Global LNG trade will grow 11% this year: Shell

LONDON (Reuters) – Global liquefied natural gas (LNG) trade will grow 11 percent to 354 million tonnes this year, as new facilities boost supply in Europe and the United States. Asia, said Monday the Royal Dutch Shell in an annual report on LNG.

Shell, the largest buyer and seller of LNG in the world, said trade increased 27 million tonnes last year, with Chinese demand growth of 16 million tonnes.

Shell's forecast that LNG demand is expected to reach 384 million tonnes next year reflects a booming industry with the opening of new production facilities in Australia, the United States and Russia, as well as more and more countries by building reception terminals.

Asia dominates the market, with Japan remaining the largest buyer. China has become the second largest country in 2017, as a result of the government's growing demand for power plants to switch from coal to cleaner burning gas to reduce pollution.

Due to the uneven progress in the development of liquefaction-export facilities and regasification-import terminals, many badysts believe that the global market will be oversupplied, if not this year, and then next year.

But most countries also see a decline in supply in the mid-2020s because, for the time being, there are not enough liquefaction facilities being planned, financed and built.

These projects rely on long-term supply contracts, signed years in advance by their operators. Between 2014 and 2017, buyers signed shorter-term contracts for lower volumes, making financing difficult to complete.

However, Shell said the duration of contracts signed last year had more than doubled to 13 years on average.

"A rebound in new long-term LNG contracts in 2018 could boost investment in liquefaction projects," said Shell. "Based on current demand forecasts, Shell is still forecasting a tightening of supply by the mid-2020s."

The spot trade amounted to 1,400 shipments in 2018, which accounted for almost 30% of the global market, up from 25% in 2017, Shell said. Spot trading, the purchase and sale of goods for immediate delivery, announces a more flexible and mature market.