South-east Asia’s LNG Demand Grows Amid Price and Infrastructure Challenges

South-east Asia’s growing appetite for liquefied natural gas (LNG) is expected to continue despite recent supply disruptions and price volatility. Industry leaders, including Leong Wei Hung, CEO of Singapore LNG Corp (SLNG), see LNG as a “mainstay of the region’s energy mix for years to come.” Analysts agree, noting that LNG remains the cleanest and most widely available fossil fuel in the region.

The region is developing 70 million tons per annum (MTPA) of LNG import capacity and over 100 gigawatts (GW) of gas-fired power generation capacity. Companies like Malaysia’s Petronas are expanding production, aiming to increase their global LNG capacity to 55 MTPA by 2035. Demand is being driven by factors such as data center expansion, economic growth, and declining domestic gas production in countries like Malaysia and Indonesia.

However, reliance on LNG comes with risks, including volatile prices and infrastructure challenges. The closure of the Strait of Hormuz has disrupted 20% of global LNG flows, leading to price spikes and energy-saving measures in several countries. Asian spot LNG prices averaged US$17.50 per million British thermal units in Q2 2026, up 45% year on year. High prices could strain emerging economies and complicate decarbonization efforts.

Infrastructure gaps and supply chain constraints further complicate the situation. A report by Wood Mackenzie forecasts that South-east Asia may deliver less than one-third of its planned gas-fired power capacity by 2030 due to equipment shortages and financing issues. Experts emphasize the need for a balanced approach, combining LNG investments with diversification into renewables to ensure energy resilience.