Neighbourhood watch: the future of Asian LNG demand growth

The global liquefied natural gas (LNG) market has returned to a semblance of calm after a tumultuous 2022. European and Chinese demand is on the path to a slow recovery, while a nuclear power renaissance is underway in Japan and South Korea. This paper will detail our expectations for LNG demand growth, discuss demand drivers and market development opportunities for Australian LNG between the late 2020s to early 2030s. We see LNG demand in the region increasing from 260 Mtpa in 2023 to 479 Mtpa by 2035. The largest source of growth continues to be China with demand growing from 68 to 150 Mtpa, driven by uptake of LNG in the industrial and buildings sectors. We will also see South Asian demand growing from 33 to 100 Mtpa, and Southeast Asian demand from 24 to 103 Mtpa. Even in legacy markets of Japan and Korea where we see demand declining in this timeframe, we will see the emergence of new buyers and the impact of market liberalisation measures. The expiry of legacy contracts and the rising influence of US LNG is set to complicate market dynamics further. We discuss the challenges of the energy transition in a region that must balance emissions considerations with energy demand. We conclude that Australian projects with their proximate location and legacy relationships will remain an attractive proposition for Asian buyers. Ullage at existing LNG plants will support backfill economics, with decarbonisation measures taken under the Safeguard Mechanism demonstrating genuine emissions reduction action.