Neighbourhood watch: the future of Asian LNG demand growth
Kaushal Ramesh A *A
Kaushal Ramesh is Vice President of LNG and Head of Rystad Energy’s Gas and LNG Analytics and manages their published LNG research, focussing on LNG trading, shipping, and investments. His past advisory work includes project economics, regulatory impact studies, market entry strategies and LNG contract negotiations. Prior to joining Rystad Energy, Kaushal worked multiple roles at ExxonMobil, managing commercial operations of refined products and LNG, and gas and power sales contracts in the Asia-Pacific, as well as advising spot cargo traders, LNG contracting, and investment decisions as a market analyst. |
Abstract
The global liquefied natural gas (LNG) market has returned to a semblance of calm after a tumultuous 2022. European and Chinese demand is on the path to a slow recovery, while a nuclear power renaissance is underway in Japan and South Korea. This paper will detail our expectations for LNG demand growth, discuss demand drivers and market development opportunities for Australian LNG between the late 2020s to early 2030s. We see LNG demand in the region increasing from 260 Mtpa in 2023 to 479 Mtpa by 2035. The largest source of growth continues to be China with demand growing from 68 to 150 Mtpa, driven by uptake of LNG in the industrial and buildings sectors. We will also see South Asian demand growing from 33 to 100 Mtpa, and Southeast Asian demand from 24 to 103 Mtpa. Even in legacy markets of Japan and Korea where we see demand declining in this timeframe, we will see the emergence of new buyers and the impact of market liberalisation measures. The expiry of legacy contracts and the rising influence of US LNG is set to complicate market dynamics further. We discuss the challenges of the energy transition in a region that must balance emissions considerations with energy demand. We conclude that Australian projects with their proximate location and legacy relationships will remain an attractive proposition for Asian buyers. Ullage at existing LNG plants will support backfill economics, with decarbonisation measures taken under the Safeguard Mechanism demonstrating genuine emissions reduction action.
Keywords: Australia, China, demand, Japan, Korea, LNG, South Asia, Southeast Asia.
Kaushal Ramesh is Vice President of LNG and Head of Rystad Energy’s Gas and LNG Analytics and manages their published LNG research, focussing on LNG trading, shipping, and investments. His past advisory work includes project economics, regulatory impact studies, market entry strategies and LNG contract negotiations. Prior to joining Rystad Energy, Kaushal worked multiple roles at ExxonMobil, managing commercial operations of refined products and LNG, and gas and power sales contracts in the Asia-Pacific, as well as advising spot cargo traders, LNG contracting, and investment decisions as a market analyst. |
References
Asahi Shimbun (2023) Poll finds record support for Japanese reactor restarts. Available at https://world-nuclear-news.org/Articles/Poll-finds-record-support-for-Japanese-reactor-res
Fitch Ratings (2023) Fitch Affirms India at ‘BBB-’; Outlook Stable. Available at https://www.fitchratings.com/research/sovereigns/fitch-affirms-india-at-bbb-outlook-stable-08-05-2023
Inpex (2022) INPEX Vision @ 2022. Press release, 9 February. Available at https://www.inpex.co.jp/english/company/pdf/inpex_vision_2022.pdf
Inpex (2024) INPEX Acquires Additional Participating Interest in Ichthys LNG Project. Press release, 11 January. Available at https://www.inpex.co.jp/english/news/assets/pdf/20240111.pdf
Pao J (2024) Power of Siberia 2 stuck on gas price, branch issues. Available at https://asiatimes.com/2024/01/power-of-siberia-2-stuck-on-gas-price-branch-issues/
Rahman A (2023) INTERVIEW: Bangladesh plans to clear LNG debt, boost imports, gas production. Available at https://www.spglobal.com/commodityinsights/en/market-insights/latest-news/lng/092823-interview-bangladesh-plans-to-clear-lng-debt-boost-imports-gas-production
Senior M (2023) Pertamina cancels Mozambique LNG offtake deal. Available at https://www.argusmedia.com/en/news/2517387-pertamina-cancels-mozambique-lng-offtake-deal#:~:text=Indonesian%20state%2Downed%20Pertamina%20has,both%20parties%2C%22%20Pertamina%20said
Subhani O (2023) LNG ensures energy security as S’pore works on decarbonisation goals: Tan See Leng. Available at https://www.straitstimes.com/business/lng-ensures-energy-security-as-s-pore-works-on-decarbonisation-goals-tan-see-leng
Wang O (2022) China energy blueprint pushes independence as ‘opportunities’ with Russia grow. Available at https://www.scmp.com/economy/china-economy/article/3171566/china-energy-blueprint-pushes-independence-opportunities
Williams I, Roberts D, Tomiyama T (2023) Japan-Australia Investment Report 2022. Press release, March. Available at https://www.herbertsmithfreehills.com/sites/default/files/Japan-Australia%20Investment%20Report%202022%20Decarbonisation%20and%20Energy%20Security%20%28English%29.pdf
World Nuclear News (2023) South Korea increases expected contribution of nuclear power. Available at https://world-nuclear-news.org/Articles/South-Korea-increases-expected-contribution-of-nuc
