South-East Asia represents a key growth region for natural gas over the next decade as populations and economies continue to grow and several countries look to gas for meeting increased power generation expectations. However, a combination of waning domestic supply with growing demand is likely to widen supply-demand gaps out to 2030 and force imported volumes to grow.
Having experienced a dip in gas demand in 2020, South-East Asia is forecast to experience strong gas demand growth out to 2030, mostly driven by increased power generation but also through increased demand in the industrial sector and for petrochemical feedstock. To fulfil demand, new entrants to the LNG import market are emerging and a build-out of LNG regasification capacity is required.
Over the coming years, there are to be some additional countries added to the list of South-East Asian LNG importers. The Philippines, Vietnam and most recently Myanmar are all eyeing LNG regasification to support their gas demand needs. As a result, the region is forecast to increase its regasification capacity from just under 2Tcf currently to potentially over 7Tcf by 2030. This growth will provide opportunity in the form of new buyers of LNG and ultimately more volumes directed to the region.
2020 saw a record volume of imported LNG into South-East Asia, over 12 million tonnes in total, indicating the increased reliance on imported gas. Singapore recorded an LNG import growth of 20% in 2020, and with Indonesia announcing a halt of piped gas exports to the country by 2023, it is likely the country will see LNG imports take share from traditional pipeline imports coming from Malaysia and Indonesia over the coming decade. Thailand saw a 10% growth in its imported LNG in 2020 and as domestic supply is expected to continue its decline the country has over 600Bcf of new LNG regasification capacity due online by 2025. Myanmar imported its first LNG cargo in 2020 and new gas-fired power plants under development in the country will drive gas demand to fuel the new power capacity.
The Covid-19 pandemic has dented the gas demand growth in the region, with South East Asia currently experiencing a third wave of infections and major cities in the region reinstating lockdown measures. This will ultimately create short term headwinds for gas projects under development in the region and the pace of gas demand recovery. However, this is unlikely to change the longer-term trajectory of gas consumption in the region and the importance of LNG will become ever stronger as a result.