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Southeast Asia key for LNG
by Staff Writers
Jakarta (UPI) Feb 20, 2013

Southeast Asian countries will drive overall Asian liquefied natural gas demand through 2025, a new report says.

Represented predominately by Indonesia, Thailand, Malaysia and Singapore, the region will account for one-third of that demand growth, increasing 45 million tons annually, the report from global research consultancy firm Wood Mackenzie says.

Of particular interest are Indonesia and Thailand, which have been making sizable investments in developing their LNG infrastructure both domestically and overseas.

"Indonesia will increasingly require LNG as we expect domestic demand to outpace domestic supply," Wood Mackenzie Senior Gas Market Analyst Nicholas Browne said in the report.

The third-largest LNG exporter, Indonesia accounted for approximately 9 percent of global LNG exports in 2011, behind Qatar and Malaysia.

Indonesia aims to establish coal bed methane exploration and production technology, but Browne said that early CBM pilot well results in South Sumatra indicate that production won't meet previous expectations, thus providing more room for LNG.

While the rate of India's LNG market growth is likely not to be as sizeable as previously thought, it is expected to grow 20 million tons per annum by 2025, the report states.

"In India, we are now seeing faltering domestic gas production and this is expected to limit the development of the gas market," Browne said. "Perhaps counterintuitively to some, reduced gas production will also lower the rate of LNG market growth in India."

For example, production from Reliance's D6 block fell to 11 billion cubic meters last year from a peak of 20 bcm in 2010.

This decline in gas output will constrain gas availability to the Indian market, mainly affecting the power sector in the medium term, Browne said.

"In the longer term, reduced production will preclude the development of greenfield fertilizer production as it is not economical to develop facilities purely based on LNG imports," he said.

Furthermore, LNG demand growth in other industrial sectors is limited by reduced economic growth expectations, he said.

But Southeast Asia will more than compensate for India's slower LNG demand growth, says Wood Mackenzie.

"What's important in examining this shift in the growth balance is that it demonstrates that the outlook across Asia is dynamic," Browne said.

Key uncertainties that could further affect the LNG outlook for the Southeast Asian region include policy issues in India; gas prices and power sector fuel competition in Southeast Asia; the pace of shale gas development in China and nuclear policies in Japan, South Korea and Taiwan, the report says.


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