Hanoi, Vietnam – Asian nations are increasingly looking to acquire U.S. liquefied natural gas (LNG) as a means to ease trade tensions with the United States and counter potential tariff hikes by the Trump administration. However, experts caution that this approach could jeopardize these countries' climate goals and energy resilience. Asian countries have prioritized U.S. LNG purchases in their negotiations with Washington amidst President Donald Trump's widespread tariffs on international goods. The Vietnamese government has already moved to buy more of this super-cooled fuel, signing a deal in May with an American firm to develop a gas import terminal.
Japan's leading power generator, JERA, recently inked new 20-year contracts to import up to 5.5 million metric tons of U.S. gas annually, starting around 2030. While U.S. attempts to sell more LNG to Asia began before Trump's tenure, his strong push for trade agreements has accelerated these efforts. LNG, a fuel used for transportation, residential cooking, heating, and industrial processes, is natural gas cooled for easier storage and transport.
President Trump has also advocated for cooperation on a $44 billion Alaska LNG project with South Korea, leading to a site visit by officials in June. This project aims to transport gas from Alaska's vast North Slope to a liquefaction plant in Nikiski, primarily targeting exports to Asia while bypassing the Panama Canal. Thailand has expressed interest in a long-term U.S. fuel agreement and the Alaska project to construct an approximately 810-mile pipeline funneling gas. The Philippines is also considering LNG imports from Alaska, while India explores eliminating import taxes on U.S. energy shipments to reduce its trade surplus with the U.S.
"Trump has applied pressure on many Asian trade partners to purchase more U.S. LNG," stated Tim Daiss from the APAC Energy Consultancy. He noted that Japan has agreed to increase imports even though it has an abundance of the fuel, prompting project cancellations and contract terminations as they aim to offload the surplus to Asia's expanding economies. "This is not beneficial for Southeast Asia's sustainability targets," Daiss warned.
LNG deals: A threat to renewable goals Experts argue these LNG purchases could impede renewable energy adoption in Asia. Indra Overland, head of the Center for Energy Research at the Norwegian Institute of International Affairs, mentioned that locking into long-term LNG deals might result in outdated infrastructure as shifts to cleaner energy sources like solar and wind intensify globally. Constructing pipelines and terminals, and investing in household gas stoves, can establish expensive and challenging systems to replace, complicating a transition to renewables. "Organizations profiting from gas or coal hold significant influence, skewing policy towards their business models," he added. Although cleaner than coal, LNG remains a fossil fuel that emits greenhouse gases.
Many LNG agreements contain "take-or-pay" provisions, compelling governments to pay regardless of fuel consumption. Christopher Doleman of the Institute for Energy Economics and Financial Analysis highlighted that if renewables rapidly grow, decreasing LNG demand, countries may still be obligated to pay for gas they don't need. Pakistan serves as an example, where skyrocketing LNG costs inflated electricity prices, driving consumers towards rooftop solar installations. With power demand declining and gas supply increasing, Pakistan is postponing LNG shipments and attempting to resell surplus fuel.
The math of LNG doesn't add up While Asian countries express a willingness to import more U.S. LNG, a substantial effect on U.S. trade deficits remains doubtful. South Korea would have to import 121 million metric tons annually—50% more than the total U.S. LNG exports from the previous year and threefold South Korea's import volumes, according to Doleman. Vietnam, with a U.S. trade surplus double that of Korea's, would need 181 million metric tons yearly, exceeding twice U.S. exports from last year.
Additional challenges include Alaska LNG's economic viability issues. In Asia, coal and renewables are so much cheaper that U.S. gas would need to drop to less than half its current cost to be competitive. Chinese steel tariffs could inflate gas pipeline and LNG terminal construction costs, while prolonged delays in gas turbine development indicate gas power projects might not be functional until 2032. Furthermore, an international LNG surplus may further drive prices down, making long-term U.S. deals difficult to justify.
LNG commitments: An energy security dilemma Analysts warn that long-term U.S. LNG contracts could undermine regional energy security amidst growing geopolitical and market instabilities. A primary concern is the long-term reliability of the US as a trading partner, emphasized Overland. "The U.S. lacks predictability. Relying on it for energy is highly risky," he said.
LNG bolsters energy security only when it is both available and reasonably priced, highlighted Dario Kenner of Zero Carbon Analytics. These concerns were evident during recent threats to fuel shipments through the Strait of Hormuz and the Ukrainian conflict, when LNG deliveries intended for Asia were rerouted to Europe. Asian countries like Bangladesh and Sri Lanka were outbid by European buyers, despite existing contracts.
"Events in Europe, seemingly distant, can affect Asia's availability and prices," Kenner remarked. He recommended Asian nations to fortify their energy security and emission reductions by bolstering renewable energy production, noting Southeast Asia uses only about 1% of its solar and wind capabilities.
"There are real options to satisfy growing electricity requirements beyond simply building LNG infrastructure," he concluded. (AP)
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