Southeast Asia Expected to Drive LNG Demand by 2030
Southeast Asian countries are predicted to be major contributors to the growing demand for liquefied natural gas (LNG) by 2030, according to industry experts.
In 2022, global trade in LNG reached a record high, fueled mainly by increased demand from Europe as the region reduced its reliance on Russian pipelines following the invasion of Ukraine by Moscow. However, Europe’s demand for LNG is expected to decline in the coming years.
Tony Regan, the Asia-Pacific gas lead at NexantECA, an energy and refining advisory firm, anticipates that LNG demand from Europe will peak in 2027 and then decrease by 2030.
“The real growth is going to happen in Southeast Asia, particularly in countries like Vietnam, Thailand, and Indonesia,” said Regan.
Vietnam, in particular, shows promise in the LNG market. Regan forecasts significant growth in demand from Vietnam in the next few years, largely due to the government’s Power Development Plan 8, which requires the conversion or retirement of all coal plants by 2050.
“There will be substantial growth in demand in the next few years, as 13 of the proposed new power plants in the plan will be LNG-fired, with an additional 10 being gas-fired. This will create a strong pull for energy from Vietnam,” explained Regan.
Due to its strong economic and population growth, Vietnam has long been considered a significant market for LNG expansion, according to Columbia University’s Center on Global Energy Policy. This growth is expected to drive energy demand.
S&P Global estimates that Vietnam’s GDP will surge from $327 billion in 2022 to $760 billion by 2030.
The global LNG market is projected to grow from $74.60 billion in 2023 to $103.41 billion by 2028, according to forecasts by analysis and consulting firm Mordor Intelligence.
Energy giant Shell has witnessed “tremendous growth” in the LNG market over the past two months and has identified three countries, including Vietnam, as pivotal drivers of this growth.
“We have supplied three new countries, Germany, Vietnam, and the Philippines, and they are all potential significant LNG markets,” said Steve Hill, Executive Vice President for Shell Energy, during the recent Gastech conference in Singapore.
“These markets have overcome the challenges of implementing LNG imports and now have great growth potential,” Hill added, highlighting that these countries have recently received their first LNG cargoes, further advancing their LNG ambitions.
S&P Global also shares the optimistic view that Southeast Asia is poised to become a prime market for LNG.
“By 2033, Southeast Asia’s LNG demand is forecast to reach 73 million tons per year, accounting for 12% of the global LNG market,” stated Zhi Xin Chong, S&P Global’s Head of Emerging Asia’s gas and LNG markets. According to data from the analytics firm, this would almost quadruple the demand compared to 2022.
The main drivers of this growth story, according to Chong, will be the continued decline in domestic gas supply and the shift from coal to gas in the power sector. However, Chong cautioned that demand in these markets is still fragile and dependent on stable prices.
“It is crucial for LNG prices to remain stable and for global funding to be available for financing the necessary infrastructure,” Chong emphasized.