Demand scenarios diverge at Gastech

The gas industry’s top annual conference wrapped up in Bangkok this week with sharply divergent views on the long-term outlook for LNG. Many industry executives continued to stick with robust forecasts for demand growth, while independent analysts and some government officials indicated that some level of demand destruction could persist beyond the immediate market turmoil.

One area of agreement for the vast majority of Gastech participants was that the geopolitical crises that are engulfing the Middle East – and upending global energy markets – were not anywhere close to resolution. This was a departure from earlier this year, when industry forecasts routinely predicted some version of near-term normalisation to energy flows.

Many industry leaders warned that the disruptions in the Strait of Hormuz, along with the newly opened front in the Bab al-Mandab Strait, will likely persist for much longer than previously anticipated. Perhaps even years.

Geopolitical volatility is now expected to be, if not a permanent fixture in the LNG market, a variable that must be taken into account for the long term.

That means LNG prices could remain elevated at least through the winter, and perhaps even  longer.

Going from the $10/MMBtu pre-war JKM price to $30/MMBtu means that the cost of 1 million tonnes of LNG goes from USD$500 million to USD$1.5 billion, Yukio Kani, global CEO of Japan’s JERA said on the sidelines of Gastech.

“That’s a huge pain people feel now,” Kani said.

“If buyers are looking into winter, it seems like there is many bad news. Prices are already high. EU gas reserve inventory is low. Hormuz situation may extend, and LNG and the gas from Russia will stop from January 1st of next year,” Kani said on a Gastech panel. “So, it seems prices may go up further.”

Rystad Energy sees JKM prices averaging close to $17/MMBtu next year. Other analysts have started to give up on trying to forecast the next moves in the market.

“For the first time since the start of the Iran conflict, we don’t have a baseline view,” JPMorgan analysts wrote to clients on Thursday. “We simply don’t know how to model the endgame.”

Demand destruction

It is no surprise that data centres received top billing at Gastech, as gas supplied to the data centre buildout now features as one of the core segments of demand growth for the gas industry. At any oil or gas conference these days, AI and data centres represent an outsized portion of the panel discussions.

A Wood Mackenzie report sees rising demand for LNG in Southeast Asia linked to data centres. In places like Singapore, Thailand, and Malaysia, energy consumed in data centres is rising and domestic production of gas is declining.

However, WoodMac added that gas is “economically unviable as a baseload fuel for data centres” in India, where renewables paired with battery storage is two to three times cheaper.

Everyone seems to agree that Asia, particularly Southeast Asia, represents the future of LNG demand. “Asia, in the mid- to long-term, this is the center for growth for everything, including LNG,” Kani said.

But high prices are eating into demand, wiping out what was expected to be a year of growth.

Asia’s imports of LNG are expected to drop to their lowest level in eight years for the month of September. For all of 2026, demand in Asia could decline by 3 to 10 percent from 2025 levels.

Thailand needs LNG imports to feed a growing economy, but in response to the spike in oil and gas prices this year, the Thai government is eyeing a future of electrification and renewables.

“We have to prepare for all the scenarios. Given what’s happening, the disruption to the oil supply means Thailand, like many countries, is speeding up the energy transition process,” Akanat Promphan, Thai minister of energy, told Bloomberg. “The answer to that is more electrification basically, not only to solve the problems of climate change, but also energy security.”

Promphan noted that renewables like solar are a natural solution to the uncertainty linked to importing crude oil or gas. “This helps as it acts as an energy reserve for the country. So we are going pretty aggressive on renewables, but meanwhile, we think that gas provides a balance, a transition.”

The transition is already well underway in China, the largest LNG importer in the world. In Guandong province – where one-third of the country’s gas generation is concentrated – gas-fired power plants are increasingly being used during peak periods, not for round-the-clock power, according to a recent WoodMac analysis.

Surging renewables are dislodging gas, and gas consumption in China may have already entered a plateau. LNG has long faced an uphill battle in the electric power sector in China. Analysts say LNG becomes competitive with coal when prices are $6/MMBtu. Current spot prices are five times higher.

“With China’s other provinces following similar frameworks, the key question for the global LNG market is how much less demand growth this could mean than previously anticipated,” WoodMac principal analyst Kai Dong said at Gastech.

Major suppliers of LNG argued that nothing has fundamentally changed in the LNG market, and that demand destruction is merely temporary.

“What’s happening in the Middle East at the moment has not changed our long-term fundamental demand forecast or expectations for LNG,” ExxonMobil’s vice president for LNG marketing, told S&P at Gastech. “We expect LNG demand to more than double by 2050 [from today].”