It is unclear if LNG imports can guarantee Southeast Asia’s energy security

Key points:

• ASEAN members plan to import more LNG, especially as domestic gas supply declines in several countries and electricity demand rises in the region over the next ten years. 
• Southeast Asian countries are planning new LNG import infrastructure investments totalling USD 20.4 billion.
• Dependence on LNG imports opens countries to supply shocks, such as the Russia-Ukraine war and ongoing tensions in the Middle East.
• Relying on LNG also exposes the region to price volatility, which can be influenced by competition for supplies with Europe and other regions. In recent years, traders have diverted LNG cargoes from Asia towards Europe because they can obtain higher profits, and this trend is likely to continue if European demand for LNG remains high. 
• Southeast Asian countries have alternatives to imported LNG that can increase their energy independence and resilience. 
• Options include investing in renewables and the ASEAN Power Grid. In addition, ASEAN countries can use the threat of US President Donald Trump’s tariffs on solar panels from Southeast Asia as an opportunity to direct their clean energy manufacturing base towards domestic installations.

LNG’s promise of energy security in ASEAN

Momentum is growing behind the narrative that importing more LNG, including from the United States, is a crucial way to strengthen energy security in Southeast Asia. Japan has been promoting LNG as one option to enhance energy security and reduce emissions as part of its Asia Zero Emission Community (AZEC) initiative. One justification given by proponents of increasing LNG use in Southeast Asia is that it reduces dependence on specific energy suppliers or transit routes, thereby building supply resilience. 

The energy security narrative is driven in part by the impending growth in global LNG supplies, which is projected to increase as the United States and Qatar, in particular, expand their export infrastructure. International Energy Agency (IEA) data shows cumulative liquefaction export capacity growing 33% between 2024 and 2028, from 665 billion cubic metres (bcm) per year to 884 bcm per year.

Countries in Southeast Asia are projected to maintain or increase their use of gas as they seek to meet growing energy demand while accelerating their switch away from coal. As such, they are embracing LNG, with plans to invest USD 20.4 billion on infrastructure to increase existing import capacity.¹For this figure, we added up the ‘In Development’ investment figures for ASEAN countries’ LNG terminals in Global Energy Monitor’s Global Gas Infrastructure Tracker. The introduction of extensive tariffs by the US in 2025 (subject to ongoing legal arguments) has created an impetus for affected nations to strongly signal that they wish to buy more LNG from the US. 

Current regional LNG market and country-level growth plans

Thailand is one of the region’s more established LNG importers as it seeks to manage rising demand and falling domestic reserves. In 2024, it was the top LNG importer in Southeast Asia. In line with its Gas Plan 2040, Thailand aims to increase the share of LNG used to meet its gas needs from 31% in 2024 to around 40% by 2030. By one estimate, LNG could reach over 60% of power generation by the mid-2030s. As part of tariff negotiations with US President Donald Trump in April 2025, Thailand said it would import an additional 1 million metric tons of US LNG in 2026, and then another 1 million metric tons over the next five years. In May 2025, state-owned oil and gas company PTT said it was ready to help by importing more LNG from the US, including from the Alaska LNG project. A month later, PTT signed an agreement to import 2 million tons of LNG annually from the Alaska LNG project for 20 years. 

Vietnam began importing LNG in 2023. According to its Power Development Plan, it aims to generate 22,524 MW of electricity from LNG by 2030 under its recently updated plan (for comparison plans are to use up to 14,930 MW from domestic gas, 31,055 MW from coal and up to 73,416 MW from solar) and has provided guarantees to make this a reality. In addition, preferential import tariffs on LNG were lowered from 5% to 2% in May 2025. In March 2025, Vietnam signed LNG agreements with US suppliers and in May 2025, it received its first LNG shipment from Russia. In January 2026, Petrovietnam Gas awarded its first-ever LNG term contract to Shell, which will deliver about 400,000 tons of LNG a year from 2027 to 2031.

