Southeast Asian markets are growing in attractiveness to would-be liquefied natural gas (LNG) suppliers while India might not offer all that some would think, a Wood Mackenzie analyst said.

LNG suppliers targeting Asia should look more closely at Indonesia, Thailand, Malaysia and Singapore as LNG demand is growing in these countries, the firm said. The combined Southeast Asian LNG markets will account for one-third of overall Asian LNG demand growth by 2025, growing by 45 million tonnes per annum (mmtpa), Wood Mackenzie said. However, the rate of India’s LNG market growth may not be as sizeable as once thought, growing by 20 mmtpa within this timeframe.

“Recent developments in Indonesia and Thailand have helped strengthen the outlook for very strong Southeast Asian LNG demand growth,” said Wood Mackenzie’s Nicholas Brown, senior gas market analyst. “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.

“Indonesia will increasingly require LNG as we expect domestic demand to outpace domestic supply. Early coalbed methane pilot well results in South Sumatra indicate that production will not meet previous expectations, providing more headroom for LNG.”

As for Thailand, Wood Mackenzie expects a trend of higher gas demand due to policy decisions in the power sector resulting in an increasing reliance on gas-fired plants. This will drive LNG demand significantly post-2020 as indigenous gas and pipeline imports will be unable to meet demand, the firm said.

In India, production from Reliance’s D6 block has fallen from a peak of 20 billion cubic meters (Bcm) in 2010 to 11 Bcm in 2012. Wood Mackenzie forecasts production from D6 to continue falling, reducing the overall outlook for Indian gas production. “This will constrain gas availability to the market, mainly impacting the power sector in the medium term,” Brown 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. In addition, LNG demand growth in other industrial sectors is further limited by reduced economic growth expectations.”

Asian demand growth overall will remain robust, though, as Southeast Asia will more than offset slower growth in India, Brown said. 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 an increased role for LNG in China’s coastal provinces, the firm said.

Speaking recently in Houston, Poten & Partners Inc. analyst Darryl Houghton said Asia “is the engine for global LNG growth. The real center for attention for growth in the Asian region is going to be China and India. Yes, there’s growth in traditional markets in Japan, Korea and Taiwan. And yes, there’s also growth in new markets, Malaysia and Singapore and Thailand and Indonesia” (see Daily GPI, Feb. 20).

Last June, Royal Dutch Shell plc’s Marvin Odum, director of the company’s America’s upstream business said in Washington, DC, that much of the growth in global energy demand would be in Asia. “Roughly half of the demand increase will come from China and India, with the majority of that from China,” he said (see Daily GPI, June 12, 2012). “Southeast Asia, traditionally an energy exporting region, also expects to double its energy demand in that time horizon.”

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