Global demand for LNG is rising, but not quickly enough to cover the growth in supply enabled by a series of liquefaction plants and export facilities coming online in Australia and the U.S. over the next few years, according to a report by Bentek Energy, the analytics and forecasting unit of Platts.

Supply-demand projections from Eclipse Energy, a separate Platts unit, are telling: Global demand is expected to increase by a little more than 3.3 billion cubic feet per day (Bdf/d) in 2016, with supply reaching 4.3 Bcf/d. By year-end, the global market will be soaked with 1 Bcf/d more than it needs, an imbalance that has concerned sector observers for some time.

“I think there is already a glut,” Thomas Moore, Houston-based partner with global law firm Mayer Brown LLP, told Hart Energy. “With the U.S. projects coming online in the next few years and major Australian projects not far behind, in at least the short term, there are expanding LNG supplies chasing relatively flat demand. The question is, how fast will the market expand? You do have a great deal of interchangeability of fuels. When the market gets out of balance, LNG prices should be forced down, which should, if economic theory holds, increase the demand for LNG because LNG is now cheaper than alternative fuels.”

A Bentek Energy analysis, “LNG Exports: Oasis or Mirage,” scheduled to be released in New York on Aug. 27-28, comes on the heels of a U.S. Energy Information Administration report showing how the world’s leading LNG importers—China, Japan and South Korea—reduced their imports by almost 7% in the first five months of 2015 compared to the same period in 2016.

In addition to the swift ramp-up in Australia, Bentek notes that five terminals expected to be built in the U.S. over the next five years will add a combined liquefaction capacity of 10.16 Bcf/d.

“As a result of oversupply of LNG in the global market, U.S. export capacity holders are likely to operate without regard to their sunk cost tolling fees and deliver gas at a cost of feedstock plus transport plus margin,” said Ross Wyeno, senior energy analyst at Bentek.

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