Page 5 - GLNG Week 40 2022

GLNG COMMENTARY GLNG

reactors by 2030 instead of phasing out nuclear measures are being introduced to shield con-
power by 2040. sumers to some extent from difficulty. With
Meanwhile in South Korea, the new con- an economic slowdown and the need to rein in
servative-leaning president, Yoon Suk-yeol, has fiscal expenses, further options to support con-
reversed the decision of his liberal predecessor sumers will be increasingly limited.
to phase out nuclear power and wants to expand Japan narrowly avoided power cuts in the
LNG infrastructure further to make it easier to Tokyo region in spring and summer, but current
procure the fuel. However, utilities and heavy forecasts suggest the country’s power reserves
industry have resorted to increasing the use of less this winter will surpass the 3% threshold for
LPG because of high LNG prices, and coal use stable supply. Nevertheless, utilities are offering
remains stable despite past commitments to industrial customers incentives to curb their
reduce it. power use, and the risk of a colder-than-average
Across Southeast Asia, the push to shift away winter means a December cold snap could lead
from coal will require investments in additional to further power shortages.
gas and renewable power capacity. Meanwhile, India’s government has cut tax on diesel and
there is falling domestic output in the Philip- gasoline to provide consumers with some relief,
pines and Thailand, the risk of disruptions in but rising gas prices drive up prices for other key
Thailand’s gas supply from Myanmar, and high domestic commodities, such as urea and potash,
generation requirements in Vietnam and the used for producing fertilisers. High commodi-
Philippines, after prompting governments to ties prices, combined with geopolitical volatility
look at various renewable and nuclear options, and the outlook of foreign direct investment, are
as well as LNG. But none of these solutions will resulting in interest rates hikes.
result in significant immediate boosts in energy Subsidies are also becoming increasingly
supply. common. Japan is providing fuel subsidies to dis-
tributors to keep pump prices low, while South
Policy responses Korea is subsidising the cost of diesel for trucks
Fuel switching is not enough to help Asian coun- and taxis. Indonesia has nearly tripled fuel price
tries overcome the problems that have been subsidies, and the government may have to pass
caused by high commodity prices, their high some of this expense to state enterprises. In Thai-
levels of energy import reliance, and the risk land, the government is likely to do what it can
of sudden spikes in demand owing to extreme to protect consumers from energy price shocks,
weather. As a result, further economic policy especially as there is an election looming.™

Week 41 14•October•2022 www. NEWSBASE .com P5