase 1 of LNG Canada, collaborations with Qatar Energy in Qatar, and the development of an additional LNG train in Nigeria.
Prelude LNG Facility Update
Regarding Shell’s Prelude floating LNG facility off Western Australia, Cremers shared that it is currently undergoing a significant turnaround process that commenced in August and is expected to extend for approximately two months.
“Due to the innovative operations and facilities there, (we) still have a few minor challenges to fix, but things have significantly improved over the first half of the year,” he stated.
This turnaround work had originally been scheduled for the previous year but faced delays due to industrial action at the plant.
“It is a crucial turning point. In essence, it is the first significant project you typically undertake four or five years after starting out, and it is the one where we were really able to address some of the residual issues of earlier designs.”
In May, Shell suspended production at Prelude, a 3.6 million metric tons per year LNG facility, due to process-related problems. The facility also encountered disruptions in production and shipments in previous months, including a small fire incident in December and work stoppages by unions seeking better pay from July to September last year.