Liquefied natural gas demand in Southeast Asia faces a significant boost from the expansion of data centers supporting artificial intelligence infrastructure across the region. Unlike previous demand drivers centered on transitioning away from coal-based power generation, this new surge stems from the need for reliable continuous electricity supply to hyperscale facilities. Combined-cycle gas turbines remain the most dependable option for providing 24/7 power in the region, as renewable energy paired with battery storage systems remain commercially underdeveloped across Southeast Asia.
Energy consultancy Wood Mackenzie projects that data center growth could elevate Southeast Asian LNG demand by 16% annually through 2035. The region’s data center capacity is anticipated to more than triple from the current 2.8 gigawatts to 9.4 gigawatts by that year, driving power consumption from 17 terawatt-hours to 57 terawatt-hours. Countries experiencing particularly robust data center development include Singapore, Malaysia, Indonesia, and Thailand. According to analysts, these large, creditworthy off-takers present a distinct advantage as their power requirements remain stable regardless of economic conditions, altering the risk assessment for new LNG supply into Southeast Asia.
Declining domestic natural gas production across the region will necessitate increased LNG imports by 2035. Singapore’s grid, already 95% dependent on gas, could reach 100% LNG reliance as pipeline imports from Indonesia and Malaysia diminish in the early 2030s. Thailand faces similar pressures as pipeline imports from Myanmar decline and Gulf of Thailand production drops, potentially pushing LNG to represent over 50% of gas supply by 2035. Malaysia is actively developing data center capacity while constructing new regasification terminals to manage growing LNG imports.
The expansion contrasts sharply with developments in South Asia, particularly India, where data center capacity is also projected to increase substantially despite minimal LNG demand growth. Despite Indian data center capacity rising fivefold to nearly 12 gigawatts by 2035, gas-powered generation remains economically uncompetitive compared to renewable energy with battery storage. The cost differential of two to three times makes gas economically unviable as a baseload power source for data centers in India.
Grid infrastructure limitations present another constraint on Southeast Asia’s power expansion. Approximately $540 billion in green capital expenditure has been announced for the region’s power and electric vehicle sectors through 2030, though only around $315 billion appears on a credible deployment path under current conditions. Transmission capacity limitations and connection delays pose risks to further data center investment in the region.
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