Lured by Cheap Coal, Southeast Asia Turns Away from Gas


SINGAPORE, Dec 9 (Reuters) - Southeast Asia's power sector will tilt away from gas to use more coal by the end of this decade, chipping away at demand for liquefied natural gas as the region of more than 600 million people tries to cut costs to meet soaring electricity needs.

With a wave of LNG projects due to come online this decade, this shift in consumption from a region long expected to be a key growth market could help take some of the heat out of rising Asian prices of the cleaner fuel.

Gas prices in Asia are about five times more expensive than in the United States, driven by demand for LNG from countries such as Japan and South Korea - whose nuclear power sectors are in crisis, and China, where stringent pollution control measures are driving a switch from dirtier coal.

Demand for more coal could also help lift flagging prices of the fuel by at least partially compensating for China's move to cleaner energy sources.

Currently coal accounts for a third of Southeast Asia's energy mix and gas for 44 percent, with the bulk supplied by the region's own gas reserves, according to the International Energy Agency (IEA), which formulates energy policy for industrialised countries.

"People in this region keep talking about green growth, but when I look at the numbers, the growth is not green. It is black as coal," said Fatih Birol, the IEA's chief economist.

Power generation capacity in Southeast Asia is set to rise by 50 percent during the current decade, of which more than half will be coal-fired and only about a quarter will be gas-fired, the IEA said, indicating slow growth in LNG imports.


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