Thailand to ramp up U.S. LNG buying to offset retaliatory tariffs

In what’s becoming a common theme with U.S. allies and long-time trading partners in Asia, Thailand has also agreed to buy more U.S. LNG to offset pending tariff hikes of 36%, the Bangkok Post reported.. The tariff hike was scheduled to kick in by April 9th, but the Trump administration later gave a 90-day reprieve to countries that didn’t retaliate with their own tariff hikes.

Pichai Chunhavajira, Thailand’s Deputy Prime Minister and Finance Minister, said in mid-April that his country was planning to buy an additional 1 million tonnes of U.S. LNG worth about US$600 million over the next five years, coming as long-term contracts with other suppliers expire over the same period.

Thailand already has an agreement to import 1 million metric tonnes of LNG from U.S. suppliers, worth US$500 million, as part of a 15-year supply deal starting in 2026.

However, given the large trade imbalance between the U.S. and Thailand of US$45.6 billion in 2024 (up 12.5 percent from the previous year, according to U.S. Trade Representative Office data) it remains to be seen if the extra LNG purchases will be enough to stay U.S. President Donald Trump’s hand for more tariffs.

Thailand imported 11.55 mtpa of LNG in 2023, a 40% increase year-on-year, according to an S&P Global report. The marked increase comes amid domestic production declines in the Gulf of Thailand and the Gulf of Martaban. It also comes as the country tries to wean itself off of coal-fired power production.

Thailand has 34 active petroleum exploration and production projects in 47 fields in the Gulf of Thailand. Its daily petroleum production capacity in 2023 was around 558,000 barrels of oil equivalent. This breaks down to 2.4 bcf of gas per day, and condensate of 75,000 barrels per day. Total domestic gas production meets about 28 percent of Thailand’s power generation needs.

Alaska LNG project

Thailand is also keen on importing U.S. LNG from the yet-to-be-built Alaska LNG project, a Trump favourite. On May 6th, Thai Secretary of Energy Prasert Sinsukprasert, along with executives from state-run energy giant PTT and government officials, travelled to Alaska to meet with Governor Mike Dunleavy and state officials to discuss joint development in the project. However, the meeting was already scheduled to take place before the U.S. threatened to increase tariffs on Thailand.

If built, the Alaska LNG project would be massive. With an estimated price tag of at least US$40 billion, it would pipe around 35 trillion cubic feet of stranded North Slope gas to the coast for export to Asian markets.

Notably, the Alaska project could export LNG to Thailand within 10-15 days, while shipping LNG from the Middle East takes nearly a month. Moreover, it takes at least three weeks to ship LNG from projects on the U.S. Gulf Coast to Asian markets. As such, Alaska LNG imports for Thailand would enjoy substantial transportation cost savings and lower prices per million British thermal units (MMBtu). The project could become operational in around 2030, according to the U.S. Energy Information Administration.

Shelved LNG trading hub plans

Pichai said that if Thailand imports enough LNG for domestic consumption, the surplus could be exported by PTT to neighbouring countries in the region. He added that PTT would also need to invest in building more storage facilities to accommodate the extra LNG.

Amid more LNG supply, Thailand will be awash with the fuel, creating spot market selling opportunities at a price premium. However, plans from a few years ago for the country to become a major LNG trading hub in the region still haven’t resurfaced, and likely never could.

A fully developed LNG trading hub would take substantial investment. It would include a network of terminals, storage facilities, and transportation infrastructure. It would also provide a transparent trading ecosystem with tools for analysing real-time pricing, historical data and trade flow insights.

In December 2019, the Thai Energy Policy Administration Committee promoted guidelines for turning Thailand into a regional LNG trading hub. Sontirat Songtijirawong, the country’s energy minister at the time, said the government could earn an estimated US$5billion between 2020 and 2030 if it became a regional LNG hub. However, that’s about as far as the plan went. It seems to have been largely abandoned during the Covid-19 era and not seriously picked up again.

Phumthep Bunnak, a former Thai government energy policy advisor, told Gas Outlook that licensing rounds affected Thailand’s goal of becoming an LNG hub. In August 2022, the Thai government threw open its LNG sector, allowing private companies to import the fuel for the first time, putting a dent in PTT’s gas import monopoly.  As such, interest in an LNG trading hub died off.

“Now we have more players to gain experience on third-party access of gas infrastructure (owned by PTT). PTT has already exported LNG to other countries. Now that large companies have already secured import licenses, there isn’t much more to talk about at the policy level,” he said.

Increased LNG imports could also put Thailand’s net zero emissions 2050 pledge in jeopardy, particularly since gas already makes up more than 60 percent of the country’s energy mix.

Thailand’s share of wind and solar power (5 percent) is a third of the global average at 15 percent. Moreover, Thailand relied on fossil fuels for 85 percent of its electricity in 2024. Its emissions per capita was slightly below the global average but its power sector emissions have nearly doubled since 2000 as gas-fired power generation met rising electricity demand.

(Writing by Tim Daiss; editing by Sophie Davies)