LNG Uncertainty Threatens Southeast Asia Energy Security

By Joseph Bernard A. Marzan

A new report by an international research group released Wednesday, July 2, revealed that liquefied natural gas, or LNG, touted by Philippine policymakers and business leaders as a key energy solution, is facing a viability crisis across Southeast Asia due to geopolitical tensions and price volatility.

LNG has been heavily promoted in recent years as countries seek alternatives to coal.

In Southeast Asia, the Global Energy Monitor reported in 2024 that around US$11.8 billion in investments were planned to expand LNG import capacity.

The Philippines is seen as an emerging leader in LNG importation, with US$1 billion already spent on operational projects and another US$4.2 billion on projects under development, according to GEM data as of September 2024.

The U.S. Energy Information Administration said the Philippines began importing LNG in 2023.

LNGPH, composed of South Premiere Power Corp. and Excellent Energy Resources Inc., signed a deal in March with commodities trader Vitol for 8 million metric tons of LNG over 10 years.

The Department of Energy’s Philippine Energy Plan 2023-2050 projects LNG imports will offset the declining supply from the Malampaya gas field, growing 8.3 percent annually from zero in 2022 to 24.3 million tons of oil equivalent by 2050.

In February, Philippine Ambassador to the U.S. Jose Manuel Romualdez said the government was considering LNG imports from Alaska.

However, a report by Zero Carbon Analytics said LNG has a mixed track record in Southeast Asia, where it can become unaffordable or experience supply disruptions.

The report warned that the US$11.8 billion in infrastructure investments could lock the region into decades of fuel shocks and price instability caused by global volatility and political unrest.

It noted that traders have diverted LNG cargo from Asia to Europe in recent years to secure higher profits—a trend likely to continue if Europe’s demand remains high.

Major obstacles to LNG’s viability include geopolitical risks, disrupted trade routes and price shocks, exacerbated by Russia’s invasion of Ukraine.

These concerns are compounded by the escalating conflict between Israel and Iran, where analysts say any disruption in the Strait of Hormuz could significantly affect Southeast Asia’s access to affordable LNG.

Dario Kenner, energy transition researcher at ZCA, said the conflict in the Middle East places Southeast Asian countries at “heightened risk of supply shortages and surging costs.”

He added that LNG imports have already contributed to higher electricity prices in Singapore and Thailand and could worsen price volatility.

“In recent years, LNG imports have contributed to significant electricity price increases in countries like Thailand and Singapore, and supply disruptions have occurred due to global market reallocation, particularly during periods of heightened European demand,” Kenner said.

He added that continued investment in LNG exposes the region to dollar-denominated costs, price swings and potential supply constraints.

Kenner said Southeast Asia still has an opportunity to pivot toward renewable energy, which could reduce its reliance on foreign imports.

“By contrast, ASEAN countries have substantial untapped renewable energy potential, and the region’s existing clean energy manufacturing capacity and grid interconnection initiatives offer alternative pathways to strengthening long-term energy independence and resilience,” he said.