Natural gas export trade last year grew year/year by 29 million metric tons (mmt) to 293 mmt, as global demand from new areas grew more strongly than expected, Royal Dutch Shell plc said Monday.

In its second annual outlook on the global liquefied natural gas (LNG) market, Shell said 1,100 spot cargoes were delivered in 2017, a 17% increase year/year, and equivalent to three cargoes delivered every day.

Supply was lifted by new export projects in the United States and Australia, with increased output from existing LNG supply facilities in Africa.

“We are still seeing significant demand from traditional importers in Asia and Europe, but we are also seeing LNG provide flexible, reliable and cleaner energy supply for other countries around the world,” said Shell’s Maarten Wetselaar, who directs Integrated Gas and New Energies.

“In Asia alone, demand rose by 17 mmt,” above expectations, he said. “That’s nearly as much as Indonesia, the world’s fifth-largest LNG exporter, produced in 2017.”

Since 2000, the number of countries importing LNG has quadrupled and the number of countries supplying it has almost doubled. LNG trade increased last year to 300 mmt from 100 mmt in 2000.

“In 2017, demand for LNG was strong with a clear ”pull’ from countries instead of a ”push’ of volumes seeking a home,” researchers said. “This was similar to 2016, but during 2017 the demand pull was from legacy gas and LNG importers in Asia and Southern Europe, whereas 2016 was characterized by a pull from new areas of demand.”

Japan continued to be the No. 1 destination for LNG supply last year, but China eclipsed South Korea to become second largest importer. Total LNG demand in China reached 38 mmt in 2017 from continued economic growth and policies to reduce air pollution through coal-to-gas switching.

“Historically, about half of all spot cargoes are supplied to North East Asia, where one cargo a day is traded,” said researchers. “With LNG demand outpacing contracted supply, there was an increase of spot cargoes into China.”

The number of spot cargoes into the Asian region has been around 400 a year in recent years, and the use of the Japan Korea Marker (JKM) LNG benchmark price assessment has risen. The exponential growth of JKM futures contracts last year reflected “demand from the industry for price risk management,” said researchers.

Trading activity also increased, “with a focus on intermediary services to the industry from price risk management to spot liquidity, credit services and infrastructure development.”

LNG buyers last year were still looking for “shorter and smaller” contracts, Shell noted, with the average contract for about seven years.

“The mismatch in requirements between buyers and suppliers is growing. Most suppliers still seek long-term LNG sales to secure financing. But LNG buyers increasingly want shorter, smaller and more flexible contracts so they can better compete in their own downstream power and gas markets.”

The mismatch has to be resolved to ensure project developers may make final investment decisions (FID) in a timely fashion, Shell researchers said.

Shell expects global gas demand to grow at an average rate of 2%/year over the next two decades, twice the rate of total global energy demand. However, LNG demand is set to increase at an average rate of 4%/year.

Based on current demand projections, an export shortage could develop in the mid-2020s, “unless new LNG production project commitments are made soon.” Following a wave of activity, FIDs for worldwide LNG projects “have nearly stopped,” Shell noted.

“As LNG projects generally take more than four years to start production, new supply will not be ready until well into the next decade. Meanwhile, the underlying market drivers and even the buyers are changing.”