Asean nations face major hurdles amid growing dependence on LNG: Report
KUALA LUMPUR: Southeast Asia's growing reliance on liquefied natural gas (LNG) as an energy security solution are under pressure.
This is due to rising geopolitical tensions, volatile pricing and infrastructure risks which may continue to challenge the region's long-term plans, according to a new report by Zero Carbon Analytics (ZCA).
The report warns that Asean nations' plans to expand LNG imports, requiring infrastructure investments estimated at US$11.8 billion, could expose the region to significant energy security risks and future fuel shocks.
Since LNG must be continuously imported, any supply disruption or price surge could significantly impact electricity prices and overall economic stability.
ZCA energy transition researcher Dario Kenner said the unpredictable nature of conflicts in the Middle East has the potential to disrupt LNG flows.
"In recent years, LNG imports have contributed to significant electricity price increases in countries like Thailand and Singapore, and supply disruptions have occurred due to global market reallocation, particularly during periods of heightened European demand," he said.
Kenner added that the region's investments in LNG infrastructure also come with exposure to continued price volatility, dollar-denominated costs and potential supply constraints.
As part of their strategic approach, Southeast Asia is turning to LNG imports particularly from the United States, to ease tariff pressures and diversify energy sources.
However, ongoing geopolitical tensions, including the Ismrael-Iran conflict and risks to the Strait of Hormuz, could further complicate both access and affordability.
The report also highlights alternative pathways for energy resilience, with Asean countries said to possess considerable untapped renewable energy potential, alongside existing clean energy manufacturing bases.
ZCA projects strong growth in global LNG supply, with the International Energy Agency forecasting a 33 per cent increase in liquefaction export capacity between 2024 and 2028, from 665 to 884 billion cubic metres annually.
This increase will be driven in large part by infrastructure expansions in the United States and Qatar, two of the world's top LNG exporters.
Thailand, the region's largest LNG importer, is expected to import up to 2.0 million metric tons of US LNG annually over the next five years.
Meanwhile, Vietnam and the Philippines are building import terminals with a combined capacity of more than 49 million tonnes per year.
Net exporters like Indonesia and Malaysia are also expected to increase LNG imports as part of ongoing tariff restructuring.
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