Shell Expects Major LNG Exporters Turning Into Importers

Shell plc SHEL predicts that several traditional LNG (liquefied natural gas) exporters, including Indonesia, Malaysia and Algeria, may soon become net importers. This trend is being driven by rising domestic demand and falling production in these countries. The shift that is reshaping the global energy landscape will not only drive demand for LNG but also ease the oversupply concerns that the industry was facing due to new upcoming projects.

SHEL’s Outlook on the Global LNG Shift

Shell estimates that the role reversal of countries like Indonesia, Malaysia and Algeria could add as much as 50 million metric tons of new LNG demand by 2040.

The company predicts that these countries are likely to follow in Egypt’s footsteps, which has already made the transition last year by turning into a net LNG importer. Egypt has secured deals worth $3 billion with Shell and TotalEnergies to buy 40-60 LNG cargoes as it grapples with an energy crunch.

Delays Roll-Out Oversupply Fears

While some producers like Diamond Gas International and TotalEnergies have warned of a potential LNG glut around 2027-2028, Shell maintains a more measured outlook. Shell estimates that since the LNG projects have faced delays in the past owing to the COVID era, ongoing supply-chain bottlenecks and labor shortages, especially on the U.S. Gulf Coast, the rollout of new LNG capacity is likely to be gradual and phased.

Asia: The Engine of LNG Growth

Asia remains the key demand center. Shell forecasts a 60% increase in global LNG demand by 2040, powered by economic expansion, the energy needs of AI and data centers, and a push to decarbonize heavy industries and transport.

However, Shell cautioned that this rising demand in Asia is sensitive to prices. The company observed that when the Spot prices dropped below $10 per million British Thermal Units in the second quarter, the purchases from Asia’s buyers saw a swift resurgence, highlighting the delicate balance between pricing and uptake.

SHEL’s Zacks Rank & Key Picks

London-based Shell is one of the primary oil supermajors, a group of U.S. and Europe-based big energy multinationals with operations that span almost every corner of the globe. Currently, SHEL has a Zacks Rank #5 (Strong Sell).

Investors interested in the energy sector might look at some better-ranked stocks like Flotek Industries, Inc. FTK, Global Partners LP GLP and RPC, Inc. RES. While Flotek Industries and Global Partners currently sport a Zacks Rank #1 (Strong Buy) each, RPC carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Flotek Industries develops and delivers prescriptive chemistry-based technology, including specialty chemicals, to clients in the energy, consumer industrials and food & beverage industries. The Zacks Consensus Estimate for FTK’s 2025 earnings indicates 55.88% year-over-year growth.

Global Partners is a Delaware limited partnership formed by affiliates of the Slifka family. The company owns, controls or has access to one of the largest terminal networks of refined petroleum products in New England. The Zacks Consensus Estimate for Global Partners’ 2025 earnings indicates 17.84% year-over-year growth.

Atlanta, GA-based RPC is an oilfield service provider in almost all of the prospective plays, like the Rocky Mountain regions, Appalachian area, Gulf of Mexico and other resources in the United States. The Zacks Consensus Estimate for RES’ next quarter earnings indicates 33.33% growth.

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This article originally published on Zacks Investment Research (zacks.com).

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