A wave of liquefied natural gas (LNG) supply will hit the market over the next three years, but rising demand and a dearth of new project advances on the horizon will make for a supply shortage in the early 2020s, analysts at Bernstein Research said in a note Tuesday.

Global demand growth for LNG surpassed 6% last year — the fastest in five years — and growth of 9% is on tap for this year, Bernstein said. “Demand growth is being led by a combination of fuel switching toward LNG in response to lower prices and reduced upstream investment reducing domestic production. China, India and new emerging markets, such as Egypt and Pakistan, have led global growth. Japan and Korea have been among the largest decliners.”

While lately, demand growth for LNG has been robust, so has supply growth, and that will continue for a bit longer, keeping a lid on LNG prices for the time being. Bernstein calculated that 100 million tonnes per annum (mtpa) of LNG supply capacity will enter the market over the next three years. Last year was just the beginning of this; the peak is coming in 2019 when an additional 40 mtpa comes online.

That 100 mtpa increase in capacity represents a 30% increase in global capacity, with projects in Australia and the United States mainly to thank.

The next round of LNG investment is expected to begin near the end of next year, which means this year will be “challenging” for companies that serve the LNG industry, the analysts said. “We expect few new projects approved in 2017, which will not be positive for services. “By the early to mid-2020s we see a market which is supply short. Given that it takes five years to build an LNG project, this means that investment will need to restart in 2018.”

In the meantime, LNG pricing will continue to benefit from higher oil prices, Bernstein said. However, the current oversupply will be a damper on spot prices for the time being. Outages and delays made for an “unusually tight” LNG market this winter, the firm said, lifting LNG prices to $9/MMBtu.

“With oil prices back toward US$60/bbl, we expect contract prices will trade around US$8-9/MMBtu, with spot prices a little lower,” the analysts said. “Although spot pricing has been firmer, new supply will cap the upside to spot prices.”