LNG provides a transition into Asia’s Greener future.
Liquidnatural gas could facilitate the energy transition in developing countries and decrease greenhouse gas emissions compared to coal in the meantime argues Mr Alexander Dodge. Mr Dodge is a PhD student of Geography at Norwegian University of Science and Technology. He is half way into a 4-year research and already conducted research in Singapore, Indonesia, Myanmar and Thailand. His study is mainly qualitative and he interviewed around 50 companies so far.
“I look at how countries in Southeast Asia can best enhance their social and economic developments and how the right energy systems can support this development. We lived in a world of cheap electricity where we could just burn and burn without accountability. That’s over.
Still coal is growing quite quickly in Southeast Asia despite consequences for health and environment. Could liquid natural gas be an alternative? It has around 50% less carbon emissions, a smaller environmental footprint, does not require as much fresh water in the production and does not release mercury into the environment.”
The Oxford Institute for Energy Studies concluded last year that the coal capacity of Southeast Asia will increase 139% by 2025 compared with 2015 if the targets of power plants are met (Sylvie Cornot-Gandolfe, The role of coal in Southeast Asia’s power sector, December 2016).
In Mr Dodge’s opinion, liquid natural gas should not be seen as competing with renewables, but as compatible. “Solar and wind power are becoming a lot cheaper and will make up large parts of the energy future, but supply is intermittent and energy storage is a large challenge. Energy supply from Hydropower, for example, is less reliable in dry seasons.
Liquid natural gas power plants could stabilise electricity supply from renewables. It only takes liquid natural gas power plants 15 minutes to sync with the power grid. Coal power plants take 300 minutes to sync with the energy grid making it much more difficult to mix with renewable energy.”
Recently Mr Dodge conducted research in Thailand commissioned and supported by the Royal Norwegian Embassy in Thailand. The research findings about opportunities for Norwegian companies in the liquid natural gas sector were just published and can be downloaded from the Norwegian Embassy in Thailand’s website. The research included the social, political and geographical framework of the Thai liquid natural gas sector.
“Privatisation of energy sector in Thailand is highly political, this is why it’s important to include the social and political developments in market research,” Mr Dodge explains. “There
has been talk of privatisation since the 1990s when the World Bank initiated the discussion. At this time, state-owned PTT still has an effective monopoly in the energy sector.
At the same time, there are new opportunities. The coal fired power plant in Krabi, South Thailand was disputed quite heavily. As a result, the plant was delayed an additional two years awaiting a new assessment of the health and environmental impact.
There is a lot of uncertainty, but liquid natural gas could be a more environmental friendly alternative to coal. The challenge for Thailand is that domestic gas reserves are waning. The question now is how to better utilise the reserves to achieve development goals. Thailand has a lot of capacity and capability to import liquid natural gas, but prices will increase if gas has to be imported so efficiency of domestic reserves is very important.”
Thailand is by far the only country in Southeast Asia considering the possibilities of liquid natural gas. “President Joko Widodo wants to develop the peripheral islands of Indonesia. The gross regional domestic product of Java is much higher than the other islands. 62% of electricity generation outside of Java relies on fuel oils.
28% of energy costs go to fuel oils, but only 11% of Indonesia’s electricity generation comes from fuel oils. This system is too expensive to build up sufficient capacity for all islands of the country. Different small-scale liquid natural gas plants could offer the muchneeded electricity to the islands.
Another example is Myanmar which just opened up to the outside world and desperately needs power. While Myanmar has a large upstream potential in domestic gas reserves, these projects won’t come online for a number of years. The medium term solution could be importing liquid natural gas to meet the power demand.”
Norwegian companies could support countries in Southeast Asia to meet their power demand, particularly in peripheral regions. “The technology needed for small-scale liquid natural gas distribution was developed in the 1990s for the Norwegian maritime industry. Norwegian companies have the most advanced and cost-effective technology for Small-Scale liquid natural gas value chains, and these solutions can help support energy development in peripheral regions in Southeast Asia.
The real challenges lie in the political landscape of these countries and specifically in the governance of publicprivate partnerships or lack thereof. The technology is available, but still small scale liquid natural gas projects struggled to developed. The crashing oil price also didn’t help to maintain urgency for new forms of energy supply.
In Tailand specifically the possibilities for foreign companies are limited by several challenges. First of all, Petroleum Authority of Thailand (PTT) still owns all the long term contracts with gas power plants. These contracts last the entire lifetime of the power plant, so there really is no room for a third party to come in. Second, PTT still owns the lower-priced domestic gas supply, and third parties will struggle to compete. Third, most LNG terminal and Pipeline Capacity is fully booked by PTT, despite Third Party Access implementation”
Despite these challenges, Mr Dodge identified three opportunities for Norwegian companies in the liquid natural gas sector in Thailand. “Opportunities for Norwegian companies lie with possible new LNG fuelled power plants if coal-fired power plant plans are shelved.
Secondly, the Electricity Generation Authority of Thailand (EGAT) is planning to enter the LNG sector by procuring a Floating Storage and Regasification Units (FSRU). Three out of four companies around the world that make FSRUs are Norwegian. And lastly, the underutilisation of existing LNG terminals is expensive for Thailand, and Norwegian firms can help increase utilisation by partnering to develop a small-scale LNG distribution chain along coastal Thailand. This would help support industrial development in Southern Thailand.
With all these opportunities, the question remains if PTT would be interested in expanding LNG terminal utilisation, since they currently control the capacity. In every case, Norwegian companies interested in the Thai gas sector have to be very reflexive. They have to be aware of the developments in the Thai gas sector, make quick decisions and follow up with the political and social sphere. Norway can not just supply technology, but needs to engage in partnerships and help solve political and social challenges.
This is the general approach Norwegian companies need to take and the Norwegian embassy can support companies with this. More specifically, companies should develop a roadmap to LNG development that includes identifying the stakeholders of the Thai energy industry. This roadmap should include industrial stakeholders, maritime stakeholders, independent power producers that need or want liquid natural gas projects together with the needed distribution technology to do so. This way companies can identify where they can help out.”
Mr Dodge’s possible next step regarding Thailand is conducting a specific case study that could highlight the benefits of liquid natural gas. “There is a lot of uncertainty, but also a large opportunity for liquid natural gas. It’s cost-effective and a reasonable alternative to coal with a lot less environmental impact.” He again makes the case for an all-inclusive approach to studying the liquid natural gas market. “You really need to understand global, national and political developments in these cases, and a geographer can study just that.”
Above left: BW LNG’s FSRU “Singapore” plowing the seas for its next assignment in Asia. Above: Norway has developed many novel LNG solutions to reduce infrastructure cost. Here Kanfer Shipping’s articulated tug barge system.