Southeast Asia's LNG demand would represent a third of Asian LNG demand growth by 2025, while India's would represent one-seventh, Nicholas Browne, Senior Gas Market Analyst at Wood Mackenzie said Wednesday.
Total Southeast Asian LNG demand will hit 47 million mt/year by 2025, an increase of 45 million mt/year from current demand levels of 2 million mt/year. This would surpass Indian LNG demand, which would be 34 million mt/year by 2025, an increase of 20 million mt/year from current levels of roughly 14 million mt/year, Browne said.
Total Asian LNG demand growth by 2025 would be 140 million mt/year, he added.
The growth in Southeast Asia should prompt LNG suppliers to look at the new LNG buying markets of Indonesia, Thailand, Malaysia and Singapore, as their appetite increases, Browne said.
"Recent developments in Indonesia and Thailand have helped strengthen the outlook for very strong SE Asian LNG demand growth," Browne said.
Indonesian demand for gas will outstrip domestic supply, forcing them to seek more LNG imports, as early results from new drilling projects in South Sumatra have shown that production will be unable to meet previous forecasts, Browne said.
Gas demand from Thailand would also increase significantly post 2020, and surpass Thailand's indigenous gas production and pipeline imports. The increase in demand follows government policy decisions limiting the amount of coal-fired power generation, and is expected to result in an increased reliance for gas-fired power plants in Thailand's power mix.
Also, while gas demand in India would continue to grow and remain an attractive LNG market opportunity, Indian demand might turn out to be of a smaller scale than many had hoped for.
"In India, we are now seeing faltering domestic gas production and this is expected to limit the development of the gas market. Perhaps counter-intuitively to some, reduced gas production will also lower the rate of LNG market growth in India," Browne said.
In India, Wood Mackenzie forecasts that production from Reliance's KG-D6 block will continue to fall, lowering the production outlook for Indian gas.
This will constrain gas availability to the market, mainly impacting the power sector in the medium term. In the longer term, reduced production will preclude the development of greenfield fertilizer production as it is not economical to develop these facilities purely based on LNG imports. In addition, LNG demand growth in other industrial sectors is further limited by reduced economic growth expectations, Browne said.
"What's important in examining this shift in the growth balance is that it demonstrates that the outlook across Asia is dynamic ... these include policy issues in India; gas prices and power sector fuel competition in SE Asia; the pace of shale gas development in China and nuclear policies in Japan, South Korea and Taiwan," Browne added.
