India began rationing natural gas on Tuesday while countries around Asia looked to the
spot market to replace supplies, activated emergency plans and
prepared to step up production, as the conflict in the Middle
East curtailed shipping and halted Qatari output.
Government officials and company executives in Japan,
Taiwan, Bangladesh and Pakistan said they did not expect an
immediate impact as some cargoes due this month had already
arrived, but they would diversify their import sources and buy
liquefied natural gas (LNG) from the spot market if the war
drags on.
LNG buyers in Asia account for more than 80% of shipments
from Qatar, the world’s No. 2 producer after the U.S., according
to data from analytics firm Kpler.
In India, gas firms on Tuesday reduced supplies to companies
in anticipation of tighter supply from the Middle East after
Qatar halted production, Reuters reported.
Taiwan, which generates more than 40% of its electricity
from LNG and imports a third of its supply from Qatar, will buy
more from the U.S. and could coordinate with South Korea and
Japan if a shipping blockade stretches on, its economy ministry
said on Tuesday.
“We will continue moving in the direction we have been
pursuing all along: obtaining sufficient quantities of energy
through diversified markets,” Taiwan Premier Cho Jung-tai said,
adding that an “emergency response mechanism” had been activated
to deal with the Qatari supply disruption.
Japan, which is the world’s No. 2 LNG importer and sources
4% of its gas from Qatar, could tap the spot market or have
utilities buy from each other if needed, its trade minister
said.
SOUTH ASIA LNG SUPPLY
In Bangladesh and Pakistan, industry officials likened the
situation to the aftermath of Russia’s 2022 invasion of Ukraine,
when LNG prices spiked and supply was disrupted, causing
prolonged power outages.
While Pakistan’s significant solar generation will prevent
daytime power cuts, Bangladesh is at risk of shortages and may
need to increase coal and power imports from India, industry
experts said.
A senior official at state-run Petrobangla said a prolonged
disruption would pressure power generation and industrial output
as the peak summer season approaches.
So far, four out of Bangladesh’s nine scheduled Qatari
cargoes for March have crossed through the Strait of Hormuz, the
official said, adding that Dhaka may seek to acquire spot
cargoes.
“The real question is where prices will go,” the executive
said. “Prices could rise manyfold and frankly, we simply cannot
afford that.”
Benchmark Asian LNG prices rose as much as nearly 40% on
Monday, while benchmark European wholesale gas prices closed
around 35% to 40% higher.
Pakistan, which receives nearly all of its LNG from Qatar,
plans to increase domestic natural gas production and reduce
regasification rates at its terminals, industry officials said.
Unlike other Asian countries, delivery delays could help
Pakistan, where a LNG glut has forced local gas extraction
companies to curtail output and drained its forex reserves.