Chevron Australia's Managing Director, Balaji Krishnamurthy, predicts that liquefied natural gas (LNG) prices will remain high for at least the next six months. This outlook is driven by several factors, including ongoing geopolitical tensions like the US-Iran war, which has significantly disrupted Qatari LNG shipments through the Strait of Hormuz. The conflict has led to a loss of approximately one-fifth of global LNG supply, forcing Asian buyers into the more expensive spot market.
Adding to the supply woes, a powerful tropical cyclone, Narelle, has hit Western Australia, disrupting production at Chevron's Gorgon and Wheatstone facilities, as well as Woodside's Karratha gas plant. These Australian plants collectively account for a substantial portion of global LNG exports, and their outages further strain a market already grappling with reduced supply from the Middle East. Australia itself has been struggling to meet rising Asian demand due to an uncertain investment environment, which has deterred the expansion of LNG capacity.
The surge in spot market prices has had a severe impact on developing Asian nations, with non-China emerging markets like India, Pakistan, Bangladesh, Thailand, and Vietnam collectively spending an estimated $7.4 billion on spot LNG since the start of the US-Iran war. This figure is more than double the approximately $3.1 billion they would have paid under long-term contracts during the same period in 2025. This cost escalation is prompting these nations to reconsider LNG's long-term viability as a reliable energy source, with many exploring alternatives such as renewables, coal, and nuclear power.
The prolonged high prices and supply chain vulnerabilities are leading to a fundamental shift in energy strategies across Asia. Many countries are now prioritizing geographical diversification in their LNG procurement, moving away from a heavy reliance on a few major suppliers like Qatar. This new focus could benefit projects with direct access to Asian markets, such as Papua LNG in Papua New Guinea, as well as potential expansions in the US and Canada. The disruption is also accelerating a trend away from new gas-fired power plants, with some $52 billion worth of proposed projects canceled or stalled in recent years, as countries seek to avoid future price volatility and supply risks.
