Southeast Asia’s LNG industry potential faces headwinds
The region was once projected to be the world’s fastest-growing LNG market.
Southeast Asia’s liquefied natural gas (LNG) industry will continue facing financial challenges as long-term LNG supply contracts before 2026 have been sold out globally.
This could expose Southeast Asian markets to “volatile, expensive spot markets,” the Institute for Energy Economics and Financial Analysis (IEEFA) noted in its report.
The LNG demand in the region was initially forecast to reach 106 million tonnes per year in 2035, seven times higher than in 2019.
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“The forecast reflected the view that rapid economic development, coupled with declining domestic gas production, would turn Southeast Asia into one of the world’s fastest-growing LNG markets. But developments over the past two years undermine bullish views,” the report noted.
Moreover, state-owned enterprises developing new LNG projects could also be forced to bear higher fuel and power costs, which could also be passed on to the consumers.
This could also lead to difficulties in project financing for private developers as government guarantees are limited.