Southeast Asia’s ambitious liquefied natural gas (LNG) expansion plans are facing mounting uncertainty due to intensifying geopolitical tensions and rising price volatility, according to a new report by international research group Zero Carbon Analytics (ZCA).

The region’s governments are investing an estimated US$11.8 billion into LNG import infrastructure as they seek to bolster energy security and navigate trade pressures, particularly from the United States. However, ZCA warns that such investments could leave Southeast Asia vulnerable to global market shocks and long-term fuel price instability.

“The unpredictable nature of the conflicts in the Middle East has the potential to disrupt LNG flows, placing Southeast Asian countries at heightened risk of supply shortages and surging costs,” Dario Kenner, Energy Transition Researcher at ZCA, said as quoted in a statement on Wednesday, July 3,2 025.

These concerns come amid renewed global tensions, including the Israel-Iran conflict, which analysts say could severely disrupt the strategic Strait of Hormuz − through which a significant portion of the world's LNG supply transits. Any disruption, ZCA warns, would have a disproportionate impact on Southeast Asia, making LNG unaffordable or inaccessible to some countries in the region.

Despite these risks, Southeast Asia continues to pursue LNG as a perceived short-term solution to energy security challenges, particularly as global LNG supply is projected to increase. According to the International Energy Agency (IEA), global liquefaction capacity is expected to grow by 33 percent between 2024 and 2028 − from 665 billion cubic meters (bcm) per year to 884 bcm − driven largely by expansions in the United States and Qatar.

Thailand, the region’s most mature LNG importer, plans to bring in an additional 2 million metric tons of U.S. LNG over the next five years. Meanwhile, Vietnam and the Philippines − both newer players in the LNG import market − are building terminals with a combined capacity to import between 19.2 and 30.2 million tons annually.

Even net LNG exporters like Indonesia and Malaysia are preparing to ramp up imports of U.S. LNG, in part to negotiate better terms under U.S. trade and tariff policies.

But ZCA cautions that Southeast Asia’s reliance on LNG imports leaves it exposed to repeated fuel shocks.

“LNG imports have contributed to significant electricity price increases in countries like Thailand and Singapore, and supply disruptions have occurred due to global market reallocation, particularly during periods of heightened European demand,” Kenner said.

In recent years, European buyers have frequently outbid Asian countries for LNG cargoes, diverting supplies away from the region. This trend is expected to continue as long as European demand remains strong, adding further volatility to Southeast Asian energy planning.

Instead of locking in decades of fossil fuel dependency, ZCA argues that ASEAN should seize the opportunity to invest in alternative energy strategies that enhance self-reliance. These include expanding domestic renewable energy capacity, developing the ASEAN Power Grid to enable regional electricity sharing, and leveraging existing clean energy manufacturing bases.

Kenner emphasized that the region holds vast untapped renewable energy potential, which could be scaled up to reduce dependence on imported fuels. He also suggested that the recent tariffs imposed by the U.S. on Southeast Asian solar products could be repurposed into an incentive to prioritize local deployment over export.

Zero Carbon Analytics’ report highlights a critical choice for Southeast Asia: double down on expensive and uncertain fossil fuel infrastructure or pivot toward a more stable and self-sufficient clean energy future.