Southeast Asia bucks Asia-Pacific’s LNG demand decline

Population growth, rising living standards, and domestic gas depletion are strengthening the region’s case for LNG imports and infrastructure.

Southeast Asia is emerging as a counterweight to weaker liquefied natural gas demand across Asia-Pacific, as growing energy requirements and declining domestic production increase the region’s need for additional supply.

Asia-Pacific LNG demand is falling to 257 million tonnes, but Andrea Stegher, President of the International Gas Union (IGU), said Southeast Asia’s different demand profile reflects population growth and rising living standards.

“Southeast Asia is the center of energy demand growth and gas demand growth,” Stegher said. Unlike established markets such as Japan, Korea, and China, several Southeast Asian economies still require additional energy to support development.

Demand is also broadening beyond power generation. Stegher identified industry, road and maritime transport, artificial intelligence, and data centres as sources of additional energy requirements.

For LNG producers, the shift will require agreements that can connect suppliers and consumers whilst accommodating changing market conditions. Stegher said producers, portfolio players, and shippers are looking for ways to establish credible agreements across the gas value chain.

Recent pressure on gas prices from the Gulf crisis remains a challenge. However, Stegher argued that gas retains a role alongside renewables, particularly where power systems require different energy sources to work together.

The outlook for Southeast Asia is also being shaped by declining domestic gas production. Stegher pointed to Malaysia and Indonesia, where projects are seeking to develop domestic resources whilst also adding import supply and infrastructure.

That combination could strengthen the case for longer-term LNG arrangements and investment, but Stegher said policy and business visibility will be important.

Rather than replacing domestic production, LNG imports could increasingly complement local resources as countries manage growing demand and declining output.

For producers and infrastructure investors, Southeast Asia’s LNG opportunity will therefore depend on whether demand growth is matched by sufficient policy certainty, import capacity, and durable commercial agreements across the gas value chain.