The Philippines also started imports in 2023. According to the Philippine Energy Plan’s reference scenario, LNG imports are forecast to rise 508% between 2025 and 2029, largely due to dwindling domestic gas supplies. In March 2025, the country agreed to a deal with commodities trader Vitol for 8 million tonnes over the next ten years (an estimated 103 cargoes) and is considering securing LNG from Alaska in the future. In January 2026, the country discovered a new gas field, which the administration said could generate nearly 14 billion kilowatt-hours of electricity every year. However, this new field is estimated to have only about 4% of the gas in Malampaya gas field, currently the main source of domestic gas supply.²Malampaya gas field is estimated to hold 2.7 trillion cubic feet of gas reserves, while the new Malampaya East-1 gas field discovered in January 2026 is estimated to hold about 98 billion cubic feet of gas. 

Malaysia is primarily an LNG exporter. As the country reduces the use of its coal power plants, it is expected to redirect some of its LNG exports to meet domestic demand. Declining reserves could see Malaysia ramp up its LNG imports in the future. In June 2025, Malaysia’s state-owned energy firm Petronas signed a non-binding agreement with Woodside Energy to supply Malaysia with 1 million tons of LNG per year, starting in 2028 for 15 years. 

Indonesia is also an LNG exporter in a similar position to Malaysia in that it is using more of its LNG to satisfy domestic demand. The government is pushing ahead with a programme to switch power plants from diesel to LNG – the boost in gas consumption could contribute to Indonesia becoming a net LNG importer by the 2040s. In April 2025, the country announced that it was considering new LNG imports from the US as part of negotiations over tariffs. 

As part of these plans, import capacity is projected to increase in the region. Thailand currently has the largest operational LNG import capacity at 19 million tonnes per annum (mtpa) and plans to build a third terminal at Map Ta Phut that could add another 5 mtpa. Vietnam has 14 projects that could bring capacity from 4 mtpa to 25.9 mtpa. Meanwhile, the Philippines has six operational projects providing 10.3 mtpa, but with new projects in development, it could see import capacity rise to a total of 24.2 mtpa (see Fig. 1). 

These new projects are estimated to cost USD 9 billion in Vietnam and USD 4.1 billion in the Philippines (see Fig. 2). If all the Southeast Asian LNG projects in development (proposed and under construction) are completed, it would give the region a total import capacity of 121.3 mtpa of LNG and would require an additional USD 20.4 billion of investment.

Figure 1

Figure 2

LNG’s mixed record of delivering energy security 

Despite the narrative that importing LNG will strengthen energy security and the plans being enacted to increase dependence on imports, LNG has an uneven track record on meeting common indicators of energy security such as security of supply and affordability.

Among major traded commodities, LNG is regarded as particularly sensitive to geopolitical disturbances, and conflicts exacerbating the market’s inherent volatility. Key reasons include LNG exports being concentrated in a few countries, cargoes being redirected to respond to market conditions, and relatively inelastic demand in importing countries increasing sensitivity to price changes. 

Past as prologue: Lessons from recent geopolitical shocks

In assessing the ability of LNG to provide energy security, it is important to understand the different ways in which it can be acquired. Long-term contracts agree a price mechanism for LNG at a set delivery schedule for between 20-25 years – in Asia this price has usually been indexed to the price of crude oil but is now sometimes linked to coal or indexed to a particular hub in the US or Asia. Historically, long-term contracts were common in the LNG trade, and substantial volumes continue to be traded this way – both globally and in Asia specifically – but there are now also more flexible options available, including short-term contracts (four years or less) and spot markets. Buying LNG on spot markets allows buyers to make more flexible purchases as needs shift, but exposes them to greater volatility. The International Group of Liquefied Natural Gas Importers (GIIGNL) refers to “true” spot volumes as those delivered within three months from the transaction date.

In light of current price trajectories, it could appear that LNG will be able to meet the IEA’s energy security indicator of affordability. In the first half of February 2026, Asian LNG prices on spot markets mostly fell. The general trend – assuming no major geopolitical unrest – is that prices are forecast to continue falling in the next few years, which could make LNG more affordable in the region. 

