Southeast Asia's Natural Gas Outlook Darkens Amid Gulf Instability

The ongoing instability in the Gulf region has policymakers, companies, and investors reassessing their plans to promote natural gas in Southeast Asia. The expansion of closures to the Red Sea, shutdowns of major Saudi pipelines, and potential use of energy as a weapon have heightened fears that past premises are no longer reliable.

Japan's efforts to expand gas use through co-firing with ammonia and hydrogen are now under doubt. A seminar sponsored by Asia Research & Engagement discussed the prospects for natural gas in Southeast Asia, concluding it would play a smaller role than previously assumed.

The International Energy Agency (IEA) report 'Southeast Asia Energy Outlook 2026' outlines the consequences of not changing energy policies and policies. The report states that if current trends continue, demand for natural gas will increase by over 40% in the next decade, but its share remains below 20%. Oil accounts for half of all energy, widely used in industry and transportation.

The IEA report warns that without structural change, Southeast Asia's energy import bill could rise sharply from $80 billion in 2024 to around $245 billion by 2035, increasing exposure to global price volatility. Meeting climate pledges would reduce the fossil fuel import bill to half that level.