en.Wedoany.com Reported - Asian liquefied natural gas (LNG) demand is expected to decline for the second consecutive year. Wood Mackenzie forecasts that Asia-Pacific LNG demand will fall to 257 million tonnes in 2026, down from 268 million tonnes in 2025 and the 2024 peak of 278 million tonnes. The ongoing conflict in the Middle East has exacerbated global supply tightness, pushing spot prices to elevated levels and forcing buyers in the region to reduce procurement volumes, switch to alternative fuels, and accelerate the diversification of supply sources.
According to Wood Mackenzie data, nearly 90% of LNG cargoes from Qatar and the UAE shipped through the Strait of Hormuz in 2025 were sold to Asia. The impact of supply disruptions varies significantly across economies, depending primarily on their reliance on Qatari and Emirati supplies, exposure to spot demand, and flexibility in fuel switching.
Hu Maoping, Principal Analyst for Gas and LNG at Wood Mackenzie, noted that the tightening global LNG market, as always, distinguishes buyers with long-term contract coverage and fuel substitution options from those without. Japan and China demonstrate strong resilience, while South Asia is experiencing real supply shocks. However, even the more resilient markets are making decisions now regarding nuclear power, coal, and long-term contract diversification that will profoundly shape LNG demand trends for the next decade and beyond.
Wood Mackenzie's "Asia Pacific LNG Demand Short-Term Tracker" covers demand trends, terminal utilization rates, and near-term market drivers across 13 Asian countries. The report indicates that the region is grappling with a supply disruption of such magnitude and duration that it is forcing structural responses rather than merely short-term tactical adjustments.
In Northeast Asia, encompassing China, Japan, South Korea, and Taiwan, LNG demand is projected to decline from 202 million tonnes in 2025 to 191 million tonnes in 2026. The varying responses across these markets starkly reveal the critical value of long-term contract holdings and fuel substitution options when spot prices surge.
China enters 2026 with the largest inventory buffer and the most diversified supply portfolio in the region, making it the most supply-diverse market among major Asian LNG buyers. LNG imports in 2026 are forecast at 62.4 million tonnes, down from 66.4 million tonnes in 2025. Against a total national regasification terminal design capacity of 220 million tonnes, overall utilization will fall to just 29%, reflecting the demand headwinds facing the world's second-largest LNG importer.
Japan's long-term contracts cover over 90% of its LNG demand in 2026, a position that allows it to weather the current spot market volatility more effectively than nearly any other Asian buyer. Japan's estimated maximum exposure to Middle East supply disruptions is up to 500,000 tonnes per month. While this absolute volume is not insignificant, it remains manageable given its diversified and deployable resources.
Among Northeast Asian markets, South Korea faces the most direct risk of contract supply disruption. Korea Gas Corporation (KOGAS) holds two 2-million-tonne-per-annum contracts linked to the Ras Laffan Train 6, which was damaged in an Iranian missile attack, potentially leading to supply interruptions lasting three to five years. South Korea's overall spot exposure exceeds 20%, meaning additional procurement in the current price environment will substantially increase costs, ultimately passed on to end-users.
Taiwan has acted swiftly. Under a Strait of Hormuz blockade scenario, up to 700,000 tonnes of Taiwan's LNG supply could be at risk monthly, but the shortfall from Qatar has largely been compensated by increased US LNG imports. Taiwan is expected to fill over 75% of its LNG gap through spot purchases, a high proportion among comparable markets, reflecting both rigid procurement demand and strong purchasing power.
The situation in South Asia is markedly more severe. India, Pakistan, and Bangladesh are all under pressure from supply disruptions, and these markets remain structurally highly price-sensitive. Current spot prices have directly triggered demand cuts, industrial fuel switching, and, in the most severe cases, fertilizer plant shutdowns and power sector load shedding.
India faces a potential supply reduction of up to 1.5 million tonnes per month, the largest exposure gap in South Asia. Natural gas allocation has been tilted towards critical sectors, with urea output squeezed due to reduced Qatari LNG supplies; energy-intensive industries are lowering operating rates and accelerating switching to propane, fuel oil, and naphtha. However, fuel switching itself carries geopolitical complexity: 80% to 85% of India's LPG imports must pass through the Strait of Hormuz, meaning fuel substitution essentially replaces one form of supply concentration risk with another.