However, despite falling prices, price volatility remains an issue, especially on spot markets, where sudden changes can impact affordability and availability, as sales shift to the highest bidder. Volatility-linked supply issues can also impact contract buyers.

The increased globalisation of gas markets has also contributed to a stronger correlation between benchmark European gas prices (TTF) and Asian prices (JKM) since 2019. This can mean that when European gas prices increase, it can lead to rising LNG prices in Asia. If this happens at the same time as Asia needs LNG, it can then lead to higher prices in these markets.

Impact of the 2022 energy crisis in Southeast Asia

This is what happened in 2021 and 2022 when European countries suddenly started buying up LNG from global spot markets after Russia invaded Ukraine in February 2022. The knock-on effect was that countries in Asia, notably Pakistan and Bangladesh, could not access or afford LNG. Some of Pakistan’s LNG contracts were broken by traders seeking higher profits in Europe – illustrating that even if a country has negotiated a contract, this does not guarantee the security of supply metric of energy security.

Overall, the Institute of Energy Economics Japan and the Economic Research Institute for ASEAN and East Asia – two agencies that are supportive of increased LNG use in the region – note that the 2020-2022 period was a time of increasing volatility in LNG prices and that combined with high prices, this “caused serious effects on economic development and steps towards decarbonisation” for the ASEAN region.

In Thailand, for example, more expensive LNG imports in 2022 were a driver of surging electricity prices. This period corresponds with a 28% rise in LNG imports to make up for reduced domestic and pipeline supplies. The Institute for Energy Economics and Financial Analysis (IEEFA) estimates that growing LNG imports contributed to a doubling of domestic gas prices and record electricity prices. In response, the government took several fiscal measures to help consumers facing higher electricity bills. 

Additionally, the power regulator did not raise tariffs until April 2022, despite increased fuel costs. Tariffs were subsequently raised by 6.4% for May-August, and by 17% for September-December, rates that did not fully cover the spike in LNG prices. The cost to the government to compensate for higher electricity prices for the first four months 2023 came to THB 75 billion (USD 2.2 billion). 

Since then LNG prices have fallen. But in an example of the long-term consequences of LNG price volatility, state-owned Electricity Generating Authority of Thailand (EGAT) uses a portion of current electricity bills to reimburse itself for the period of high LNG prices when it subsidised electricity.

In Singapore, the government confirmed in October 2022 that higher LNG prices contributed to a rise in electricity prices. It reported that between August 2021 and August 2022 there was a year-on-year increase of 50% for LNG contracts and 224% for spot LNG prices. The difference in these increases shows that compared to spot market purchases, long-term LNG contracts can, to some extent, better shield countries from price volatility, but not completely. 

The utility company SP Group said higher global gas prices were a factor in tariffs rising 8% (by 2.21 cents per kWh) in Q3 2022 compared to Q2. The surge in LNG prices also had a cost to public finances. The Ministry of Finance distributed USD 100 per household in compensation to help with their utility bills, as part of a USD 1.5 billion package to help citizens with rising inflation.

2026: Another potential supply disruption

Another potential geopolitical conflict is simmering in early 2026. As of February 2026, over 7,000 people were reported to have died from a crackdown on nationwide protests in Iran. In talks linked to Iran’s nuclear programme, the US has threatened military intervention against the Middle Eastern nation, and is building up fleets of warships and fighter jets nearby.

Like the Russia-Ukraine war, an ensuing conflict could lead to a spike in oil and gas prices, especially if Iran’s oil and gas exports are disrupted, as it is one of the world’s biggest producers. As of 2024, Iran was the third-largest gas producer globally, accounting for 6.5% of the world’s output and the ninth-largest oil producer, accounting for 4% of the world’s supply. Recent tensions have already affected prices: as of February 17, 2026, Brent crude was trading around USD 72/bbl (one barrel of oil), up about 20% from the start of January and the highest in almost seven months. 

