Asia's LNG Crisis: War-Driven Prices Spark Shift to Renewables

The ongoing US-Iran war has severely impacted the global liquefied natural gas (LNG) market, particularly in Asia. Qatari shipments of LNG have all but stopped since the conflict began in late February, leaving Asian buyers without contracted supply and forced to purchase on the spot market at surging prices.

The collective spending by India, Pakistan, Bangladesh, Thailand, and Vietnam on spot LNG has reached $7.4 billion since the war started, according to a Bloomberg News analysis of purchase tenders. This is more than double what these countries spent on long-term contracts over the same period last year.

Fabian Kor, executive vice president for Asia at SEFE Marketing & Trading Ltd., stated that if prices remain high, LNG will struggle to compete with alternative fuels. Many Asian countries are now exploring options to reduce their reliance on LNG, such as renewable energy sources like solar and wind power, or locally produced gas.

The war has also forced countries to consider alternative producers to Qatar, which supplied around 20% of the world's LNG before the conflict. About 80% of LNG buyers expect to change their procurement strategy in the coming years, prioritizing geographical diversification over reliance on a single supplier.