Shell Puts Middle East LNG Supply Loss at 36 Million Tons as China and India Await Rebound
GAIL and PetroChina say import cuts are temporary, but Qatar infrastructure damage and a JKM price near $25 have reshaped Asian supply chains for years ahead.
Shell estimates that around 36 million tons of LNG supply have been lost from the Middle East so far in 2026, Cederic Cremers, Shell's President of Integrated Gas, said at the Gastech conference in Bangkok, according to Reuters on Tuesday (2026-09-15). JKM spot prices stood at $25.06 per MMBtu early Tuesday (2026-09-15), close to levels that have kept Chinese and Indian buyers out of the spot market for months.7
State-owned gas companies in both countries say the pullback is temporary. GAIL and PetroChina told Reuters on Tuesday (2026-09-15) that demand destruction will reverse once the US-Iran conflict ends and Asian spot prices ease from near-$30 levels. The two companies represent a substantial share of the import volumes the region has lost since the conflict began.6,7
The disruption has been severe. Iran's blockade of the Strait of Hormuz severed a corridor handling nearly 20% of global LNG flows. Damage to Qatar's liquefaction infrastructure removed around 12.8 million tons per annum of supply, according to databiztimes. Recovery timelines could stretch up to five years. Leading energy consultancies have collectively cut global LNG supply projections by as much as 35 million tons.1
The demand impact was immediate. Chinese LNG imports fell to 3.5 million tons in March 2026, down 30% on the year, Kpler data showed. Overall Asian imports that month dropped 4.3% year-on-year to 21.12 million tons, a seven-year low, according to Gas Exporting Countries Forum figures, with roughly 80% of Persian Gulf LNG normally flowing to Asian buyers.2
By May 2026, China had partially stabilized, recovering to 4.9 million tons of monthly imports, a slight increase on the year, Bloomberg reported, citing shipping data. India moved further: GAIL expanded sourcing from markets outside the Gulf and restored gas consumption to around 90-95% of normal levels, Reuters reported Tuesday (2026-09-15).2,7
The annual toll is still steep. Asia Pacific LNG demand is forecast to fall 4.1% in 2026 to 257 million tons, from 268 million tons in 2025, Wood Mackenzie said in a July 2026 report, marking a second consecutive annual decline. India faced an estimated shortfall of around 1.5 million tons per month at the depth of the disruption, the consultancy added separately.4,3
Wood Mackenzie sees demand recovering to 279 million tons in 2027 and reaching 297 million tons by 2028, as geopolitical risk subsides, new regasification capacity comes online, and structural gas demand grows across South and Southeast Asia. That recovery path holds only if the conflict timeline shortens in ways that are not yet visible.3
One source of supply relief is independent of any settlement. Shell's Cremers pointed to 150 to 200 million tons of new LNG capacity expected to come online in coming years, a wave large enough to ease JKM prices even without a Middle East resolution, Reuters reported Tuesday (2026-09-15).7
High prices have meanwhile accelerated coal substitution. The IEA said in a report published Thursday (2026-09-10) that soaring LNG costs were driving economies back to coal, with global coal demand set to hit a fresh record this year. Newcastle physical coal stood at $139.30 per ton early Tuesday (2026-09-15).5
Storage and demand-side indicators currently lean bearish on JKM, according to market analysis, and JKM at $25.06 is already well below the nearly $30 peak that industry executives cited as the demand-destruction threshold. Some price easing is underway before any diplomatic resolution, though supply remains far below pre-conflict levels.6,7
An additional supply variable: as Europe phases out Russian LNG from 2027, discounted Russian cargoes seeking alternative destinations could add incremental volume to Asian markets, Equirus Securities said in a recent note. How quickly Chinese and South Asian buyers absorb those volumes alongside new Atlantic Basin output, ahead of any Qatar capacity recovery, will shape the pace of the next LNG cycle.3