Southeast Asia is a region with enduring potential for the LNG market. Massive demand growth prospects and rapidly developing industrial sectors promise to increase demand for energy and natural gas. LNG provides an opportunity that the southern nations have seized upon to develop the sector. However, the region’s interests could be served by a collaborative effort to develop the LNG sector.
The
LNG-focused nations of southeast Asia are pursuing different aspects of the
market, but all involve hefty government involvement. Vietnam seeks to invest as
a major consumer as it develops its LNG-to-power schemes. Indonesia continues
to invest in exploration and development as an ongoing supplier, both for its
own sake and for valuable exports.
Malaysia seeks to invest and stabilise its
domestic gas market. Singapore is becoming increasingly reliant on LNG to
decarbonise its power industry. The Philippines is significantly investing into
LNG as the Malampaya gas field depletes. And of course, Brunei remains a
producer reliant on LNG for wealth even as it begins to look ahead to its
declining reserves.
The
growth of LNG as a power source for the region has begun to take off. The cost
of LNG has been a steep barrier for most of the region to overcome. Indonesia led
the way largely out of necessity, given their island bound geography. LNG
consumption in the region has begun to take off as efforts to decarbonise
industry compete with the need for more energy.
Vietnam
Vietnam
and the Philippines are the new kids on the block. Vietnam is looking to
transition to a gas-fired energy grid, moving away from coal to a
lower-pollution fuel, driven by its stated Nationally Determined Contributions
to climate change, reductions of 9% by 2030. The plan’s keystone is the LNG-to-Power
plants outlined in Power Development Plan (PDP) 8.
Energy security has also become
a key focus for the Vietnamese government. In 2020, announcements targeting 5.6Mtpa
of actual LNG imports by 2030 and 10Mtpa by 2045 were announced by the
Politburo. Initial LNG imports target the latter half of 2023.
Despite
PDP8 establishing plans for 22GW of gas-fired power, the dramatic increase in
demand over 2022 has sabotaged the project’s potential. High LNG prices have
caused the government to call for a review of the feasibility of gas-fired
power projects. Hanoi may consider offshore wind as the primary alternative if
LNG remains expensive, but a minimum of three power plants will proceed with
coal-to-LNG switching.
The nation’s commitments to net zero by 2050 encourages
a greater investment in renewables at the cost of the two new potential LNG facilities.
The tentative plan to burn hydrogen after 2030 to mitigate emissions is holding
the planned LNG-fired power projects in place for now. 3500MW of gas-fired
plants are due to come online by 2025, an estimated 2Mt of imports that year,
with an additional 21GW to come online by 2030.

Philippines
The
Philippines’ National Oil Company has recently granted approval to a seventh
LNG facility, though imports are far from capacity due to the nation’s current low
power requirements. The move has been spurred by declining output from the
Malampaya gas field in the South China Sea, expected to become depleted as soon
as 2027.
The
end of the March quarter will see the completion of First Gen’s Batangas LNG
terminal, which is intended to host a 5.3Mtpa FSRU vessel while onshore
construction finishes. Combined with the upcoming start of the completed 3Mtpa
Philippines LNG, the Filipino LNG import capacity has rapidly expanded. The
other approved projects remain smaller, around 0.2-0.5Mtpa capacity each.
Indonesia
Indonesia
will remain self-sufficient and a strong regional contributor to the LNG market.
Steady investment in exploration and development have kept Indonesia’s energy
mix diverse despite the abundant cheap coal resources made available over the
last decade. Gas use contributes around 20% of electricity production in 2022,
expected to grow to 21% in 2025, before gas and coal slowly lose ground to
renewables. By 2030, gas is expected to contribute 18% of electricity
generation.
Indonesia’s
LNG imports are almost entirely self-managed, provided from the nation’s three
key LNG terminals. While Pertamina’s Bontang LNG is in decline due to age and
falling gas supply, the upcoming 3.8Mtpa expansion at Tangguh LNG and the
government’s continued investment will maintain the nation’s production levels.
Indonesia’s
key production growth is the long-delayed 9.5Mtpa Abadi LNG project, processing
gas from the Masela Block. The project has been in limbo for over a decade, and
Inpex recently confirmed its intent to delay FID into the latter half of the
decade. Meanwhile, Shell is desperately trying to offload its 35% stake onto
state-owned Pertamina, more than two years after Shell’s announced exit from
the project.
Indonesia
will have 2Mtpa of contracts expire in 2024 at Tangguh LNG and Bontang LNG, and
another 2Mtpa in 2028 at Donggi-Senoro LNG, freeing up additional production
for domestic use. This gas will be partially used domestically as Indonesian
demand grows, but at least 2Mtpa will be recontracted.
Malaysia
Malaysia’s
gas use for electrical power generation will peak next year in 2024. Increasing
shares of gas will be committed to domestic use as domestic fields decline. Bintulu
LNG, otherwise known as Malaysia LNG, has been in long-term decline as a
result. Field development will be unable to compensate for losses in gas
supply, and new field discoveries have a host of technical and compositional
issues that will increase processing cost.
Estimates
of the 92bcm Kasawari discovery, slated to start later this year after the CCS
project reached FID in 2022, suggest it holds up to 35% CO2 content.
The CCS project is expected to capture up to 3.3Mtpa of CO2-e. Other
fields have similar issues, with estimates of high CO2 and sulfur
content common, which Bintulu LNG has not been technically designed for.
Petronas has prioritised sweet gas field development for feed gas to Bintulu,
and upgrades to Bintulu LNG to allow for very sour and high CO2
content fields would be expensive and time consuming.
As
a result of these supply declines, Malaysia’s LNG production will fall from
29Mt in 2021 to 23Mt in 2030 and 20Mt in 2040.

Singapore
Singapore
is investing in renewables and potentially nuclear to transition away from LNG,
but while the gas share of the energy mix will fall, net demand will continue
to grow. The nation is heavily reliant on LNG, currently producing nearly 90%
of its electricity from gas-fired power stations. LNG demand will grow 26% from
3.5Mt in 2023 to 4.4Mt in 2040.
The
gas market may continue to grow if renewable power developments stall due to
lack of available land. Improving energy efficiency and reliability remain the
key focus.