South, SE Asian LNG Demand to Quintuple: WoodMac
Demand for LNG from the south and southeast Asia region will grow over five times to reach 236mn metric tons/year by 2040 with almost half of that demand coming from Indonesia and India alone, Wood Mackenzie said July 17.
According to WoodMac principal analyst Asti Asra the two major markets of India and Indonesia, with 63mn mt/yr and 43mn mt/yr of demand respectively by 2040, will see demand growing from different sectors. India's demand will be driven by industrial and city gas, while Indonesia's is power-driven.
In case of India, there is active interest in the regas terminals, but downstream connectivity is a problem. “Some existing regas terminals face low utilisation rates and will remain so while awaiting pipeline connectivity and demand growth in the long-term,” Asra said.
For Indonesia, LNG imports will only be required in the 2030s which means in the near term, national oil company (NOC) Pertamina will need to manage its various purchase commitments.
LNG import requirement grows to around 20mn mt/yr in 2040 for both Malaysia and Thailand. This is despite a lack of strong growth in overall gas demand, Asra said. Mature fields and limited successful exploration fields will lead to an LNG requirement to backfill the decline in domestic production.
“Both countries are also moving towards liberalising their gas markets and breaking up the monopolies of their NOCs. Regas terminals have now been opened up to third-party access and other entities such as power companies may import LNG directly,” Asra added.
Pakistan and Bangladesh face the double effect of declining domestic production and continued growth in gas demand, leading to LNG demand of around 25mn mt/yr each by 2040. New regas terminals will be required to access these markets.
“In addition, Bangladesh will need to introduce price reforms to reflect the impact of higher LNG prices. It has historically been able to pass on low prices from domestic production. Existing subsidy programmes will not be sustainable in the long run as imported LNG takes a bigger share in the country's fuel mix,” Asra said.
Out of the next set of emerging markets, WoodMac believes Vietnam is the most promising one. Over 10 regas terminals have been proposed, and WoodMac forecasts three will come online, starting from 2024. For the Philippines, the timing of its regas terminal in Batangas will depend on the depletion rate of its main Malampaya field. Shell, as the field operator, has stated that continued production is possible until 2030. That means the terminal could be delayed until then.
In January 2018, Myanmar approved four LNG-to-power projects to fulfill the country's power demand. However, little progress has been made since, owing to infrastructure and political constraints. Wood Mackenzie forecasts its first regas terminal will only come online by 2030 at the earliest.
“In summary, the south and southeast Asia region will see rapid LNG demand growth over the next two decades. There are opportunities for both LNG suppliers and investors in infrastructure to open up these growth markets,” WoodMac said.