LNG Demand in India, China, Pakistan May Rebound as Prices Ease
LNG demand in India, China and Pakistan could recover as Middle East supply disruptions ease, new supplies arrive and prices become more affordable.
LNG demand in China, India and Pakistan could recover once the Middle East supply disruption eases and prices return to more affordable levels. The current crisis has pushed Asian spot LNG prices to nearly $30 per million British thermal units (MMBtu), compared with around $10 before the conflict.
Restrictions on LNG shipments from Qatar and the UAE through the Strait of Hormuz have disrupted supplies and forced some Asian consumers to switch to coal and oil. Shell estimates that around 36 million tonnes of LNG from the Middle East have been lost so far this year.
India has been particularly sensitive to the price surge, with some industries shifting to alternative fuels. GAIL and Petronet LNG have said demand remains, but affordability and supply stability are major concerns. GAIL has also increased sourcing from other markets, restoring supplies to around 90-95% of previous levels.
Pakistan could also see LNG consumption rise if additional supplies become available at lower prices. In China, demand from gas-fired power plants is expected to recover if LNG prices return to around $7-$9 per MMBtu, with rising electricity consumption providing further support.
Over the next four to five years, around 150 million to 200 million tonnes of new LNG supply is expected to come online. Industry executives expect these additional volumes, combined with lower prices, to support a recovery in consumption across the three Asian markets.
