ASEAN LNG Demand Seen at 35mn mt/yr by 2025

Along with south Asian nations like India, Pakistan and Bangladesh, the Association of Southeast Asian Nations (Asean) region is expected to be a major consumer of LNG in the decade ahead primarily because of expanding demand for power.

The Asean region -- which consists of Indonesia, Malaysia, Philippines, Singapore, Thailand, Brunei, Vietnam, Laos, Myanmar and Cambodia -- has installed 209 GW of power capacity as of this year, and needs an additional 270 GW of new capacity by 2035, to meets its burgeoning demand.

According to Wood Mackenzie’s Asia Pacific gas and power senior analyst, Edi Saputra, countries such as Indonesia, Vietnam, Philippines, Myanmar, Laos and Cambodia have low power consumption per capita, between 300 and 1,800 kWh/man-year. They are also lagging in power supply reliability, and therefore could see a lot of development in those markets. Saputra estimates that around $500bn of investments will be needed to build the much needed power capacity.

Lack of co-operation

Although a lot of co-operation has been planned, little progress has been made in terms of energy policy. This is partly due to the lack of joint regulations and the weak control the organisation has over its members, says Saputra. To stay relevant however, Asean has to explore new ways of fostering energy co-operation among its members, instead of merely relying on individual efforts in isolation, apart from each other.

Two of the key initiatives in Asean's energy cooperation are the Trans Asean gas pipeline (TAGP) and an Asean power grid. While there are some existing bilateral gas pipeline interconnections, the full realisation of the programme depends heavily on the monetisation of the giant Natuna D-Alpha field, which is mostly carbon dioxide, and so will be expensive to develop. At the same time, the arrival of LNG into the region has made this project less urgent.

Singapore, Malaysia, Thailand and Indonesia can now evaluate their markets and where desirable, they can liberalise, he argues, adding that Asean needs to shift its focus towards LNG cooperation and in building virtual pipeline interconnections.

LNG demand at 35mn mt/yr in 2025, double that ten years later

Wood Mackenzie expects Asean's LNG demand to triple to 35mn mt/yr in 2025, and grow further To 72mn mt/yr in 2035. Thailand has been relatively successful in developing its domestic gas market, with the established natural gas vehicle infrastructure. Malaysia started liberalising its gas market this year, something that other countries in Asean are also now contemplating.

“Looking at this robust growth, the region should explore collaborative ways on how to make LNG procurement more competitive,” says Saputra.

Shardul Sharma