One potential scenario is that the US may target Iran’s oil and gas infrastructure as part of its military intervention. If Iran’s oil exports are disrupted, Citibank estimates that oil prices could spike 15-20%. 

Higher oil prices would mean higher fuel prices for consumers in most regions, including in Asia. Similarly, higher gas prices could lead to higher electricity prices in countries like Thailand and Singapore, as occurred in 2021 and 2022.

Currency concerns

The US dollar continues to be the dominant currency for imports into Asia. This incurs costs and exposes the region to currency volatility. The IMF has warned that if US rates rise, the dollar could rally again, weakening many Asian currencies.

This would raise the cost of LNG purchases. For example, depreciation of the Bangladeshi taka between December 2021 and September 2023 meaningfully increased the cost of LNG imports in local currency terms, putting additional pressure on an already tight fiscus. Meanwhile, in Thailand, the depreciation of the baht in April 2023 contributed to higher LNG costs and electricity prices for citizens. More recently, in May 2025, Vietnam faced the prospect of more expensive LNG imports, with a knock-on impact on electricity costs, because of the weakening of its currency against the US dollar on the back of the US reciprocal tariffs.

Diversion of LNG cargoes from Asia to Europe

As well as having the potential to make gas more expensive, price volatility and competition with Europe has affected the predictability of LNG shipments arriving in Asia. The shorter shipping -distance also partly explains why US exporters favour Europe when prices are similar. 

In autumn 2024, a period of low wind speeds in Europe led to a surge in demand for gas to power grids there. This contributed to pushing up European gas prices, and the resulting competition with Asia in turn lifted Asian LNG prices. However, as traders could still get higher profits from shipping to Europe, LNG flows from the US to Asia fell. In October 2024 at least four cargoes were rerouted and another seven changed course in November 2024.  

This cycle of competition-driven supply diversions repeated itself in the first quarter of 2025, when at least ten more shipments were diverted. More profitable market conditions in Europe led to a higher volume of cargoes shipped there and a reduction in imports in Asia, while also contributing to upward pressure on LNG prices in Asia.

In 2025, LNG imports to Asia fell due to competition with Europe as European bidders pushed spot market prices up. When competition is high, as the pro-LNG Asia Natural Gas & Energy Association puts it, “these developing nations have fewer financial resources to compete for LNG”. 

Disruptions on shipping routes 

Although historically, Australia and Qatar have supplied the largest volumes of LNG to Asian markets, the US plans to increase its LNG exports to Asia. Disruptions to LNG supply routes to Asia from the US have been ongoing for several years, and there is no clarity about when these will be resolved. 

Panama Canal: Drought reduced transit of LNG from the US to Asia through the Panama Canal, the quickest route, in 2023. It is uncertain how often these drought conditions will occur again and to what extent they would disrupt future LNG shipping to Asia, but the revenue losses in 2023 convinced the Panama Canal Authority to push forward a USD 1.6 billion plan to build a reservoir in 2027. While this backup water source could be a solution, it is not due for completion until 2032, and its construction could be slowed by resistance from local communities. 

Suez Canal: The 2023 drought at the Panama Canal forced LNG shipping companies to turn to the Suez Canal. This meant higher costs and longer travel distances, alongside disruptions due to ongoing security risks in the Red Sea linked to conflicts in the Middle East. In 2023, around 8% of global LNG shipments went through the Suez Canal. These flows fell from 32.36 million tonnes in 2023 to just 4.15 million tonnes in 2024. Despite the US and the Houthis in Yemen reaching a tentative truce in early May 2025, LNG suppliers are expected to adopt a cautious approach to restarting shipping via this route. 

Cape of Good Hope: The result of disruption via the Panama and Suez canals is that the favoured route from the US to Asia has become via the Cape of Good Hope, which adds significant time. Compared to approximately 28 days via the Panama Canal, or the 34 days via the Suez Canal, it can take around 37.5 days to go round the Cape of Good Hope, incurring higher shipping costs and using more fuel at sea. 

