A US$7 billion gas bill sees developing Asian nations sour on LNG

An estimated US$7.4 billion was spent by major Asian buyers – India, Pakistan, Bangladesh, Thailand and Vietnam – on spot LNG since the start of the US-Iran conflict at the end of February, according to Bloomberg News. This surge in costs threatens to damage the reputation of LNG as a reliable energy source, as it comes just a few years after another war – between Russia and Ukraine – also led to shortages and price spikes.

The conflict has deprived Asian buyers of contracted supply of the fuel, pushing them into the spot market where prices have surged. Many Asian nations now seek ways to reduce their reliance on LNG, with renewables, coal, nuclear or locally produced gas or piped supply among the options. Long-term, concerns are being raised about LNG's ability to compete with alternative fuels if prices remain high.

Thailand, the host of this year's Gastech conference, aims to get at least 65% of its electricity from renewables by 2050, partly offsetting natural gas use. Pakistan and Bangladesh are also shifting towards solar and hydropower generation, while Vietnam and the Philippines may revert to coal. The Middle East conflict has forced countries to seek alternative LNG producers beyond Qatar, and nearly 80% of buyers plan to adjust their procurement strategy for geographic diversification over the next few years.

This shift could benefit projects with direct access to Asia, such as TotalEnergies and Exxon Mobil's Papua LNG in Papua New Guinea. High gas prices and a strong El Niño are also driving demand for coal, the dirtiest fossil fuel, as air conditioning use rises. In recent years, over 47 proposed gas-fired power plants have been cancelled or delayed in countries including the Philippines, Thailand and Vietnam.