Global gas shortage worsens as emerging Asia joins the hunt
The hunt for natural gas is spreading to Asia’s developing economies, with India and Indonesia adding to the global demand pressure.
Indian Oil Corp. and Gujarat State Petroleum Corp. have recently bought spot cargoes of liquefied natural gas after being absent from the market for months, according to traders. Indonesia — a major exporter — has asked its gas producers to prioritise local customers, while Thailand and Bangladesh are also seeking prompt LNG shipments via tenders released in the last few days.
The rising interest from South and Southeast Asia adds to elevated demand from Europe, which pushed prices to record highs last month. Consumption of the electricity feedstock and heating fuel, which typically sees a bump in the run-up to the northern winter, has risen as major economies recover from the depths of the pandemic. Supply, meanwhile, remains constrained due to underinvestment in new projects over the last few years.
South and Southeast Asian buyers have been unusually active in the spot market for cargoes for January to March delivery, despite surging prices, according to traders with knowledge of the matter. While these countries are among the most price sensitive LNG buyers, they’re being forced to make purchases to avoid having to cut supplies to households and industrial users.
This dynamic is playing out most starkly in Pakistan, where a gas shortage is curbing its crucial textiles exports, according to an industry trade organisation, and posing economic and political risks for Prime Minister Imran Khan.
One factor keeping prices from surging even higher is ample stockpiles in China, which overtook Japan as the world’s biggest LNG importer in 2021. Asia’s largest economy has spent the last year restocking its natural gas inventories. It’s entering the chilliest months well supplied and has little need for more unless the weather turns significantly colder, according to traders. That means there’s still some spare supply in the Pacific region.
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