Southeast Asia Offers Promise for LNG Players

The infrastructure needed for Southeast Asia to develop into a key LNG importing region is piecing together with the opening of two new markets this year. Emerging coal-reliant markets in Southeast Asia, alongside South Asia, are expected to be key pillars underpinning long-term global LNG demand growth. The region's LNG import momentum was strong until the pandemic struck in 2020 and the subsequent outbreak of the Ukraine war last year, which sent LNG prices through the roof. Both events disrupted and delayed terminal plans in Southeast Asia, home to 11 countries with varying levels of economic development. There is structural need for LNG to replace declining gas production, displace coal and complement renewables. However, the region's LNG imports aren't expected to grow significantly until the mid-2020s, when more terminals should be built and policymakers resolve teething issues associated with the introduction of LNG. Vietnam's state PV Gas and Philippines LNG delayed plans to open their first terminals in 2022 due to high prices, but they imported their debut LNG cargoes in July and April, respectively, joining existing importers Thailand, Malaysia, Singapore and Indonesia, which together imported more than 16 million tons of LNG last year. A second terminal in the Phillippines is slated to open later this year, while more terminals are being planned in both markets, which have imposed bans on new coal power plants. Cambodia, one of the region's smallest economies, imported its first LNG via ISO containers in 2020 from China to diversify its power sources, but plans for a floating terminal have been disrupted.