Page 6 - AsianOil Week 15 2022

AsianOil COMMENTARY AsianOil

Report warns Japan, South

Korea and Vietnam face

exposure to LNG markets

Japan, South Korea and Vietnam face volatile gas prices and

increased investment risk if they pursue investment in LNG
imports and gas generation, a new report has warned

ENERGY BUILDING a new generation of LNG import global LNG demand. Vietnam, meanwhile, has
TRANSITION terminals and gas-fired generating stations the largest regional pipeline of new gas power
would leave Japan, South Korea and Vietnam infrastructure.
WHAT: exposed to highly volatile gas prices, put up to
A new report has warned $70bn of investment in danger and would leave White elephants
about the risks of them unable to meet their net-zero goals, a new The report finds that instead of LNG, investing in
certain Asian countries’ report has warned. renewables and battery storage would minimise
becoming more reliant Russia’s invasion of Ukraine and the threat of exposure to commodity price risk, would prove
on LNG. the weaponisation of gas supplies would expose to be cheaper than new gas and would prevent
the countries to high levels of geopolitical risk billions of dollars of LNG infrastructure invest-
WHY: and supply constraints, green think-tank Car- ment from becoming stranded.
Carbon Tracker argues bon Tracker found in its recent report, entitled The report found that for Japan, 60% of its
that investing in more Stop Fuelling Uncertainty. LNG projects’ net present value would be nega-
renewable generation Instead, Asian nations, both established LNG tive in order to meet 2050 net-zero targets, while
would be less risky. importers and emerging market players, should 95% of South Korea’s project would be negative,
focus on developing renewables in order to and 100% of Vietnam’s. In total, this would leave
WHAT NEXT: avoid a decades-long reliance on gas imports 94% of the three countries planned gas genera-
The report argues that and to minimise investment risk. tion projects, worth 84.7 GW, with negative net
certain renewable The report stressed that although Japan, Viet- present values.
developments in those nam and South Korea have made commitments This means that nearly all the gas infrastruc-
countries is either to reach net-zero emissions by 2050, all three of ture on the drawing board in the three countries
already cheaper, or will them still have unabated gas-fired units at the would lose money, and run the risk of becoming
be by 2025. centre of their power systems. white elephants if they are built.
Asia has been the primary driver of LNG Up to $70bn could be lost if planned new gas
demand in recent years, accounting for 95% units are developed under this more stringent
of projected growth in 2020-22, with Japan climate scenario. The vast majority of projects
and South Korea accounting for one-third of would require extensive government backing to

P6 www. NEWSBASE .com Week 15 15•April•2022