Emerging Asia poised to be world’s LNG key demand driver: IEEFA
It is projected to surpass LNG demand in China by 2040.
Whilst the Asia-Pacific region is expected to drive demand growth in liquefied natural gas (LNG) across the globe, an analyst draws attention to the growing potential of Southeast Asia and South Asia that could surpass demand in China by 2040.
According to Institute for Energy Economics and Financial Analysis (IEEFA) Energy Finance Analyst Sam Reynolds, Southeast Asia and South Asia are expected to add a combined 190 million tonnes of demand until 2040.
This is due to the rapidly declining gas production throughout that region, driving focus on markets with significantly high reserves, such as Pakistan, Myanmar, and Vietnam.
“The Philippines, Bangladesh, and Thailand are all within five years of wells running completely dry,” Reynolds said during Asian Power Summit 2022.
They’ve turned to LNG as the most convenient replacement for domestic gas to continue operating natural-gas fired power plants and infrastructure in countries like Pakistan, Myanmar, and Vietnam, which have significantly more reserves but faced troubles developing reserves.
On top of this, the high demand growth projection is also linked to the optimistic economic growth in emerging Asia, Reynolds said citing International Monetary Fund estimates that countries in the region will grow at a rate of 5.5%-7% annually.
This is also supported by the narrative that LNG serves as a bridge fuel from coal to renewable energy sources.
For instance, the AG&P LNG in the Philippines claimed that renewables are highly volatile, whilst LNG is much more reliable and affordable as a power supply.
The United States Agency for International Development, meanwhile, claimed in a white paper that US LNG would cost under $6 per MMBtu to be delivered to the Philippines.
“That is a ridiculous price when considering that it includes the gas costs, the liquefaction fees, as well as the shipping costs from the US to Asia,” he said.
“And the result of the result of these rosy macro fundamental and upstream circumstances in the region is that we've seen a frenzy of proposed infrastructure investments in the LNG sector.”