Thai LNG hub ambitions need caution

Despite local and global headwinds, Thailand's energy demand, driven by economic activities, continues to grow. Such seemingly insatiable energy demand has been met primarily via natural gas, which, according to Thailand's Electricity Generation Authority (EGAT), is used to generate 60.85% of Thailand's electricity.

- Imran Arif

This dependence on natural gas isn't new. For decades, Thailand has relied on natural gas for its power needs. However, the difference in recent years is that Thailand can no longer satiate most of its natural gas appetite from more traditional sources such as the Gulf of Thailand, the Malaysia-Thailand Joint Development Area, and the Yadana pipeline from Myanmar.

As natural gas is depleting in those sources, Thailand has been reinforcing its energy security by increasing its liquefied natural gas (LNG) imports even garnering the distinction of being Southeast Asia's first LNG importer in 2011.

Fast forward to 2025, and Thailand is fashioning itself to be Asia's regional LNG hub. This is to take advantage of its strategic location in Asia, particularly its proximity to Southeast Asia, which is seeing a growing LNG appetite.

But what does this mean for Thailand's energy transition plan?

NO LONGER JUST AN INTERIM FUEL

Under Thailand's Power Development Plan (PDP), the government is committed to reducing its fossil fuel usage and ensuring that by 2037, 51% of its energy mix is from renewables.

Thailand like many oil & gas exporting nations has been advocating for natural gas as a feasible energy option as it facilitates its transition towards cleaner energy. This is largely based on natural gas emitting significantly lower CO2 emissions during power generation as compared to coal, making it a somewhat "acceptable" interim fuel that allows countries to reduce carbon emissions while keeping power and energy prices affordable.

However, Thailand's ambitions of becoming a regional LNG hub appear to run counter to its long-term energy transition efforts.