BANGKOK: Liquefied natural gas (LNG) demand in major Asian markets, including China, India and Pakistan, could recover from multi-year lows once disruptions to Middle Eastern supplies ease and additional global LNG capacity comes online, industry executives said.
The ongoing US-Iran conflict has disrupted LNG flows from Qatar and the United Arab Emirates, with restrictions on shipments through the Strait of Hormuz significantly tightening global supply.
The disruption has pushed Asian spot LNG prices sharply higher, reaching nearly $30 per million British thermal units (MMBtu) compared with pre-war levels of around $10/MMBtu, increasing pressure on price-sensitive consumers across the region.
Cederic Cremers, President of Integrated Gas at Shell, the world’s largest LNG trader, estimated that the global market has lost around 36 million tonnes of LNG from the Middle East so far this year.
High Prices Pressure Indian Demand
The sharp increase in LNG prices is already affecting consumption in India, where industries and other gas users remain sensitive to fuel costs.
GAIL Chairman Deepak Gupta said at the Gastech conference in Bangkok that elevated LNG prices were “definitely impacting” demand, particularly in sectors where switching to alternative fuels is economically viable.
The price pressure has also encouraged greater use of coal and oil as substitutes for natural gas, reversing some of the recent growth in gas consumption.
Pakistan Demand Could Recover
Pakistan’s LNG market could also see a revival if prices decline and additional supplies become available.
Pakistan LNG CEO Masood Nabi said demand could increase if new LNG volumes enter the market at competitive prices.
Pakistan has increasingly relied on solar power to meet part of its electricity requirements and manage supply challenges, reducing gas demand in some power-generation applications. However, LNG and natural gas remain important for industrial users, other sectors and household consumption.
The outlook for Pakistan’s LNG demand will therefore depend heavily on international prices, the availability of competitively priced cargoes and the pace at which new global LNG production capacity comes online.
Global Supply Outlook
Industry executives expect additional LNG production capacity to gradually ease supply pressures, potentially bringing prices down and encouraging demand recovery in Asia.
For Pakistan, lower international LNG prices could improve the economics of imports and support greater gas availability across power, industry and residential sectors. Until then, elevated spot prices are likely to remain a key constraint on LNG consumption across price-sensitive Asian markets.
By Reuters
