OIL & GAS
Make The Edge Malaysia your preferred
KUALA LUMPUR (Sept 7): Malaysia and Thailand are poised to lead a surge in demand for liquefied natural gas in Southeast Asia, driven by an influx of hyperscale data centres amid steady drops in domestic gas output, according to energy research analytics and consultancy firm, Wood Mackenzie.
In a statement on Monday, the firm noted that Malaysia currently has 3.9GW of data centre capacity under development, with new regasification terminals being built to meet growing power demand, as legacy piped gas supply decline.
Thailand, where two-thirds of the grid is already gas-fired, is expected to see its LNG share of gas supply exceed 50% by 2035, as Gulf of Thailand production and Myanmar pipeline imports continue to fall.
“Malaysia and Thailand are at a turning point. Data centre investment is growing quickly just as domestic gas output peaks and declines,” said its principal analyst Md Fadhlullah Omarali. “New import infrastructure is being developed and the importer base is broadening. For LNG suppliers with volumes to place, this timing is important.”
Citing its latest research findings, the firm said data centre capacity across Southeast Asia is set to more than triple from 2.8GW today to 9.4GW by 2035, with power demand from data centres growing from 17 terawatt-hours (TWh) to 57TWh over the same period.
It also noted that combined-cycle gas turbines remain the most viable generation technology to meet the 24/7 baseload reliability that data centres demand, as grid-scale battery storage remains commercially immature across the region through the mid-2030s.
In Singapore, the country’s grid relies on gas for roughly 95% of generation. With piped imports from Malaysia and Indonesia set to cease by the early 2030s, its gas supply will become 100% dependent on LNG.
As for Indonesia, Batam has emerged as the third node of the Singapore-Johor-Riau (Sijori) corridor, with over 450MW in its pipeline, but grid stability remains a bottleneck.
South Asia: Scale without substance for LNG
In contrast, South Asia remains structurally out of reach for gas, Wood Mackenzie’s research shows, as the region presents scale without significant LNG demand.
While India’s data centre market is forecast to grow fivefold to nearly 12GW by 2035 — attracting US$145 billion (RM586.4 billion) in investment between 2024 and 2030 — LNG is structurally unable to capture the opportunity.
This is because the gas is economically unviable as a baseload fuel for data centres, as LNG-to-power generation costs two to three times more than renewables paired with battery storage in India.
“Gas currently accounts for under 2% of India’s power generation mix and is forecast to remain at that level through the outlook period, as coal and renewables continue to dominate. Pipeline infrastructure gaps across key data centre corridors in southern, central and eastern India add a further barrier to gas penetration,” the firm said.
Hence, hyperscalers in India have instead opted for renewable power, with such purchase agreements having already exceeded 33GW of contracted data centre capacity.
As for Pakistan and Bangladesh, the firm noted that they face further constraints, with persistent load-shedding, grid instability and macroeconomic pressures limiting data centre demand and deterring hyperscale investment.
