The increase in LNG demand in China and India has been delayed due to price fluctuations and recent conflicts in the Middle East. High LNG prices, especially due to the war in Iran and the closure of the Strait of Hormuz, have negatively impacted key Asian markets. This situation has made it difficult for producers to find alternative solutions for LNG supply.
Current LNG Supply Situation
Gulf producers have been seeking solutions for oil transportation, including shuttle shipping of crude oil from the Strait of Hormuz and transferring cargo to other ships near Oman. However, LNG flows have still significantly decreased and are currently almost nonexistent or very low. Some LNG shipments have passed through this bottleneck in recent weeks, but these shipments have not been able to compensate for the massive supply shortage since March. As a result, LNG prices in Asia have reached their highest level since 2022.
Read more: Donald Trump and the Effort to Revive American Refineries
Forecast for Increased Demand
Deepak Gupta, the head of GAIL, India's largest gas distributor, said at the GasTech conference in Bangkok, "Prices have risen sharply, and this has clearly impacted demand in India, as many sectors are price-sensitive." According to Luo Yizhou, CEO of PetroChina's international division, current purchases are directly related to rising prices. He added, "This situation will not harm demand in China, and demand is expected to increase rapidly as prices return to below $10 per million BTU."
Yaview Zhang, Vice President and Global Head of LNG and New Energies at PetroChina, warned that China's demand growth may not be as rapid as before the Ukraine war. Currently, the price for delivery in October to Northeast Asia has remained above $25 per million BTU. However, the issue of cost and reliability has been repeatedly raised at this conference, and industry officials have pointed to the enormous potential for demand growth in Asia, although high price sensitivity has also been noted.
Read more: Hornbeck Offshore Signs Multi-Year Contract for Well Decommissioning Operations in the North Sea · Chevron Seeks to Expand LNG Activities Across Four Continents
