LNG reliance in SE Asia power sector faces rising risks, Rystad says
Friday, March 13 2026 - 06:33 PM WIB
By Romel S. Gurky
Southeast Asia’s growing reliance on liquefied natural gas for power generation may face increasing risks as domestic gas production declines and global supply uncertainties rise, according to analysis by Rystad Energy.
The region’s rapidly expanding electricity demand is pushing governments toward gas fired generation and LNG imports as financing for coal projects tightens and renewable energy deployment struggles to keep pace with reliability sensitive power needs, the consulting firm said.
Gas already plays a significant role in the region’s power mix, with Southeast Asia currently operating more than 120 gigawatts of gas fired capacity, generating about 418 terawatt hours of electricity in 2025, or roughly 30% of total power output.
According to Rystad Energy’s analysis, gas generation in Southeast Asia could rise by 42% to nearly 600 TWh by 2040, even as the share of gas in the overall power mix gradually declines due to the expansion of renewable energy.
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However, the region’s gas supply dynamics are shifting as domestic production falls, increasing reliance on imported LNG.
Southeast Asia is expected to become a net gas importer before 2030, exposing regional power markets to global LNG price volatility, supply disruptions and geopolitical risks.
Recent tensions in the Middle East highlight how quickly disruptions can affect LNG supply chains and prices, the company noted.
Rystad Energy also pointed to several structural challenges that could complicate the expansion of LNG to power projects in the region, including shortages of gas turbines and long equipment lead times, volatile LNG prices, potential global LNG supply tightness after 2030 and competition from renewables and energy storage.
Despite the challenges, the firm said demand for gas fired power in Southeast Asia remains strong, supported by growing electricity consumption and policy support for gas as a transition fuel in the region’s energy systems.
Editing by Alexander Ginting