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Power Sector Driving Growth in Imports for Thailand

This current feature was extracted from the latest edition of Poten’s LNG Market Outlook, a monthly service published on January 29, 2024.

Lower domestic output, expanding power production and lower pipeline imports have been the key drivers in rising LNG imports for Thailand, but LNG import growth is likely to slow in the near term as the Thai government seeks to lower the LNG import bill and electricity prices. After rising by 31% in 2022, LNG imports rose by 32% to 11.5 MMt in 2023.

LNG imports are forecast to increase by 12% to 12.9 MMt in 2024 and 19% to 15.4 MMt in 2025. Despite the effort to reduce LNG imports, LNG will continue to play a vital role in Thailand as roughly 55% of power generation comes from gas-fired power plants.

Thailand LNG Import Forecast

Natural gas demand rose by about 3 Bcm in 2023 to 55.3 Bcm on the back of higher demand from the power sector. Power demand rose by 3.5 Bcm to 32.7 Bcm in 2023, but growth from the power sector was offset by declining demand from the industrial sector.

Rising gas demand from the power sector will likely be a major contributor to rising LNG imports, but delays in the retirement of coal-fired generation and the possibility of switching to other sources like fuel oil pose a risk to the gas demand forecast.

Currently, demand from the power sector is forecast to increase by 5% to 34.2 Bcm in 2024 and 8% in 2025 to 37 Bcm. Additionally, demand from the residential, commercial and industrial sectors is forecast to increase on economic growth, bringing total gas demand to 61 Bcm by 2025.

Thailand Gas Demand Forecast by Sector

Increasing domestic production and pipeline imports have been at the forefront of the government’s effort to lower the country’s reliance on LNG. PTTEP has stated that production from the Erawan gas field is projected to increase from 200 MMcf/d to 800 MMcf/d by the start of 2Q 2024.

However, the field is nearly depleted and the remaining available gas reserves are in small pockets, which will require more wells to be drilled, adding to capital costs. Unless new discoveries are made, it’s unlikely Thailand will be able to maintain the increase in production.

Production is forecast to increase by 2% in 2024 and 1% in 2025. Additionally, the government is seeking to replace lost pipeline import volumes from Myanmar with volumes from Laos.

Thailand Gas Production and Pipeline Import Forecast

 

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