A Pathway Forward for the Future of Gas and LNG Globally and in Asia
As Asia continues to be the fastest-growing region for energy consumption, natural gas and LNG are expected to play a crucial role in its energy future. However, the region faces a complex challenge: meeting rising energy demand while navigating the energy quadrilemma of energy security, affordability, sustainability, and access. The trajectory for gas and LNG in Asia will depend on several factors, including demand growth, policy support, and investments in infrastructure.
Asia’s Demand Growth: Short- and Long-Term Outlook
Short-Term Demand
In the short term, Asia’s demand for gas and LNG is set to rise due to the region’s ongoing economic growth, urbanization, and the need for cleaner alternatives to coal. Countries like China, Japan, and South Korea are already major consumers of LNG, while India and Southeast Asian nations are trying increasingly to turn to LNG to try and meet their growing energy needs, but coal appears more abundant and affordable.
China is the world’s largest LNG importer, with a focus on continuing to build 2 coal fire plants a week and 1,600 coal fire plants in over 60 countries around the world. China says they are replacing coal in industrial processes and heating, but are they? Short-term demand is expected to remain robust as the country continues to prioritize energy security and renewables.
India has ambitious plans to increase the share of natural gas in its energy mix from 6% to 15% by 2030. In the short term, demand is expected to grow significantly, driven by industrial and power generation sectors, as well as expanding LNG infrastructure.
Southeast Asia is experiencing rapid growth in LNG demand, particularly in countries like Singapore, Thailand, Vietnam, and the Philippines. As domestic gas production declines and electricity demand surges, these nations are increasingly turning to LNG to fill the gap.
Long-Term Demand
In the long term, Asia and the World’s demand for LNG will be influenced by the pace of the energy transition, the development of renewables, and the availability of infrastructure to support gas imports.
The reality is that we are in an energy expansion, not a transition. A true transition implies that the foundational risks have been fully evaluated, and alternative energy sources are ready to immediately meet current demands. However, we are not at that stage yet, and we cannot base laws or policies on uncertain future technologies that are still under development. Relying on speculative assumptions, or "betting on the come," places citizens, hospitals, industries and economies at risk.
While LNG is expected to remain an important part of Asia and the World’s energy mix, the long-term outlook will be shaped by several factors:
Can China actually reach decarbonization goals which could then lead to a gradual decline in LNG demand 2050 and beyond, particularly if the country is able to develop proven technologies that may accelerate its shift toward renewables, nuclear, and hydrogen.
India and Southeast Asia are expected to see sustained growth in LNG demand over the next two decades, driven by industrialization, urbanization, and efforts to replace coal with cleaner alternatives. However, the long-term demand trajectory will depend on the world’s ability to develop renewable energy and integrate it into the grid in an affordable manner.
Unlocking Demand Potential in South and Southeast Asia
To fully realize the potential of LNG in South and Southeast Asia, several key actions need to be taken:
Infrastructure Development: A major barrier to increased LNG adoption in the region is the lack of infrastructure for import terminals, regasification, and distribution. Many countries in South and Southeast Asia still have underdeveloped gas networks, making it difficult to expand LNG usage beyond coastal regions.
Investment in LNG import terminals and regasification facilities is crucial. Countries like India, Bangladesh, and Vietnam have made progress in developing LNG infrastructure, but more investment is needed to meet future demand.
Improved distribution networks are essential to bring gas to inland and remote areas, allowing industries and power plants to access LNG.
Policy and Regulatory Support: Governments in South and Southeast Asia need to provide clear, long-term policy frameworks that support the growth of the gas sector. This includes establishing favorable regulatory environments, offering incentives for private investment, and setting realistic goals that allow for the use of gas as a base load energy fuel.
Price reforms are also necessary. In many countries, domestic gas pricing is regulated or subsidized, which distorts the market and discourages investment in LNG infrastructure. A shift toward market-based pricing would help attract private sector participation and ensure the long-term viability of LNG.
Financing and Partnerships: Developing countries in South and Southeast Asia often face challenges in financing large-scale energy projects. International financing, public-private partnerships, and multilateral support will be key to unlocking the region’s demand potential.
International partnerships with LNG exporters and energy companies can help finance infrastructure projects and transfer knowledge and technology. Countries like Japan and South Korea, which are already major LNG consumers, can play a significant role in supporting the development of LNG markets in Africa, South Asia and Southeast Asia.
Addressing Energy Poverty: Many countries in the region face high levels of energy poverty, with millions of people lacking access to reliable electricity. Expanding LNG use for power generation can help address this issue, providing cleaner and more reliable energy to households and industries.
Affordable pricing mechanisms and targeted subsidies can help ensure that LNG reaches the most vulnerable populations, balancing the need for energy access with environmental sustainability.
Navigating the Energy Quadrilemma: Security, Affordability, and Sustainability
As Asia’s demand for energy continues to grow, the region faces the challenge of balancing energy security, affordability, and sustainability. Natural gas and LNG will be critical in navigating this energy quadrilemma, but the path forward will require strategic planning and investments.
Energy Security
Asia’s reliance on energy imports, particularly in the form of LNG, makes it vulnerable to supply disruptions and price volatility. Ensuring energy security will require diversifying supply sources, building strategic reserves, and investing in domestic production where possible.
Diversifying LNG suppliers is key. Countries like Japan and South Korea have already secured long-term contracts with a variety of suppliers, including the U.S., Australia, and Qatar. Emerging markets in Southeast Asia will need to follow suit, securing diversified LNG contracts to reduce their exposure to supply risks.
Developing domestic gas production can also enhance energy security. Countries like India, Indonesia, and Malaysia may have untapped gas reserves, and investments in domestic production are realized that could reduce their dependence on LNG imports.
Affordability
One of the major challenges for LNG in Asia is its cost, particularly in price-sensitive markets like India and Southeast Asia. As global LNG demand rises, prices can become volatile, making it difficult for developing economies to afford consistent supplies.
Long-term contracts can provide price stability and ensure a steady supply of LNG at predictable costs. Governments and companies around the world including Asia should focus on securing such contracts with major LNG producers.
Developing competitive domestic markets by encouraging private sector participation can also help bring down costs. Market-based pricing mechanisms, transparent regulatory frameworks, and the removal of price controls can stimulate competition and reduce the overall cost of gas.
Sustainability
To meet global climate goals, the World and Asia will need to reduce its reliance on coal while transitioning to cleaner energy sources. LNG offers a cleaner alternative in the short term, but long-term sustainability will depend on the scalable reality of affordable renewable options and their ability to integrate into the energy mix.
LNG as a transition fuel: LNG produces fewer emissions than coal. To align with sustainability goals, countries in around the World and in Asia need to treat LNG as a fuel that provides a long-term solution.
Reducing the carbon footprint by investing in improving what we have and not reinventing the wheel, we can reduce emissions of LNG through technologies that have yet to be developed or like carbon capture, methane leak reduction, and the use of renewable energy in LNG production can help align LNG with sustainability goals.
Governments should focus on building a complementary energy mix where gas provides backup and stability while renewables may provide part of the solution then believing that renewables will take the lead in electricity generation.
A Balanced Approach to the World and Asia’s Energy Future
The future of gas and LNG in globally is bright but complex. To unlock its full potential, the world must address infrastructure gaps, secure investments, and implement supportive policies that balance energy security, affordability, and sustainability. LNG will play a crucial role in the short, medium and long term as not only a transition fuel, but the long-term source that complements the energy mix, ensuring a sustainable and secure energy future for the World.