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Blackouts Hit Asia As LNG Prices Soar In Tight Global Market

Emerging economies in Asia face prolonged electricity crises and continued rolling blackouts as spot LNG prices surge and high demand from Europe is pricing Southeast Asia out of the tight global gas market.

For over six months now, Europe has been the key driver of global LNG demand as it looks to replace as much Russian pipeline gas supply as soon as possible. Since the energy crisis of last autumn, Europe has displaced Asia as the growth driver of LNG demand and is no longer “the market of last resort” for LNG cargoes.

In Bangladesh, spot LNG purchases stopped in June, and the country is looking for long-term supplies, the country’s state minister for power, energy and mineral resources, Nasrul Hamid, told Bloomberg in an interview published on Monday. However, long-term suppliers such as Qatar have signaled they will have available LNG volumes under term contracts, but only after 2026, the minister added.

The power crisis in Pakistan is worsening, too, amid sky-high LNG import prices and the unavailability of additional LNG supplies. Unable to get its hands on exorbitantly expensive spot LNG volumes, Pakistan has ramped up imports of fuel oil to use as power generation. Yet, this will not be enough to cover the shortfall, and Pakistan continues to go through blackouts during heat waves.

Elsewhere in Southeast Asia, blackouts and a deep economic crisis in Sri Lanka have led to protests that ousted the president after the country couldn’t afford to import food and fuel.

Even some in Europe are bracing for blackouts this winter. Greece’s Environment and Energy Minister Kostas Skrekas warned on Monday that households could face rolling blackouts after the summer if Russia cuts off gas supply to Europe in the coming weeks or months and if the EU wants to reach its 15-percent cut in gas consumption. Before households are affected, Greece will turn off the spotlights on landmarks and use less street lighting.

“We must all understand that we cannot behave as if nothing’s happening around us,” the minister told Greek newspaper Kathimerini. “There is a war that is destroying a country and is also feeding an energy crisis the likes of which we have never seen… we must all realize we cannot waste energy,” Skrekas added.

By Tsvetana Paraskova for Oilprice.com

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