South Asia’s $107b LNG expansion faces price shock risks amidst Middle East tensions

Renewables are overtaking gas in the region.

South Asia’s planned liquefied natural gas (LNG) expansion could threaten long-term economic and energy security as markets spike after U.S. and Israeli attacks on Iran and renewed Strait of Hormuz disruptions, according to a report by Global Energy Monitor (GEM).

The report said that India, Bangladesh, and Pakistan countries have a combined  $107b in LNG terminals and pipelines announced or under construction.

Southern Asia accounts for 17% of global LNG import capacity under development—totaling 110.7 million tonnes per annum—and 17% of global gas pipelines by length, amounting to 34,146 kilometers.

Bangladesh and Pakistan each have enough LNG import capacity in development to roughly double their existing capacity, whilst India is pursuing the world’s second-largest LNG terminal expansion and the third-largest gas pipeline buildout.

Still, GEM warned that even a balanced global LNG market cannot shield these countries from price spikes caused by shipping disruptions or geopolitical crises, such as the recent U.S. and Israeli attacks on Iran. Gas may struggle to compete long term, threatening emerging economies built around it.

All three nations are highly price-sensitive LNG importers with a history of project cancellations. Over the past decade, India, Bangladesh, and Pakistan have shelved or cancelled two to three times more LNG import capacity than they have commissioned, with proposed import terminals in Southern Asia experiencing higher failure rates than comparable projects in Europe.

Meanwhile, renewables are overtaking gas. Pakistan’s solar generation has tripled in three years, and India aims for 40% of electricity from renewables by 2030. Energy storage and green hydrogen could further reduce reliance on imported gas.

“We’ve seen this story before, and South Asian economies that import LNG will struggle with these price shocks,” said Robert Rozansky, Global LNG Analyst for Global Energy Monitor. “It’s a reminder of the risks of building new gas infrastructure, and that domestic alternatives like renewable power are more affordable and reliable in the long run.”