BAKU, Azerbaijan, June 22. After facing significant challenges, Asia is set to reestablish itself as the driving force behind global LNG demand growth, Trend reports via BMI, a Fitch Solutions company.
The disruptions caused by the outbreak of war in Ukraine in 2022 and the sharp reduction in Russian gas flows to Europe have reshaped global gas dynamics. During this period, price-sensitive Asian consumers were sidelined as European buyers secured their gas supplies by turning to LNG, causing a surge in LNG imports into the EU and UK. This shift diverted supplies away from the Pacific basin and led to skyrocketing global LNG and European gas hub prices, exacerbating the broader energy crisis.
Market conditions have since stabilized, with the Asian spot LNG benchmark JKM falling from its 2022 peak of USD 70/mnBTU to approximately USD 12/mnBTU as of mid-June 2023. This normalization has allowed LNG flows into Asia to recover, although the pace was tempered by slowing economic growth in key importers such as China, India, and Japan, a mild winter, and increased piped gas exports from Russia to China. Despite these challenges, Asia dominated global LNG demand growth in 2023, contributing over 75 percent of net global growth projected over the next decade.
The long-term outlook for LNG demand in Asia remains optimistic, although the near-term economic picture is mixed. Most Asian importers are expected to experience accelerated real GDP growth in 2024-2025. However, growth in China and India is forecasted to slow. While LNG imports have increased in these markets this year, they could face downward pressure due to competition from domestic coal resources and, in China's case, imported pipeline gas. Northeast Asian markets have structurally lower GDP growth compared to other parts of the region, but economic activity is robust in South and Southeast Asian countries like Bangladesh, the Philippines, Thailand, and Vietnam.
These emerging markets currently account for a modest share of Asia's LNG imports (just over 10 percent of the regional total in 2023), but their strong economic and demographic fundamentals support increased energy consumption and LNG demand growth over the next decade. Thailand, Pakistan, and Bangladesh are expected to be among the largest growth markets for LNG imports in Asia through 2033, supplementing substantial volume additions in India and China and compensating for stagnant growth in South Korea and declining imports in Japan.
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