Asian LNG Demand to Rebound as Middle East Supply Crunch Eases

Liquefied natural gas (LNG) demand from India and China is expected to rebound once Middle East supply disruptions ease and prices fall, according to industry executives at the Gastech conference in Bangkok. The current demand slowdown is temporary, they said.

The US-Iran war has cut off much of the LNG supply from Qatar and the United Arab Emirates through the Strait of Hormuz, which accounts for around a fifth of global LNG supplies. This disruption has sent Asian spot LNG prices to nearly $30 per million British thermal units (MMBtu), up from around $10 per MMBtu before the war.

India's GAIL Chairman Deepak Gupta said high prices have hit demand, with several industries switching to other fuels when gas becomes too expensive. 'The prices have hit through the roof ... and that is definitely impacting the demand insofar as India is concerned because there are a lot of sectors which are price sensitive,' Gupta said.

GAIL has had to restrict gas consumption but has since restored supplies to about 90-95% by sourcing LNG from alternative markets. GAIL and PetroChina have both deployed trading teams to find replacement cargoes after supplies from Qatar and the UAE were disrupted.