After a two-year hiatus, Pakistan returned to the spot market in April 2026, seeking three cargoes for April-May delivery, following several weeks with no LNG vessel arrivals since early March. Under current agreements, Pakistan can receive one cargo per month from SOCAR, and over 300 million cubic feet per day of previously shut-in domestic production can be gradually restored.
Bangladesh exhibits the most resilient spot demand among South Asian nations. Shortly after the outbreak of the Middle East conflict, Petrobangla purchased two spot cargoes for March delivery from Gunvor and Vitol at prices of $23 to $28 per million British thermal units, and tendered for three additional cargoes for early April delivery. Despite high prices, spot demand remains robust.
Overall demand in the Southeast Asia region is forecast to increase from 27 million tonnes in 2025 to 31 million tonnes in 2026, reaching 39 million tonnes by 2028. Markets in this region are at different stages of LNG development.
Supported by growing electricity demand and the structural phase-out of diesel power plants as part of power sector decarbonization, Indonesia's LNG demand growth exceeds 20% in the first half of 2026. Its terminal utilization rate is expected to be 57% in 2026 (against a total design capacity of 11.8 million tonnes), rising steadily to 63% by 2028.
Driven by rapid data center expansion and the phased retirement of coal-fired power plants, Malaysia's LNG demand growth exceeds 40% in the first half of 2026. Its terminal utilization rate is forecast at 45% in 2026 (against a total design capacity of 7.4 million tonnes), rising to 69% by 2028 as structural demand grows.
Singapore is addressing Middle East supply disruptions through aggressive spot procurement, sourcing cargoes from Australia, the United States, and Mozambique to fill contract supply gaps. Pipeline gas supply contracts from Malaysia and Indonesia have been extended to 2028, but Indonesian supply volumes have been reduced by approximately 40%. LNG bunker fuel demand reached 570,000 tonnes in 2025, and growth in this niche segment may slow in 2026 as high prices dampen shipping economics.
The Philippines presents a unique demand profile within Southeast Asia. The license for its sole domestic gas source, the Malampaya field, has been extended by 15 years to 2039. New drilling for Phase 4 will commence in the fourth quarter of 2026, but existing well production will terminate by the end of 2027, leading to a sharp decline in total output after 2028. Unlike other Southeast Asian countries, the Philippines lacks a sufficiently deep pool of experienced upstream operators to scale up and replace its declining domestic production capacity.
Thailand remains Southeast Asia's largest LNG importer and the market most exposed to current spot price volatility. Its continued reliance on spot procurement directly exposes it to the high-price environment triggered by the Middle East conflict. As a direct response to geopolitical uncertainty, Thailand restarted its coal-fired power plants in March 2026.
Vietnam is in the earliest stages of LNG market development, having achieved commercial gas supply for power generation in January 2026 through its first LNG-fired power projects—the Nhon Trach 3 and 4 units. PVGas signed its first multi-year LNG contract with Shell in January 2026, a DES agreement for 400,000 tonnes per annum operating through the Thi Vai terminal, with a contract term extending from 2027 to 2031.
Wood Mackenzie forecasts that as geopolitical risks ease, new regasification terminal infrastructure comes online, and structural demand growth in Southeast and South Asia resumes, Asia-Pacific LNG demand will rebound to 279 million tonnes in 2027 and reach 297 million tonnes by 2028. This recovery trajectory implies a net increase of approximately 40 million tonnes over two years: a volume that requires both new supply support and a normalization of spot prices. The pace and direction of the recovery depend on several key factors that remain highly uncertain: the duration and severity of Middle East supply disruptions, spot price trends and their competitiveness with oil products, and, at the regional level, the speed of gas demand recovery in China and India after prices fall, the timeline for nuclear power restarts in Japan and South Korea, and the pace of gas demand growth for power generation in Southeast Asia.
