LNG

TEPCO is rushing to restart of Unit 6 Japan’s largest nuclear power station to displace LNG-fuelled power at a time of escalating gas prices. With 1,356 MW installed capacity, Kashiwazaki-Kariwa Unit 6, is could help avoid combustion of 1.3 million tons of imported LNG, based on Japanese government estimates of fuel substitution.

Across Southeast Asia, burning coal for power generation is rising faster than anywhere in the world – except for Bangladesh which is on course to overtake Pakistan as an LNG importer by 2035. The pivot to coal threatens to undermine Just Energy Transition Partnerships (JETPs) in Indonesia and Vietnam, not least because clean energy finance is hard to come by.

A rebound in coal-burn is limiting China's power sector pull for LNG imports to 20 million tons, prompting Kpler analysts to revise down earlier projections of 35 Mt. Weather risk poses upside risk to coal-burn, with hotter summer forecast to add 50 Terawatt-hours (TWh) to China’s electricity demand.

Energy import-dependent Japan has again lowered LNG-burn for power generation to the lowest levels in a decade due to high fuel prices and robust recovery of nuclear baseload power. Japan’s nuclear reactors generated the highest electricity output since the 2011 Fukushima disaster while gas-fired generation fell 25% in the first half this year.

2025 marked an end to a 13-quarter run of gas generation growth in the United States, where rising feedgas demand for LNG exports pushed up Henry Hub gas prices and made utilities switch to coal. Gas-burn fell by 34 TWh or -3.9%, compared with a 44 TWh or 5.4% rise last year, lowering the share of gas in the US power mix to 37.9% from over 40%, Ember think tank finds.

Philippine power generators are burning less coal in the first time in 20 years as Asian spot LNG prices are down 13% year-to-date on tepid demand which makes natural gas a more competitive fuel. The benchmark Asian spot LNG price for September delivery dropped $2.70 to $12.30 per MMBtu on lacklustre demand and high stockpiles.

Heatwaves in the eastern part of the U.S. have sent Henry Hub futures soaring as gas-burn stays high at 49.3 bcf/d through July 25, while financial flow risk is skewed to the upside, Energy Aspects finds.

Singapore is at the heart of an evolving regional power grid which is poised to lower the share of LNG-fuelled power generation. If all proposed interconnections get built, they could unlock up to 25 GW of renewable and energy storage capacity worth over $40 billion, Rystad Energy reckons.

Today, over 96% of Singapore’s electricity is generated by burning natural gas which needs to be imported as LNG. Yet, Rystad analysis finds that importing electricity through the regional grid is cost-effective for the city state and could help reduce CO2 emissions by 13 million tons per year.

Higher load factor helps reduce electricity cost

Though CCGT are flexible and reliable in terms of operation, comparing the levelized cost of electricity (LCOE) reveals that electricity imports via ASEAN interconnectors may offer a more cost-effective alternative to building new domestic CCGT capacity. Singapore’s Electricity Market Authority (EMA) current regulatory framework require projects to reach an annual load factor of at least 60% within five years of commercial operation. For project developers there is a strong economic incentive to exceed this target.

Raising the load factor target from 60% to 100% could lower the overall LCOE, as this helps spread transmission costs more equally. This impact is particularly significant in countries such as Malaysia (Sarawak), Cambodia and Vietnam, where long transmission distances amplify cost optimization benefits particularly for hydropower projects

Solar-plus-storage hybrid systems, with optimized direct current/alternating current (DC/AC) configurations and appropriately sized battery energy storage systems (BESS), can already achieve load factors above 90%. By integrating solar and BESS technologies with the necessary backups, these systems can reach the level of reliability required by Singapore’s EMA and could be comparable to other dispatchable energy sources.

“Hybrid systems could deliver lower LCOEs than many in the industry currently anticipate. Singapore, strategically positioned at the heart of this evolving energy system, stands to gain significantly,” said Rystad’s renewables analysts Nevi Cahya Winofa.

India’s LNG imports are bound to rise amid higher gas-burn in the summer season and Petronet aims to get the expansion of the 17.5 mtpa Dahaj terminal to 22.5 mtpa completed in the next three months, CEO A.K. Singh said. He indicated Petronet aims to maximise the utilisation of this terminal over the summer.

Electric power generators across India have already been asked by the government to operate underutilised gas-fuelled plant at a higher capacity between May 26 and June 30.

Rain and cooler temperatures have subdued gas demand over the past few weeks but electricity demand is forecast to rise starkly as the summer season approaches. "We expect LNG demand to rise similar to last year's levels. Demand for power is rising in last few days so we are expecting demand for LNG to rise in the third or fourth week of May and in June," the Petronet CEO said.

Dispatch of gas-fuelled power plants has been more expensive than those running on thermal coal, solar or wind energy which results in three-fifth of all gas power stations standing idle. These plants tend to be primarily used for gas peaking power.

Yet the narrowing spread between spot and longterm LNG prices is incentivising buyers like Petronet to step up purchasing, Sing said, indicating Indian offtakers prefer LNG prices at below $10 per million British thermal units. At this level gas-burn for power generation starts to become economic.

Near-fixed price LNG offtake

For long, Petronet used to purchase US LNG at a near-fixed price. In September 2019, it signed a $7.5 billion agreement with Tellurian to take a stake in Driftwood LNG and import 5 mtpa. For American LNG vendors, selling LNG directly to Indian customers is difficult given that utility customers are hesitant to lock in long-term offtake agreements due to a high risk of price volatility at wholesale power markets.

Prime Minister Narenda Modi is pushing to turn India into a gas-based economy, aiming to boost the use of gas from 6.2% to 15% by 2030. To achieve this goal, the PM has set out measures to double city gas networks to 400 districts, set up an independent gas transmission system operator and a trading exchange to allow for transparent operations of pipelines and price discovery.

“Increasing natural gas use will enable India to fuel its impressive economic growth to achieve Prime Minister Modi's goal of a $5 trillion economy," noted Tellurian president and CEO Meg Gentle.

Southeast Asia is expected to become a net LNG importer by 2032, with demand set to soar approximately 182% over the next decade. Wood Mackenzie forecasts the region’s gas demand will outpace both oil and coal, particularly in Malaysia, Thailand, the Philippines and Vietnam.