The US is actively supporting liquefied natural gas (LNG) and nuclear projects in the Philippines. This initiative, spearheaded by the US Trade and Development Agency (USTDA) and involving companies like San Miguel Corp. and Manila Electric Co., aims to reduce electricity costs, attract businesses, and establish an investment belt to counter China's influence on supply chains. This move is part of a larger strategy by the US to bolster energy infrastructure in South and Southeast Asia, with the US International Development Finance Corporation (DFC) approving $1.5 billion for energy infrastructure across the region, focusing on American LNG exports and equipment.
However, this US push for LNG comes at a time when developing Asian nations are re-evaluating the fuel's long-term viability. The ongoing US-Iran war has led to a significant disruption, with Qatar's LNG shipments through the Strait of Hormuz largely ceasing since late February. This loss of approximately one-fifth of the global LNG supply has driven Asian buyers into the spot market, where prices are surging. Developing Asian nations, including India, Pakistan, Bangladesh, Thailand, and Vietnam, have collectively spent an estimated $7.4 billion on spot LNG since the conflict began, a substantial increase compared to the roughly $3.1 billion for a similar volume under long-term contracts in 2025.
The volatility and increased costs are tarnishing LNG's reputation as a reliable energy source, especially after similar price spikes during the Russia-Ukraine conflict. While countries still need gas to prevent blackouts in the short term, many are now exploring alternatives for the long term, including renewables like solar and wind, coal, nuclear, or locally produced gas. Solar power is becoming particularly attractive in developing Asian countries, with battery costs decreasing over 30% in the last four years. Some countries, like Pakistan, are increasing solar and hydropower, while Bangladesh is offering incentives for solar panel installation. Vietnam and the Philippines might even shift back to coal, with global coal consumption projected to reach a record high in 2026 due to higher gas prices. The geopolitical risks have also led approximately 80% of LNG buyers to consider diversifying their procurement strategies geographically, with potential new sources emerging from Papua New Guinea, the US, and Canada. This shift is highlighted by the cancellation or stalled progress of 47 proposed gas-fired power plants, totaling $52 billion, in countries like the Philippines, Thailand, and Vietnam over the past five years, indicating a fundamental re-evaluation of LNG's role in the region's energy future.
