– by Paul Everingham
The rise of the United States’ gas export industry has been well-chronicled but the numbers are so vast that it’s worth a second look to let them really sink in.
As recently as 2016, the US was a net importer of natural gas. In 2015, the most Liquefied Natural Gas (LNG) it exported in any one month was 3172 million cubic feet.
Fast forward to 2023 and the US officially became the world’s biggest LNG exporter, a stunning feat. Over the course of the year, US LNG exports never dipped below 326,000 million cubic feet for any month and the country overtook Qatar and Australia atop the global rankings.
The “shale revolution” has queen quite remarkable and it has also had an impact at home.
Over the past 10 years natural gas has overtaken coal as the biggest single source of US electricity generation, coinciding with a consistent decline in power-related CO2 emissions even as overall demand has slightly risen.
This last piece of the puzzle is one of the major reasons why Asia wants to see the US bring on future gas projects and continue to grow global LNG supply.
Many nations in Asia are net energy importers. Across the region, economies of all types – from the highly-developed to the still developing – are striving to minimise their use of coal to produce electricity.
Gas, which emits about half as much as CO2 in electricity generation as coal does, is a well-suited and attractive alternative. It can provide a reliable baseline source of power as more renewables are integrated into national energy systems and support both economic growth and progress on decarbonisation.
However, for Asian countries without substantial domestic natural gas resources or access to piped gas, importing LNG from other parts of the world is the only way to make this happen.
The LNG market in which these Asian nations find themselves operating in 2023 is vastly different to what it was five years ago and it’s likely to stay that way for some time.
Before the invasion of Ukraine, Russian gas made up almost half of Europe’s supply. In the nearly 18 months since, developed European economies have had to look for other solutions to energy security challenges and understandably have turned to LNG, much of it from the US.
This in turn has led to developing nations in Asia being priced out of an elevated LNG spot market, at a pivotal time when they are also looking to reduce reliance on coal.
It’s a complex global equation and there are no simple answers. But there are steps gas-producing countries can take to alleviate some of the supply-and-demand pressures.
The organisation of which I am CEO, the Asia Natural Gas and Energy Association (ANGEA), in 2023 commissioned a study on energy security in Southeast Asia, undertaken by independent experts Rystad Energy.
The study looked at three countries – Vietnam, Thailand and Indonesia – and assessed their energy options against the variables of availability, affordability and acceptability. The strong conclusion was that natural gas was the best energy source to support credible energy transition in Southeast Asia.
Indonesia is a significant producer of natural gas, which it currently exports. But for Vietnam and Thailand, where domestic gas resources are declining, significantly increased LNG imports will be necessary to achieve this (The Philippines, although not part of the study, is a Southeast Asian nation that faces a similar situation).
As the Rystad Study outlines, addressing this situation and ensuring a return to “normality” for the world’s LNG markets will require policy support from governments of gas-producing jurisdictions for new and future projects that increase long-term supply, along with financial support from public investment institutions.
This is why the pause on pending LNG export approvals recently announced by the US Government is of such concern for Asia.