Higher Prices Pose Long-Term Risks To Asia’s LNG Demand Growth Story
Key View
- The post-pandemic LNG demand recovery in Asia is being held back in part by soaring global oil and gas prices in the wake of tight supplies resulting from Russia’s invasion of Ukraine.
- The broad outlook for LNG across Asia remains bullish, with the fuel still expected to take on a major role in the broader energy transition.
- Asia’s LNG sector will continue to be shaped by the big three importers of China, Japan and South Korea, although future growth trajectories for LNG demand in these markets have become more mixed.
- Slower growth in South Korea and Japan will be partly offset by rising LNG demand in Asia’s EMs, some of which are still aiming to make their first forays into LNG imports in the next three-to-four years.
The post-pandemic LNG demand recovery in Asia is being held back in part by soaring global oil and gas prices in the wake of tight supplies resulting from Russia’s invasion of Ukraine. A growing number of markets in Asia have made successful transition to living with the Covid-19 virus, after prolonged lockdowns in 2020 and 2021, as indicated by declining number of new cases, improving access to vaccines and more pronounced easing of restrictions including those over mobility and air travel. The notable exception continues to be Mainland China where strict Zero-Covid-19 policies remain in place. The return of lockdown measures across major industrial cities and financial hubs that dates back to late-March have place substantial downside pressure on the domestic demand recovery narrative. This looks set to be a lasting narrative through to the end of the year at least, with Beijing unlikely to backtrack on its strict virus management approach.
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