GLOBAL liquefied natural gas (LNG) trade will rise 11 percent to 354 million tons this year as new facilities increase supplies to Europe and Asia, Royal Dutch Shell said in an annual LNG report yesterday.

Shell, the largest buyer and seller of LNG in the world, said trade rose by 27 million tons last year, with Chinese demand growth accounting for 16 million tons of those volumes.

Shell’s forecasts, which see LNG demand climbing to 384 million tons next year, reflect a burgeoning industry with new production facilities opening in Australia, the United States and Russia and more countries becoming importers by constructing receiving terminals.

Asia dominates the market with Japan remaining the top buyer. China became the second largest in 2017 as demand soared due to a government-mandated push for power stations to switch from coal to cleaner-burning gas to help reduce pollution.

Due to the uneven progress of developing liquefaction-export facilities on the one hand and regasification-import terminals on the other, many analysts see the global market becoming oversupplied if not this year then next year.

But most also see a supply crunch around the mid-2020s because, at the moment, there are not enough liquefaction facilities being planned, financed and built.

Such projects are underpinned by long-term supply contracts struck years in advance by their operators. Between 2014 and 2017, buyers were signing shorter-duration contracts for smaller volumes. (SD-Agencies)