LNG demand from China, India and Pakistan is likely to rebound from multi-year lows once the Middle East supply crunch ends and new supplies emerge, industry executives say, reversing a pick-up in coal and oil to replace gas during the US-Iran war.
The conflict has prevented Qatar and the United Arab Emirates from exporting most of their LNG via the Strait of Hormuz, through which a fifth of global supplies used to pass, driving up prices.
Shell, the world's biggest LNG trader, estimates the world has lost about 36mn tons of LNG from the Middle East so far this year, President for Integrated Gas Cederic Cremers said.
Asia's spot prices have surged to nearly $30 per million British thermal units from a pre-war range around $10 per MMBtu, as the region competes for alternative supplies.
Sky-high prices are "definitely impacting" demand in India, GAIL Chairman Deepak Gupta said at the Gastech conference in Bangkok, where "a lot of sectors... are price sensitive". "There are many industries which switch over to different fuels in case gas is not viable for them," said Gupta, who heads India's top natural gas distributor by market share.
Both GAIL and PetroChina, China's top LNG importer, have deployed their trading teams to source alternative cargoes to replace Qatari and Emirati supplies.
The CEO of India's top gas importer Petronet LNG said consumers are seeking price stability.
"Affordability is a major challenge," said Akshay Kumar Singh. "There is no doubt there is demand, only it is price-sensitive demand."
In neighbouring Pakistan, the CEO of importer Pakistan LNG also expects more demand if the price is right. "That could happen with additional volumes coming online," said Masood Nabi.
While solar buildouts have helped Pakistan cope with power cuts in recent years, there is still gas demand from other sectors as well as households, he added.
GAIL's Gupta said India had had to limit gas consumption initially, but resumed supplies to almost 90% to 95% as it ramped up its capability to buy LNG from elsewhere.
ExxonMobil, GAIL and PetroChina executives expect consumption to rebound once prices fall.
"We are hoping that all this is very short-term, and in the coming days, in mid-term and long-term, things will become normal," Gupta said, adding that there may be about 150mn to 200mn tons of LNG coming online in the next four to five years.
PetroChina International CEO Luo Yizhou expects demand from gas-fired power plants to rebound once LNG prices return to a "normal" range of $7 to $9 per MMBtu, citing strong growth in electricity consumption.
Exxon expects substantial LNG demand growth in China over the long term, with extensive import infrastructure built along the country's east coast, its vice president for global LNG marketing Andrew Barry told Reuters on the conference sidelines.
The company remains confident in the diversification of its LNG portfolio, which includes interests in the US, Mozambique, Qatar, Papua New Guinea and Australia. It continues to look at new opportunities with a focus on cost of supply.
"We still have an extremely bullish demand forecast out through to 2050," Barry said.
