Asia’s emerging economies and growing population are expected to sustain growth in the global LNG market and help absorb excess supplies hitting the water later this decade as new export projects come online.
Europe is on a trajectory to cut natural gas demand as industrial consumption falls and more renewables are expected to come online, leaving suppliers to focus on fulfilling nascent demand in Asia in the coming decades.
The Gas Exporting Countries Forum (GECF) expects the Asia-Pacific region to account for more than 52% of the 700 billion cubic meter (Bcm) increase in global natural gas demand expected by 2050. India, China and Southeast Asia are expected to underpin growth in the region.
The International Group of Liquefied Natural Gas Importers (GIIGNL) anticipates a similar trend to take shape. The group expects China to be the largest growth market this decade. India is likely to assume that role after 2030, while both South and Southeast Asia are poised for the highest incremental LNG import growth, GIIGNL said in its latest annual report.
China’s imports could rise by about 8% year/year in 2024 to 80 million tons (Mt) as strong demand from the industrial, power generation, and transport sectors support consumption, according to PetroChina Co. Ltd.
“Recent projections of China's natural gas balance show that China's gas imports could reach or exceed 300 Bcm/year by 2040,” said Columbia University’s Erica Downes, a senior research scholar at the Center on Global Energy Policy. “If these projections prove to be accurate, China will need to import more given that only 150 Bcm are covered by existing contracts.”
Even if more pipelines, such as the Power of Siberia 2 (POS2) and Line D, are built to move additional volumes from Russia and Turkmenistan, respectively, “there would still be room in China's gas import portfolio for LNG since the combined capacity of these two proposed pipelines is 80 Bcm.”
Despite increasing domestic natural gas production and potential pipeline deals, China continues to count on LNG, with more than 46 LNG-related projects expected to start-up by 2028, according to GlobalData.
China’s natural gas consumption is projected to increase, with total demand rising to 470 Bcm in 2033 from 369 Bcm in 2023.
Whether LNG imports to China would continue to rise depends on how quickly renewable energy sources are developed to replace natural gas in the power sector.
“China has put in place targets for non-fossil fuels, led by lower-cost renewables such as solar and wind, to account for 25% of the energy mix by 2030 and 80% by 2060,” said Fitch Ratings unit BMI Research in a recent report.
China could switch from LNG to lower-cost pipeline imports from Russia, Turkmenistan, Kazakhstan, and Myanmar, as well.
Rystad Energy analyst Wei Xiong told NGI that with the expected startups of Line D and POS2 around 2030, “LNG is likely to face much more competition from piped gas that will slow LNG import growth compared to the 2020s.”
Rystad expects China’s LNG imports to continue growing until the pipelines come online, projecting volumes to go from 72 Mt last year to more than 130 Mt by 2030.
Volumes could peak at 160 Mt, she added. China’s city gas sector is expected to continue to drive demand growth. There also is still room for urbanization in the country, Xiong told NGI.
GECF expects South and Southeast Asian buyers' share of Asia-Pacific’s LNG imports to rise to over 55% by 2050 from 18% in 2022. At that rate, the region would become Asia-Pacific’s largest demand bloc.
Although coal is expected to continue competing with gas in some of Asia’s emerging markets, Vietnam and the Philippines began importing LNG in 2023 to fuel natural gas-fired power plants. Once coal is phased out in most Asian countries, renewables and gas would likely compete for market share.
Moreover, South Korea and Japan are both forecasted to decrease LNG imports by 2050 by increasing nuclear power and renewable capabilities, opening the door further for smaller buyers to play a larger role in the market.
Thailand is also expected to announce a revised energy plan that would require more of its electricity to be produced by renewables. In the short-term, though, with dwindling domestic production, and declining imports from Myanmar, Thailand is counting on LNG imports to meet its power generation needs.
Many other countries in South and Southeast Asia are supporting policies to lean more heavily on natural gas and renewables instead of coal.
In Southeast Asia, "a realistic energy solution for lower carbon emission is to reduce coal-fired power generation and shift to gas-fired power plants along with renewable energy,” Michiaki Hirose, former president of Tokyo Gas Co. Ltd., recently told Nikkei Asia. He added that the “LNG era” would come to Southeast Asia via each country's renewable energy strategies.
