The hunt for natural gas (LNG) is getting tougher after increasing demand from developing countries in Asia. On Thursday (6/1/2022), Indian Oil Corp., and Gujarat State Petroleum Corp., recently purchased spot cargo of liquefied natural gas (LNG) after several months of absence. Indonesia, as the largest exporter, has asked its gas producers to prioritize domestic customers. Meanwhile, Thailand and Bangladesh have also been trying to find LNG shipments through tenders in recent days.
High demand from South Asia and Southeast Asia added to the burden of a surge in demand from Europe, triggering price hikes to reach record highs last month.
Consumption of raw materials for electricity and heating fuel experienced a spike ahead of winter in the north. However, energy supply is limited due to underinvestment in new projects over the past few years.
South and Southeast Asia's interest in LNG is considered unusual when prices increase. Yet these countries are among the most sensitive to price. It seems that they are forced to prepare sufficient supplies to avoid blackouts in the household and industrial sectors.
This dynamic is most striking in Pakistan, where a gas shortage will limit textile exports, according to the industry trade organization, and pose economic and political risks to Prime Minister Imran Khan.
One factor keeping prices from soaring higher is ample stockpiles in China, which will overtake Japan as the world's biggest LNG importer by 2021. Asia's largest economy has spent last year's savings to replenish its natural gas stocks.