LNG demand from the South and Southeast Asia region will grow over five times to reach 236 million tpy by 2040. Almost half of that demand will come from the two major markets of Indonesia and India, according to Wood Mackenzie principal analyst Asti Asra.
The two major markets of India and Indonesia, with 63 million tpy and 43 million tpy of demand respectively by 2040, see demand growing from different sectors. India’s demand is driven by industrial and city gas, while Indonesia’s is power-driven. There is active interest in the regasification terminals, but uncertainty lies more in the downstream connectivity. Some existing regasification terminals face low utilisation rates and will remain so while awaiting pipeline connectivity and demand growth in the long-term. 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 20 million tpy in 2040 for both Malaysia and Thailand. This is despite a lack of strong growth in overall gas demand. Mature fields and limited successful exploration fields 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. Regasification terminals have now been opened up to third-party access and other entities such as power companies may import LNG directly.
Pakistan and Bangladesh face the double effect of declining domestic production and continued growth in gas demand, leading to LNG demand of around 25 million tpy each by 2040. New regasification 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.
Out of the next set of emerging markets, Vietnam is the most promising one. Over ten regasification terminals have been proposed, and Wood Mackenzie forecasts three of them to come online, starting from 2024. For the Philippines, the timing of its regasification 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 timeline could be delayed until then. In January 2018, Myanmar approved four LNG-to-power projects to fulfil the country’s power demand. However, little progress has been made since due to infrastructure and political constraints. Wood Mackenzie forecasts its first regasification terminal will only come online by 2030 at the earliest.
In summary, the South and South East 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.
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