LNG: Cold Fuel, Hot Topic

LNG: Cold Fuel, Hot Topic

Following introductions, the conversation opened with a focus on energy education and the need to help people understand their personal energy use, such as the devices they rely on daily, and the sources powering them. This was illustrated with Singapore; the city looks clean and green, but nearly all electricity comes from gas-fired generation. This means that while activities like high EV adoption reduces street-level pollution, it does not yet represent a systemic shift to clean energy.

Myth Busting

The panel went on to do some “myth busting” around LNG. One myth is that LNG has higher lifecycle emissions than coal [as some studies have shown], but other studies show LNG from major producers averages around 47% lower emissions intensity, making coal-to-gas switching a meaningful decarbonization step. Another myth is that LNG displaces renewables; when there is an opportunity to see is as complementary, providing reliability to enable renewable-energy growth. LNG is a proven, viable technology available today that can utilise existing infrastructure (e.g. pipelines) and underpin growing energy demand and standards of living in Southeast Asia. Despite a common perception that gas and fossil fuels are becoming less relevant, the panel stressed that gas remains a substantial part of the global energy mix, while coal still dominates much of Asia’s power supply — making a full-scale transition away from these fuels difficult in the near-to-medium term.

In Southeast Asia LNG plays two key roles: replacing coal to reduce emissions and substituting for declining domestic gas production in countries such as Thailand, Malaysia, Indonesia, and Singapore. Advances like floating regasification units have expanded access across the region. Although LNG is cleaner than coal, it is often more expensive than the domestic gas many markets are accustomed to, creating a cost gap that can only be bridged through subsidies or market reforms. Without such support, countries may default to coal because it remains cheaper despite its higher emissions. Rising LNG imports therefore underscore the need for broader power market reform — not just narrow fixes like gas-pricing adjustments — to manage higher costs, support utilities, and enable integration of renewables with firming and demand-side technologies. LNG thus represents a pragmatic, lower-carbon bridge fuel in Asia’s energy transition, but its long-term role will depend on striking the right balance between affordability, renewables, and supportive policy frameworks.

A final myth addressed later in the discussion, is the belief that building new infrastructure and commercial arrangements requires very long lead times. The example of Europe’s rapid pivot away from Russian gas after the invasion of Ukraine showed that such transitions can, in fact, happen much more quickly when the pressure is on.

Complexities of Domestic Markets

The panel discussed why LNG is often imported to countries that also export LNG, for instance Australia. This situation can be politically unpopular. The discussion highlighted some of the complexities of energy (and specifically LNG) markets. In Australia, the east and west coast gas networks are not connected. Building a cross-country pipeline has been considered but is prohibitively expensive. This leaves Australia with effectively two separate gas markets. Large LNG projects in Western Australia and Queensland were financed on the basis of long-term export contracts, which underwrote the investment into the projects. While domestic supply obligations do exist, shifting more LNG to domestic markets after contracts are signed creates major commercial and investment challenges. While in Victoria, a lack of investment in domestic gas production and pipeline capacity has increased pressure on supply, creating mismatches between high demand centres and production zones.

However, Australia is not alone in facing these issues. Other LNG exporters face similar challenges. Malaysia for instance, despite being a major LNG exporter, also imports LNG. That is because its major demand centres (based on Peninsula Malaysia) are separate from production centres (based in Borneo), and you cannot put a pipeline through the South China Sea. Malaysia could ship from Borneo to the Peninsula, but it prioritizes higher-value exports to countries like Japan, Korea and Taiwan, over sending domestically where gas prices are capped and subsidized.

Even in the US, with its vast LNG capacity, it imports LNG in certain regions. Boston, and the New England region for instance, imports LNG from countries like Trinidad, Peru, and as far away as Nigeria, due to very old cabotage shipping legislation. These cabotage laws [enacted via The Jones Act, 1920] required that any cargo moved between US ports must be carried on vessels that are US-built, owned, and crewed. The US has no LNG tankers that meet these requirements [e.g. they are built abroad mostly in South Korea or Japan]. This means Boston cannot receive LNG shipments even if it comes from the US.

Egypt presents a slightly different example of energy market complexities, which can reverberate across the global market. In Egypt, gas is used to power the grid, and that grid-power is used power the LNG plants. When domestic demand peaks (for instance in summer) and they don’t have enough gas to fuel the demand, they stop sending LNG out for exports and divert it back to fuel domestic demand. This creates some significant sovereign risks issues, and creates headaches for importers that were relying on those LNG cargos for their own power supply.

The broader lesson is that LNG export and domestic supply are shaped not only by gas reserves, but also by infrastructure, long-term contracts, regulations, and shipping rules. Sudden supply shifts can reverberate globally, given how interconnected LNG markets are.

Decarbonizing LNG ‘Toolkit’

The panel discussed how you can bring down the carbon intensity of LNG to extend its longer-term viability. The key approaches in this ‘toolbox’ were:

• Carbon Capture & Storage (CCS): viable today, with 50+ MtCO₂ stored annually, equivalent to a ‘quick ChatGPT estimate’ of 11-13 million combustion fuel cars off the road.
• Blending LNG with cleaner fuels [e.g. with hydrogen] to reduce the carbon intensity.
• Carbon credits may help to offset carbon emissions, though the market appetite for these is inconsistent.
• Plant Electrification: and moving away from LNG operations that uses gas, can reduce emissions of production. For instance, an LNG plant based in Freeport, Texas draws directly from the grid. That said, storms and outages has tripped the plant numerous times, requiring flaring of excess gas, potentially increasing emissions. How a plant is electrified therefore needs careful consideration of these types of risks.
• Methane Management: identifying and reducing leaks is crucial.
• Verified emissions tracking is needed for credibility. Some importers (particularly in Japan and Korea) are starting to differentiate based on emissions intensity.