Thai Electricity Prices Set to Soar as Global LNG Costs Surge

Thailand's energy outlook is facing renewed pressure as liquefied natural gas prices surge. The rise in LNG costs is expected to increase Thai electricity prices by about 5% for every $3 per million British thermal units increase, according to PTTEP.

LNG currently supplies around 30% of Thailand's electricity generation, with over a quarter of the gas used for power generation being imported. The country is particularly exposed due to half of its LNG purchases being made on the spot market, leaving utilities vulnerable to sudden price movements.

The problem is structural as well as cyclical. Domestic gas production is declining as major fields mature, while pipeline supplies from Myanmar are becoming less predictable. Without additional domestic production or long-term contracts, Thailand may become increasingly dependent on imported LNG just as Asian demand for the fuel is competing with European buyers.