Asia Pacific gas & LNG: 5 things to look for in 2023 Report

Insight 13 December 2022

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Report summary

With Russian pipeline gas flows to the EU effectively dead, Europe will continue setting marginal LNG spot prices in 2023. Given little new addition to global supply, high and volatile spot prices are expected to persist. This is bad news for Asia as it will continue to constrain demand in price-sensitive emerging markets, impacting both spot procurement and long-term contracting activity. The need for more affordable and accessible gas creates an impetus for greater domestic production. However, except for China, India and Malaysia, the rest of Asia is struggling to maintain existing production levels. This will ultimately drive increased LNG imports and more regasification terminals over the longer term. Despite elevated LNG prices, Asian governments remain largely supportive of gas and LNG. 2023 won’t be great for Asian LNG demand, but we do anticipate a longer-term recovery as prices soften mid-decade. Read on for our five key themes to watch in Asia Pacific Gas & LNG 2023.

Executive summary
1. Europe and China demand dynamics drive LNG spot prices
- Prices risked to the upside with incremental liquefaction capacity in short supply
- High prices cramp Asian import demand
2. Subdued long-term LNG contracting in Asia amid rising contract prices
- Strong global contracting momentum, but all quiet on the Eastern front (ex-China)
- The return of Brent-linked contracting
- US LNG contracting gets interesting
3. Falling domestic supply across most of Asia, but a few bright spots for upstream activity
- China – NOC E&P investment continues to underpin surging supply growth
- South Asia – Market reforms key to boosting domestic gas production
- Southeast Asia – Mature fields in decline with limited new fields as backfill
4. Sharp rise in Asian regasification capacity, but pricing reforms needed to sustain growth
- China – Continuous infrastructure build and market reform
- India – New regasification terminals in the east should unlock large areas of future demand
- Southeast Asia – First LNG imports for Vietnam and Philippines, but long-term pricing remains uncertain
5. Asian governments remain supportive of gas & LNG despite near-term affordability issues
- Northeast Asia – Resilient LNG demand supported by energy security and transition policies
- China – Safeguarding energy security and affordability to ensure socio-economic stability
- South Asia – Gas affordability remains the biggest driver of market development
- Southeast Asia – Continued support for LNG imports with a concurrent search for alternatives