The launch of operations at Cheniere Energy Inc.’s (AMEX: LNG) Sabine Pass, La., export terminal helped push global LNG trade to a record in 2016, one that Oslo-based International Gas Union (IGU) expects to be broken repeatedly in the near future.

LNG volumes last year rose 5% to 258 million tons as a surge of production from Australia and increased output from Indonesia made Asia-Pacific the world’s leading export region, replacing the Middle East. Asia-Pacific is also the leading import region, with Japan, South Korea, China, India and Taiwan leading the world in volumes purchased.

In its “2017 World LNG Report,” the IGU cited the Paris Agreement as a driver of natural gas usage growth and noted that new markets have emerged in Egypt, Pakistan, Jamaica and Malta. Japan and South Korea, the world’s leading importers of LNG, appear to be moving toward an all-of-the-above approach to power generation, with increased reliance on nuclear, coal and renewable sources.

“It is not an exaggeration to say that the increased uptake of natural gas has direct and positive impacts on the environment and on human health around the world,” David Carroll, IGU’s president, wrote in the report.

Recent steps taken by the Trump administration that indicate a de facto withdrawal by the U.S. from the Paris Agreement may not be a hopeful sign for growth in natural gas usage, but the accord is not the only driver, said George Popps, Singapore-based director for Stratas Advisors, who covers global LNG.

“Yes, nuclear is returning to Japan and cheap coal prices have east Asian countries looking hard at its value,” Popps told Hart Energy. “However, natural gas is cheap—and will likely remain so—while also being more environmentally defensible, at least compared to coal. This makes it ideal for emerging economies in Latin America, west Africa, and most notably south and southeast Asia.”

Popps sees a prime opportunity for floating storage regasification units (FSRUs) as a short-term solution for power-starved countries like Pakistan and Bangladesh, while pipelines from the Middle East are being discussed for a potential long-term power solution. Stratas also expects growth in gas consumption from Thailand, Vietnam and Indonesia.

Among the trends identified in the IGU report:

  • China, India and Egypt added a total of 15.7 million tons in import demand;
  • Brazil, U.K. and Japan collectively decreased demand by 8.8 million tons;
  • Angola and Egypt returned to the export market, but Yemen, troubled by political instability, has not exported LNG since mid-2015;
  • Global spot prices dropped by an average of $2.32 per MMBtu as additional supply outpaced growth in demand; and
  • Cold winter weather in Asia and Europe, and unseen supply outages led to rebounds in spot prices in second-half 2016.

Popps does not believe that recent tensions in the Middle East will result in any serious supply interruption.

“The countries already prone to unrest [Libya, Yemen] haven’t produced meaningful volumes in a long time,” he said. “The bulk of Middle East supply comes from Qatar, and the LNG industry is the basis for that economy. It’s simply too important to that country for them to allow anything to happen to it.”

Popps noted that Qatar has recently reopened the offshore North Field, the world’s largest gas field, for development after a 12-year moratorium. Production is expected to reach 2 Bcf/d in five to seven years. Iran refers to the field as South Pars.

Qatar Petroleum said it was returning to exploration and development to regain global export leadership in LNG. Russian President Vladimir Putin recently said that he intends for his country to become the world’s leading LNG producer.

Popps does, however, view recent reports of a possible domestic gas shortage in Australia with concern.

“If there is a shortage it will likely affect the Curtis Islands projects (QCLNG, APLNG, Gladstone),” he said. “Concerns about the availability of [coal-seam gas] to feed the plants seem to be very real, and Stratas anticipates a real possibility that without the development of additional upstream resources they could run well below the 80% to 85% nameplate utilization that is normally expected [and perhaps operate in the low 60% range].”

Joseph Markman can be reached at jmarkman@hartenergy.com and @JHMarkman.