Asia’s LNG affordability challenge amid surging supply

Global LNG supply is set to surge by 40% by 2030, raising a critical question: how much of the expected demand growth will actually materialise in Asia? Wood Mackenzie projects Asian LNG demand to rise by 115 million tonnes (Mt) between 2024 and 2030. Much of this increase will be driven by the power sector in emerging economies, where booming electricity demand makes LNG an attractive complement to renewables and a cleaner alternative to coal. Yet affordability remains a key obstacle.

At current contract and spot prices, many governments spend billions subsidising LNG imports to cover the gap between regulated electricity tariffs and market realities. Bangladesh, for example, required $1 billion in subsidies in 2024 – five times pre-2022 levels.

Recent years of extraordinarily high LNG prices have curbed demand growth. This is about to change. As new supply enters the market, spot prices are set to fall. Wood Mackenzie expects Asian spot LNG prices to decline from today's $12–13/mmbtu to an average of $8.8/mmbtu between 2028–2030. This marks a significant drop from post-Ukraine invasion peaks above $30/mmbtu.

Four markets, four realities

The central question remains: at what price does LNG become truly affordable for Asia's emerging economies, enabling sustainable, market-driven demand rather than reliance on subsidies? Our analysis examines four case studies: Vietnam, Thailand, Bangladesh, and China's Guangdong province. This combined market represents nearly 25% of Asia's gas-to-power demand and 15% of LNG consumption. Together, their power sector gas demand is expected to grow by 15 bcm by 2030, driving an additional 27.5 bcm of LNG demand.

• Vietnam: subsidy gap narrowingCurrent power tariffs create a $4/mmbtu shortfall versus spot LNG, requiring heavy subsidies. By 2030, however, falling spot prices are expected to reverse this gap, trading at a $0.8/mmbtu discount to regulated tariffs. Additionally, Vietnam's proposed LNG Power Purchase Agreement could set higher affordability thresholds still, paving the way for signing of long-term contracts. This would underpin its ambitious 20 GW gas-fired power plan.
• Thailand: spot LNG to undercut pool pricesThailand's gas pool pricing blends domestic output with imports, but remains higher than regulated prices, necessitating subsidies of $0.7/mmbtu. After 2028, spot LNG prices are expected to fall below the pool price, reducing requirement for government subsidies. Direct access to spot LNG prices will improve the competitive positioning of power players further, supporting nine million tonnes of demand growth between 2024–2030.
• Guangdong: market reform favours spot LNGIn August 2025, Guangdong shifted from guaranteed tariffs to a market-based system where plants bid based on weighted average gas costs (WACOG). While spot LNG remains above this benchmark today, by 2030 it is forecast to trade $1.7/mmbtu lower. This will boost LNG's competitiveness, displace pipeline gas, and support 7.6 Mt of new demand.
• Bangladesh: the toughest affordability testBangladesh faces the steepest challenge. With regulated tariffs at just $4–5/mmbtu and WACOG still higher, subsidies remain unavoidable. Even with declining spot prices, LNG may still trade $3/mmbtu above affordable levels by 2030. This limits projected import growth to just 3.2 million tonnes between 2024–2030.

The next phase: lower prices unlock demand

The upcoming wave of new supply will reshape global LNG dynamics. Lower prices are poised to unlock fresh demand in emerging Asia. However, the extent will depend on how far affordability improves across diverse regulatory and market structures.

Lower spot LNG prices will reduce governments’ fiscal burden, paving the way for a shift from subsidy-dependent to market-driven demand in a sign of maturation of Asian LNG markets. Direct access to spot markets, Vietnam's proposed LNG PPA structure and Guangdong's market-based pricing all signal regulatory evolution. However, domestic regulated tariffs will need to evolve further for LNG affordability to persist beyond the anticipated period of temporary lower prices.

For LNG suppliers and investors, the potential for 115 million tonnes of new Asian demand offers an unprecedented market expansion opportunity. But realisation depends on navigating diverse regulatory frameworks and affordability constraints that vary dramatically across the region. The potential for growth is clear, but in markets constrained by fiscal and regulatory limitations, the pace at which it materialises remains the key question.