Global LNG suppliers looking at Asia should focus more on combined Southeast Asian markets—Indonesia, Thailand, Malaysia, and Singapore—as the LNG appetite of these markets increase. India, on the other hand, may disappoint.
That's advice from consultancy Wood Mackenzie.
Combined Southeast Asian LNG markets, it said, will account for a third of overall Asian LNG demand growth by 2025, growing by 45 million tonnes/year (tpy). India's LNG market, on the other hand, may grow more slowly than once thought, by only 20 million tpy within this timeframe.
Senior Gas Market Analyst Nicholas Browne said, "Recent developments in Indonesia and Thailand have helped strengthen the outlook for very strong Southeast Asian LNG demand growth. In India, we are now seeing faltering domestic gas production [that will] limit development of the gas market. Perhaps counter-intuitively to some, reduced gas production will also lower…LNG market growth in India."
On Indonesia's role in boosting Southeast Asian LNG demand growth, Browne said the country will increasingly require LNG as domestic demand outpaces domestic supply. "Early coalbed methane pilot well results in South Sumatra indicate that production will not meet previous expectations, providing more headroom for LNG," he said.
In Thailand, higher gas demand driven by policy decisions in the power sector will limit the scope for coal-fired electric power generation and result in increasing reliance on gas-fired electric power plants. WoodMac believes this will drive LNG demand after 2020 when indigenous gas and pipeline imports will be unable to meet demand.
In India, production from Reliance's D6 block has fallen from a peak of 20 billion cu m in 2010 to 11 billion cu m in 2012 (OGJ Online, Feb. 19, 2013; Feb. 15, 2013). WoodMac believes production from D6 will continue to decline, reducing the overall outlook for Indian gas production.
With these market developments, WoodMac says, overall Asian demand growth will remain strong as Southeast Asia "will more than compensate" for India's slower LNG demand growth.
Furthermore, LNG demand expectations for Asia have strengthened in recent years due to the reduced long-term reliance on nuclear power in Japan and Taiwan, as well as increased demand for LNG in China's coastal provinces.
