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(The opinions expressed here are those of the author, a columnist for Reuters.)
* GRAPHIC: Top LNG exporters, importers: http://tmsnrt.rs/2BtShEX
By Clyde Russell
LAUNCESTON, Australia, Feb 22 (Reuters) - If you were looking for signs that the liquefied natural gas (LNG) merry-go-round is starting to spin a little faster, the announcement of a planned massive expansion in Papua New Guinea is ample evidence.
Global majors Exxon Mobil and Total are considering plans to double LNG exports from Papua New Guinea to about 16 million tonnes per annum, their partner Oil Search said on Feb. 20.
If approved, three new trains would be added to the existing Exxon-operated PNG LNG facility, with natural gas from Total's fields supplying two of the units and the third using existing fields and a new Exxon development.
While a final investment decision on the $13 billion expansion is still more than a year away, it's a clear sign that LNG producers believe the market is headed for a deficit and that large-scale projects are once again viable.
The LNG industry's recent development has been characterised by periods of massive investment and capacity expansions followed by lulls amid fears of low prices caused by oversupply.
The past decade has witnessed a rapid expansion of LNG capacity, with eight large-scale projects being built in Australia and six in the United States, as well as some others such as the Yamal venture in Russia.
Most of these developments have started, or are due to start, within a fairly narrow time frame between 2016 and 2020, a bunching together of new capacity that led to widespread market concern of oversupply and weak prices.
While it's still likely that there may be some oversupply this year, and perhaps until the early 2020s, the market reality is that new LNG buyers in Asia and a surge in Chinese demand has eaten away most of the expected surplus.
China imported 38 million tonnes of LNG in 2017, up 46.4 percent from the prior year, according to customs data.
A few years ago there were forecasts that China would import as much as 60 million tonnes of LNG a year by the middle of the next decade, predictions that started to look wildly optimistic as LNG imports struggled to gain traction in the 2014-2016 period.
However, a concerted effort by the authorities in Beijing to switch from more-polluting coal to natural gas has seen a surge in LNG imports, one that is likely to continue as cleaning up air pollution remains a priority, making 60 million tonnes per annum a realistic target.
The attractiveness of LNG relative to coal has also been boosted by a declining spot price for LNG in Asia, which at the current $7.90 per million British thermal units (mmBtu) is less than half the peak of $20.50 reached in February 2014.