Escalating armed conflict in West Asia following the United States and Israel’s strikes on Iran last Saturday is a “wake-up call” for Southeast Asian countries to rethink their energy systems, experts warn, as many rely heavily on imported liquefied natural gas (LNG) from the Gulf.
The war has pushed gas prices higher and raised concerns over supply disruptions after Iran’s retaliation and its decision to close the Strait of Hormuz, a chokepoint through which more than a fifth of global oil and gas shipments pass.
Saudi Arabia announced the closure of its Ras Tanura refinery, one of the region’s largest, after a drone strike. QatarEnergy, which produces about 20 per cent of global LNG exports, also said it was suspending LNG exports for the first time in 30 years after its own industrial facilities were damaged.
“The current situation could be interpreted as a wake-up call for Southeast Asian countries to reshape their energy landscape by increasing the share of clean technologies [while] strengthening domestic energy security,” said Dinita Setyawati, senior energy policy analyst for Southeast Asia, Ember.
Southeast Asian countries have increasingly imported LNG and the region is expected to become a net importer of the fuel by 2032, according to analysis by research firm Wood Mackenzie.
Singapore and Thailand have been the two largest importers of LNG from Qatar. In 2025, 45 per cent of Singapore’s LNG imports came from Qatar, while 28 per cent of Thailand’s LNG import volumes came from Qatar and Oman.
“Countries would benefit from rethinking planned LNG expansion, to avoid being locked into dependence,” Setyawati told Eco-Business. “With rising prices, the use of oil and fuel subsidies in Asean’s transportation sector might be affected. This is where electrification of transportation is no longer optional, but the structural shift the region needs.”
Reuters data show LNG prices in Asia last traded at a six month high of US$13.7 British thermal units (MMBtu), well below a US$68.80 MMBtu high in July 2022.
According to data from the World Bank’s World Integrated Trade Solution, Singapore and Thailand were the most reliant on liquified natural gas imports from Qatar in 2024. Image: Eco-Business
Sam Reynolds, research lead at the Institute for Energy Economics and Financial Analysis (IEEFA), shared a similiar view.
“Long-term disruptions to LNG flows from the Strait of Hormuz present a serious risk to the affordability of the fuel for emerging markets in Asia,” said Reynolds, adding that this would be “similar to what happened in the aftermath of the Russian invasion of Ukraine in 2022.”
But he believes that while Southeast Asia’s energy importers are likely to diversify their LNG sources in the near term, their longer-term pathways could diverge.
Reynolds pointed to the Philippines as an example, where the government’s energy strategy reflects a mixed approach. While it is expanding LNG development, a move that has raised concerns among civil society groups, it has also introduced more favourable policies for renewable energy.
“The government rolled out more favourable policies for renewable energy, including the country’s first centralised procurement auction for new renewables capacity and a repeal of foreign ownership restrictions for clean energy projects,” he said.
A similar trend can be seen in Thailand, which doubled down on the role of LNG in 2022, adding nearly 10 gigawatts of new gas-fired capacity between 2020 and 2025. However, recent IEEFA analysis showed this has been costly – a large amount of gas plants in the country are not fully utilised due to overcapacity and new renewable energy mechanisms have stalled.
The country’s energy minister Atthapol Rerkpiboon said that it has sufficient reserves to meet domestic demand for up to two months. Any shortfall would be made up for by increasing LNG production in the Gulf of Thailand and Malaysia, or by importing hydropower from Laos, ThaiPBS reported.
Consumer concerns
In Singapore and Malaysia, authorities were most immediately concerned with potential inflation shocks and other economic impacts. In a statement on Monday, the Monetary Authority of Singapore said that it is “assessing the impact on the domestic economy and financial system.” The country’s Energy Market Authority told Business Times that it could experience higher energy prices.
In Malaysia, Prime Minister Anwar Ibrahim said that the government would try to maintain subsidies for petrol and diesel. The country’s national oil company Petronas recently signed a 20-year supply agreement to buy LNG from QatarEnergy.
Most of Malaysia’s remaining gas reserves are located in the state of Sarawak, which has been embroiled in a legal dispute with Petronas over rights to distribute gas.
In Vietnam, US-headquartered Murphy Oil recently discovered one of Southeast Asia’s largest oil fields in the past 30 years. However, LNG projects in the country have historically faced long delays due to challenging contract negotiations and an unwillingness by the government to absorb fossil fuel price volatility risks, said Reynolds.
According to a report by the Institute for Energy Economics and Financial Analysis (IEEFA), the share of liquified natural gas (LNG) imported from Australia, and the US into Asia increased, while that of Qatari LNG has fallen. Source: IEEFA
LNG ‘doesn’t make sense’
In the broader Asia Pacific region, China, India, Japan and South Korea are much more significant importers of LNG from the Gulf region. These four countries account for 75 per cent of oil and 59 per cent of LNG flowing through the Strait of Hormuz, according to a report by Zero Carbon Analytics.
“Of these, Japan and South Korea are the most vulnerable to supply shocks, sourcing 87 per cent and 81 per cent of their energy from fossil fuel imports,” ZCA’s analysts wrote.
Global energy experts cautioned against any region relying on LNG, given its price and supply volatility in recent years, as well as its negative climate impacts.
“The idea that you can cost-effectively decarbonise your economies by relying on a commodity that, in the space of 5 years, is subject to two illegal wars that send prices stratospheric…just doesn’t make any sense,” said Seb Kennedy, founding editor and gas analyst at analysis platform Energy Flux.
He added during a media briefing that arguments in support of using LNG as a transition fuel is “falling apart before our very eyes.”
“This incursion is a bonanza for US LNG exporters, and a catastrophe for everyone else,” added Kennedy. The US became the world’s largest LNG exporter in 2023.
Other experts also warned against the overreliance on fossil fuels for energy security, especially when crises are driven by global powers like the US, which rely on fossil fuels to extend their dominance.
“Our security strategy is currently reduced to responding to fossil fuel-induced crises – and that comes at the cost of people, planet and security,” said Pauline Heinrichs, lecturer in war studies on climate and energy at King’s College London.
“If we are to take security strategy seriously, then we need to reduce the insecurity from fossil fuel dependency,” she said.
