Gas price risk rising for emerging Asian markets, threatens expansion plans

Gas price risk rising for emerging Asian markets, threatens expansion plans

An IEEFA paper published earlier this year has proved to be eerily correct with forecasts of doubling or even tripling of the US Henry Hub price and higher and extremely volatile global gas prices, providing a lesson for emerging markets that investment in gas importing, distribution and power production assets will lead to stranded assets and lost wealth.

IEEFA warned in January 2021 that over US$50 billion in gas power projects and liquefied natural gas (LNG) import facilities were at risk of cancellation in Bangladesh, Pakistan and Vietnam as gas-fired electricity became unaffordable in emerging markets.

This week the US domestic gas price indicator – from which its increasing exports are priced – traded above US$5 per one million British Thermal Units (mmbtu), up 112% for 2021 year-to-date.