The Oxford Institute for Energy Studies calculates that compared to going through the Suez Canal, a tanker travelling from Texas to Hong Kong via the Cape of Good Hope would increase its round-trip time, potentially reducing the number of round-trips by 10% a year. 

Strait of Hormuz: The threat of disruption to the Strait of Hormuz, which runs between Oman and Iran, has repeatedly triggered LNG price spikes in Asia. Around 20% of global LNG flows through the Strait of Hormuz, of which around 80% was destined for Asia in 2023. Modelling published in June 2025 finds that if, in the unlikely event, the strait is blocked for a year, this could remove 110 bcm of LNG supply from the Middle East to the world market, resulting in a potential price shock at European and Asian gas hubs similar to that which occurred after Russia invaded Ukraine in 2022. 

Alternative power sources could provide energy security

Despite the risks to availability, affordability and volatility described above, a number of Southeast Asian countries are planning to increase LNG imports.

The question remains whether this investment is a good one for ASEAN’s long-term energy security. At a time of falling prices, LNG could be seen as an attractive option for Southeast Asian countries, but it cannot guarantee energy security in terms of offering security of supply, affordability and protection from price volatility. 

Investing in LNG-related infrastructure represents an opportunity cost in that it diverts money from developing renewable sources of power that do not face the same risks for energy security. 

Renewable potential

Governments in the region understand this reality. For example, the Malaysian National Energy Transition Roadmap, published in 2023 by the Ministry of Economy, notes: “there are concerns about Malaysia’s growing dependence on fuel imports, particularly natural gas imports. Given the anticipated rise in reliance on natural gas and crude oil by 2050, there is a heightened need to focus on ensuring energy security. Moving forward, Malaysia will look to reduce this dependence on natural gas by scaling up of RE capacity and exploring potential non-carbon energy sources.”

There is huge potential for renewable energy in Southeast Asia, but the region is moving too slowly. Based on National Renewable Energy Laboratory (NREL) data, Ember finds that in 2022 ASEAN was using just 1% of its solar (30,523 GW) and wind (1,383 GW) potential. Meanwhile, Global Energy Monitor finds that plans in ASEAN for new utility-scale solar and wind projects use just 3% of its 220-GW prospective capacity, adding just 6 GW to its 28 GW of current operating capacity.

At its April 2025 Summit on the Future of Energy Security, the IEA underscored that clean technologies are helping to maximise domestic energy sources, reduce imports and shield users from fossil fuel price volatility. Therefore, Southeast Asian nations face a choice. They can either import LNG with the uncertainty that brings, or they can look towards their domestic renewable energy sources to strengthen their resilience. 

What steps could ASEAN countries take to increase their use of clean technologies to enhance energy security?

Invest in rapid and ambitious renewables generation

Vietnam shows what is possible. It raised its solar PV  capacity from 105 MW in 2018 to 17.07 GW by 2023 – more than a 16-fold increase. This boost in solar helped the country reduce its import bill. A report by Ember, Centre for Research on Energy and Clean Air (CREA) and IEEFA estimates that between January and June 2022 Vietnam avoided USD 1.7 billion that it would otherwise have spent on imports of oil, gas and coal.

Purchase cheap clean technologies from China

ASEAN members could import cheap solar, wind and battery technologies from China, the global powerhouse of clean technology, which is on their doorstep. China may also be keen to export more solar panels to Asia if it is exporting less to the US. While this would entail import dependency as technology such as solar panels would need to be purchased and replaced after around 30 years, this is a different type of exposure than that of fossil fuels, which need to be imported on a continuous basis.

Use their manufacturing base to use more renewable energy at home

Another option would be to take advantage of the clean technologies they make at home. These countries possess significant solar module manufacturing capacity – outside of China they account for over 40% of global manufacturing capacity – and cover approximately 20% of global exports. 

