Is Another Energy Crisis Knocking at Asia’s Door?

Asian countries are actively preparing for the arrival of another potential global energy crisis. Since Europe continues to struggle with its own energy shortages, Asian nations – especially those that remain heavily dependent on fossil fuels imports – have many reasons to worry about any potential blackouts.  

Still feeling the pain from the 2022 crisis, states across the continent are taking proactive steps to prepare for another such episode this winter. That is why certain resources – namely natural gas and liquefied natural gas (LNG) – are expected to play a critically important role in maintaining global energy security and stability, a reality that most Asian policymakers are already very much aware of. 

Following the crisis in Ukraine, the global energy system was left disjointed, disrupted, and dysfunctional. As several nations took steps to cut themselves off from Russian gas, the vulnerability of traditional supply lines was made clear, with much of the world suffering from skyrocketing prices and continuous resource shortages. But even though natural gas prices went down over the past 12 months, there are fears that another cold winter, while Russian gas and infrastructure continue to be excluded from global markets, could once again trigger a period of extreme market volatility.

Quite aware of that, policymakers in Asia have made historic efforts to increase their natural gas and LNG capacities as a means of securing the stability of their domestic energy supplies in the face of another potential crisis. For instance, India is expected to resume the imports of Russian LNG, following the 2022 supply suspension that came after Germany seized assets of Russian energy giant Gazprom. More importantly, earlier this month, Japanese officials have approached the International Energy Agency (IEA) with a proposal to create a global natural gas and LNG stockpile for member nations. As one of the largest consumers of natural gas and LNG in the world, Japan is wary of further shortages, which is why it has explored a variety of potential remedies, including a new deal with the EU to strengthen their energy cooperation, especially in the field of LNG.

Outside of Japan, several developing Asian countries are taking similar steps to expand their natural gas capacity and prepare for any upcoming crises or shortages that can often have a severe impact on emerging economies. Pakistan, for example, has long been plagued by large-scale power outages due to poor infrastructure and lack of stable and secure baseload of energy. To prevent the continued degradation of the country’s energy system, and prepare for any potential global shortages, Islamabad has requested increased deliveries of liquefied natural gas from Qatar – the world’s largest LNG exporter. Coupled with the Pakistan Stream project – a joint effort with the Russian government to rebuild the Asian nation’s energy infrastructure – Islamabad may yet have hope to resolve its electricity nightmares. 

Meanwhile in Bangladesh, the authorities have similarly made the expansion of natural gas and LNG reserves a policy priority. Just recently, the government of Bangladesh has signed deals with Japan, Oman, and Qatar, as well as companies from India, Russia and China, for massive shipments of natural gas and LNG. While some may argue this move reflects a cavalier attitude to the country’s net zero responsibility, Bangladesh has in fact made promising strides in the development of its renewable energy infrastructure and capacity, working closely with the United Arab Emirates to do so. Therefore, these deals are not reflective of Bangladesh’s approach to the energy transition, but rather underscore the critical importance of natural gas and LNG to both global and domestic energy security and affordability. 

With such a significant rising trend towards natural gas throughout Asia, including recent expansions of LNG infrastructure in South Korea, Taiwan and India, it is not surprising that this year’s Gastech Conference will be taking place in Singapore – the continent’s leading hub for gas and LNG trade. With the world’s leading policymakers and energy executives in attendance, the event will provide a crucial platform for the discussion of new opportunities emerging across the energy sector and for outlining an industry-wide strategy which can help many states avoid shortages and volatility in the following years. 

In the meantime, Asian countries are expected to continue to drive advancements and improvements within the natural gas and LNG industry, while being quite aware that the energy crisis of 2022 has caused a shift in focus by governments and companies towards energy security. At the same time, they will undoubtedly work on the transition to low-carbon energy, although the process can often be too expensive and unpredictable. 

Given the current power outages in many nations around the world, as well as a continued high demand for fossil fuels, a possible continuation and even an escalation of the last year’s energy crisis remains on the table. The coming months will show how prepared Asian countries are.

[Header image: LNG carrier Energy Advance in Ishikari Bay, Japan. Photo byとまりん♪, CC BY-SA 2.1 JP, via Wikimedia Commons]

The views and opinions expressed in this article are those of the author.

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