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Asia300

Southeast Asia in midst of LNG terminal construction boom

BANGKOK/TOKYO -- Southeast Asian nations could soon double import capacity for liquefied natural gas as domestic energy sources fall short, collectively becoming a key player in the global LNG market.

Energy providers in the region will boost annual LNG receiving capacity from 25 million tons to some 50 million tons over the next five years. The expanded figure equates to about 20% of the LNG carried on tankers worldwide in 2015.

Thai state petroleum giant PTT will double capacity at an import terminal in Map Ta Phut, on the Gulf of Thailand, to 10 million tons by March 2017. New docks for transport ships have been added, and two massive storage tanks are nearly complete, putting the expansion on track to begin operations as scheduled.

Thailand relies on natural gas for 60% of its electricity. Much of that fuel is produced domestically. The country aims to boost production of renewable energy as gas reserves at home decline and electricity demand increases. But the fuel will still account for 40% or so of power production, meaning that more LNG will need to be brought into the country. PTT will soon enter into 15-year supply contracts with affiliates of Royal Dutch Shell and BP to make use of expanded receiving capacity.

Indonesia could also start importing LNG as early as 2019 if no new oil fields are developed, said an official at the Ministry of Energy and Mineral Resources. Domestic oil and gas output is quickly becoming insufficient to meet growing energy needs. The country could become a net importer of LNG by 2030, the official indicated.

State energy giant Pertamina is adding two LNG import terminals to its network, including one in Central Java. These will raise the company's annual import capacity to more than 14 million tons. PetroVietnam Gas, meanwhile, is building Vietnam's first LNG terminal at the southern port of Thi Vai for $286 million.

Singapore LNG is working to boost receiving capacity at a terminal on Jurong Island 80% to 11 million tons by 2017. Additional construction could bring that to 15 million tons in the future. The city-state aims to become a regional natural gas trading hub, with the Singapore Exchange having introduced LNG futures products in January. Brisk trade in the commodity in Singapore would let prices there reflect the state of the entire Asian market, according to S Iswaran, minister for trade and industry.

Global investment in LNG development is in a lull for now on such factors as a letup in Chinese demand. But demand is expected to pick up again in the long term, particularly in Southeast Asia. Thailand, Singapore and Malaysia imported around 5.8 million tons of LNG in 2015, according to the Oxford Institute for Energy Studies. This is around 2% of the total traded globally. In 2021, these countries, plus Vietnam, stand to import around 20 million tons of the fuel. That total is seen surging to between 45 million and 65 million tons in 2030, when Indonesia is added to the mix.

In a median scenario, Japan is seen remaining the world's top LNG importer in 2030 at around 74 million tons. China, with 66 million tons, will be next in line. Southeast Asian companies could work with Japan to source gas from producer nations, such as those in the Middle East.

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