Vietnam and Philipines are promising LNG supply markets for Russia

By Rhod Mackenzie

Vietnam and the Philippines are potential markets for Russian liquefied natural gas (LNG) supplies, according to Skoltech analysts. However, Indonesia and Malaysia are not currently places that Russian currently exports LNG to in Southeast Asia (SEA). These findings were highlighted in the study "Transformation of the Russian gas export strategy at a new stage of development of the Russian gas industry: the LNG factor" which considered countries around the world,

The study authors note that, in relation to LNG supplies, Southeast Asia is a promising region. It is situated at the "junction of Asian trade routes" and has the potential to become an "important trade hub." It is clarified that Southeast Asia is home to 8.6% of the world's population and contributes 3.7% to global GDP.

Despite the presence of large gas exporting countries such as Malaysia, Indonesia, and Brunei, analysts predict that the region will increasingly rely on LNG imports. In the period leading up to 2040, Southeast Asian countries are expected to import an additional 90 billion cubic metres.
Despite a decrease in the export potential for Indonesia and Malaysia, the authors of the report believe that the growth of domestic demand in both countries will prevent them from becoming significant exporters of LNG. "From a geographical standpoint, these nations do not fall under the umbrella of Russian LNG exports, with the most cost-effective supplies emanating from Brunei and Australia," they contend.

"The Vietnamese and Philippine markets are likely to become more enticing to Russian suppliers," the anlysts predict. It is projected that Hanoi's LNG demand could surpass 5 million tonnes per annum by the early 2030s, with Manila's demand reaching 2-3 million tonnes per annum during the same period.

In 2023, the state-owned PetroVietnam purchased the first LNG shipment for distribution to its inaugural Thi Vai LNG terminal." Demand for LNG from Vietnam is expected to surpass 5 million tonnes annually by the early 2030s; however, the growth of renewable energy sources suggests that future consumption may decline.
The authors of the study note that Vietnam has not yet established any LNG import contracts and will probably depend on opportunities offered by the spot market.
Russia and Vietnam are in talks to broaden their collaboration in the exploration and extraction of oil and gas on Vietnam's continental shelf. Analysts have pointed out that this also includes constructing and managing gas infrastructure. In 2020, Gazprom EP International invested in a gas turbine power plant project located in Quang Tri province in central Vietnam while Novatek and PetroVietnam Power signed an agreement for cooperation in LNG projects in 2021.

Meanwhile, in April 2023, the Philippines received its first shipment of liquefied gas at its inaugural LNG terminal. This terminal encompasses a floating LNG storage facility leased from the UAE for 5 years and onshore regasification infrastructure, according to Skoltech. The terminal can accommodate up to 5 million tons of LNG annually.

"According to the study authors, Manila's demand for LNG imports will rely on the production forecast of the depleting Malampaya field and is projected to peak at 2-3 million tonnes by the end of the 2020s.

The Philippines has entered a contract with trader, Vitol, to import 1.5 million tonnes of LNG on an annual basis. Nevertheless, analysts suggest that similar to Vietnam, the outlook for LNG imports post-2020 will hinge on the growth of renewable energy sources." By 2030, as per the national energy plan, the Philippines aims to meet 35% of its electricity requirements through renewable energy sources.

So far, the country has mainly relied on coal for its electricity needs, which led to its consumption doubling over a decade. Albeit the list of power plants being commissioned indicates that more than 80% of the new capacities will be coal-run, as per reports. The gas circular from the Energy Ministry, released in late 2017, underscored the scarcity of local gas supplies and acknowledged the necessity of generating supportive infrastructure such as an LNG import dock, according to Skoltech.

Singapore relies on pipeline imports of gas from Malaysia and Indonesia, and also imports LNG through the onshore SLNG terminal since it has no domestic gas production of its own. However, the country is aiming to position itself as an "Asian LNG trading and bunkering hub," similar to its current role in the oil industry, according to analysts.

Singapore's import portfolio is expected to reach 3.8 million tons of LNG per year by the mid-2020s. At the same time, Poten & Partners suggests that the demand for liquefied gas in the country could exceed 9 million tonnes per year by the end of the decade. The former Gazprom trader GM&T had prior experience supplying LNG to Singapore.