Global imports of liquefied natural gas grew 30 per cent more than expected over the last year, on the back of increasing demand for the cleaner fuel in China, Shell said in its annual LNG report.
"Natural gas is expected to grow at an average of 2 per cent per year over the next couple of decades; twice the rate of total global energy demand. Demand for LNG is set to increase at an average of 4 per cent per year," the Anglo-Dutch oil major noted in its report.
China and India, the second and third-biggest oil consuming countries globally, are increasingly moving to cleaner sources of fuels to combat rising levels of pollution in their mega cities. The vagaries of the oil market have also prompted a strategic reallocation of energy sources towards natural gas and renewables over the next decade.
Chinese demand in particular grew by 31 billion cubic metres - up 15 per cent - from 2016. Total LNG demand reached 38 million tonnes last year, making China the second largest importer, overtaking South Korea. The increase in LNG imports is being supplied by Australia, Africa as well as the shale gas boom in the US that has kick-started a wave of entrepreneurial players in the market.
Spot cargoes of LNG, which have become an economically feasible way to meet natural gas shortages, over building expensive pipelines saw around 1,100 deliveries in 2017 - an increase of 17 per cent over the previous year. The length of contracts has continued to shrink, with the average contract measuring less than seven years, observed the report.
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The increase in spot sales of LNG cargoes to Asia-Pacific has also increased the use of the Japan Korea Marker - the benchmark price assessment used for the region.
While the Platts' benchmark has been one of the strongest in assessing the price of gas in the Asian markets, newer ones are expected to be launched this year. China looks to launch its own gas benchmark on the Chongqing Oil and Gas Exchange this year. The world's third largest consumer of gas, behind the US and Russia, also set up a similar gas exchange in Shanghai in 2015.
China's clean energy push will also see a steady deployment of renewables over the next decade, with an expected 327GW of capacity to be deployed between 2017 and 2027, according to a report by BMI.
The Asia-Pacific region in general is expected to add more than 500GW of non-hydro renewables capacity during the same period, twice as much as Western Europe and North America, it added.