Uncertainty over future LNG supply a critical concern for Asia

The recent annual report released by the GIIGNL - International Group of LNG Importers makes for both encouraging and concerning reading.?

On one level, it contains some very positive data about LNG demand, particularly from an Asian perspective.?

As global LNG imports rose to 401 million tonnes in 2023, much of the growth was driven by Asia, underscoring the role of natural gas in supporting both energy security and energy transition in our region.?

Of the four new importers of LNG in 2023, three were located in Asia: Hong Kong, the Philippines and Vietnam. Nine new LNG import terminals were reported as being commissioned across Asia in 2023, with as many as eight more set to become operational by the end of 2024.?

LNG imports in China, Thailand, Bangladesh, Indonesia and Singapore all increased more than 10 per cent, year-on year.? India also came close to that mark, as Asian customers took advantage of market moderation after two years of highly elevated pricing.?

Yet, as the GIIGNL report notes, a “veil of fog” has been introduced to global LNG markets through the Biden Administration’s halt to ongoing export approvals.?

ANGEA has made its views on this “pause” clear since it was announced in late January. It has added uncertainty to decision making in Asia at a time when policy makers sorely need clarity to make vital calls about what their energy systems will look like in decades’ time.?

The potential for restricted or even reduced future LNG supply from the US increases the risk that coal use for power generation will become even more entrenched in emerging Asia.?

The GIIGNL report doesn’t comment specifically on the policy situation in Australia but it is also of significant interest for nations in Asia.?

The ANGEA board recently convened in Perth, Western Australia on the sidelines of the Australian Energy Producers Conference.?

It was an excellent event that served as another reminder that Australia has been at the forefront of the global LNG export industry for 35 years.?

With large gas resources yet to be developed and existing fields that can be expanded, there is significant opportunity for Australia to continue meeting growing demand from Asia.?

Yet, as with the US, there exists a worrying lack of clarity around Australia’s policy environment – something that was referenced many times at the AEP Conference.?

While the recently released Future Gas Strategy (FGS) is a largely positive document that provides an outline for Australian gas production to 2050, little within it is set in stone. Asian customers are understandably nervous that Australia’s need to secure domestic gas supply could one day come at the expense of exports.?

Furthermore, there has been a delay to progressing reforms to Australia’s offshore approval processes, which will be required to support many of the laudable goals of the FGS.?

Returning to the GIIGNL document, one of the standout statistics is that nearly 41 per cent of all global LNG imports originated in either the US or Australia, including 38 per cent of volumes received by Asia.?

With energy demand in Asia expected to more than double by 2050 and many nations looking to replace high-emitting coal with cleaner-burning gas, there’s a lot riding on LNG policy developments in the US and Australia.?

It’s essential that governments in both countries look outside their borders, including to Asia, when making critical decisions about future gas production and exports.?

Paul Everingham?is the CEO of the?Asia Natural Gas and Energy Association (ANGEA),?which works with governments, society and industry throughout Asia to build effective and integrated energy policies that meet each country’s climate objectives.