A new opportunity to use this capacity domestically has perhaps opened up since the Trump administration announced tariffs of up to 3,521% in April 2025 on solar panel components from Cambodia, Vietnam (395%), Thailand (375%) and Malaysia (34%). According to US Census Bureau data, in 2024 Vietnam exported 19,300 MWdc of solar modules to the US,³In relation to mega watts direct current (MWdc) the IEA explains “A large majority of PV installations are grid-connected and include an inverter which converts the variable direct current (DC) output of solar modules into alternating current (AC) to be injected into the electrical grid.” followed by Thailand with 13,401, Malaysia 7,594, Cambodia 4,875 and Indonesia 1,853. If governments put incentives in place and investment was found, some of these exports could instead be deployed to increase domestic energy generation within ASEAN, including potentially to expand floating solar PV.

Invest in electricity grids and storage

Alongside installing more renewable energy, complementary investments can help to successfully integrate and store the energy generated by these variable clean power sources. Measures to maximise flexibility and storage, such as pumped hydro, lithium batteries and demand-side management, could play a crucial role in ASEAN. In Thailand, BNEF analysis finds that solar energy combined with battery storage is a cheaper option compared to building a new gas or coal power plant. Such storage capacity could help maximise variable sun and wind energy, as well as reduce the need for LNG imports to back up renewables.

The rapid rise in installed solar capacity in Vietnam was slowed due to issues of grid stability and congestion but this can be overcome by upgrading national and cross-border grids.

Accelerate the ASEAN Power Grid

The ASEAN Power Grid (APG) is an ambitious group of projects that would enable the transmission of electricity throughout the region by 2045 (see Fig. 3). By sharing energy through the APG, Southeast Asian countries have the opportunity to reduce reliance on imports of volatile fossil fuels by maximising each of their respective renewable energy capacities.

By early 2026, eight out of 18 key interconnection projects were finished, facilitating an estimated 2.8 GW of electricity flow. However, to complete the APG, more finance and harmonisation of regulations are needed, as well as countries to champion it. There are some positive signals that momentum is picking up with the agreement of the ASEAN Power Grid Financing Agreement in late 2025. Accelerating these cross-border connections could balance peaks in demand and the variable (higher or lower) generation from renewable energy in different locations, benefiting ASEAN members as they would be able to move electricity efficiently from regions with abundant hydro, solar and wind generation capacity to major demand centres in an efficient way that strengthens collective resilience. 

Countries with more hydro generation capacity such as Laos, Vietnam and Cambodia could export to countries lacking in hydro capacity, but if hydro generation is lower due to lower rainfall, they could rely on other forms of renewable energy or import from their neighbours. Future interconnections from Brunei to the Philippines have the potential to reduce electricity costs and reliance on fossil fuels, but are still in the early stages.

Figure 3: Existing and future projects in the ASEAN Power Grid

Which future will ASEAN choose?

The unreliability of LNG raises the question about what kind of energy system is being built in ASEAN. In its 2024 World Energy Outlook the IEA made the case that: “A new energy system needs to be built to last […] one that prioritises security, resilience and flexibility”.

Therefore, Southeast Asian nations face a choice. 

• They can continue taking a step into the unknown by depending on LNG imports, despite the history and potential for future price volatility, raising doubts that it can ensure resilience and deliver on security of supply. 
• Or, in their pursuit of enhanced resilience, security and flexibility, ASEAN countries could take steps to generate and store more of their own energy from renewable sources (taking advantage of their existing clean technology manufacturing base to do so), which they then distribute via upgraded national and cross-border electricity grids, including the APG.

This briefing was originally published in July 2025 and updated in February 2026 to reflect ongoing geopolitical concerns.

• 1
  For this figure, we added up the ‘In Development’ investment figures for ASEAN countries’ LNG terminals in Global Energy Monitor’s Global Gas Infrastructure Tracker.
• 2
  Malampaya gas field is estimated to hold 2.7 trillion cubic feet of gas reserves, while the new Malampaya East-1 gas field discovered in January 2026 is estimated to hold about 98 billion cubic feet of gas. 
• 3
  In relation to mega watts direct current (MWdc) the IEA explains “A large majority of PV installations are grid-connected and include an inverter which converts the variable direct current (DC) output of solar modules into alternating current (AC) to be injected into the electrical grid.”