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Fears Mount as Thailand Risks LNG Fuel Shortages

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The rise in prices of liquefied natural gas (LNG) in Thailand has led to restrictions on LNG imports, which may threaten fuel supplies.

According to traders, state-run importers have cut purchases of liquefied natural gas (LNG) from the spot market due to skyrocketing prices.

Traders who did not want to be identified as they are not allowed to speak to the media said that while they plan to boost the purchase of cheaper alternatives, like diesel and fuel oil, the deficit left by cutting LNG may not be able to be filled by other sources.

According to Rachada Dhnadirek, a deputy government spokeswoman, “we won’t let a fuel shortage happen.”

According to her, Thailand does not have a shortage of supplies.

As oil and gas costs increase, some of Thailand’s poorer Asian neighbors, such as Pakistan and Sri Lanka, are experiencing severe energy crises. This month, spot prices for LNG in North Asia jumped around 50%, more than double what they were a year ago as Russia curtailed exports to Europe, creating global competition.

Despite the absence of a crisis yet, Thailand’s reliance on gas raises the threat of rationing or blackouts. Government data show that nearly two-thirds of the nation’s electricity is generated by natural gas. Additionally, the risk is exacerbated by tourism and industry recovery from the Covid-19 pandemic.

Curtailing LNG imports

According to PTT Plc, imported LNG accounted for a fifth of power generation gas in 2020. As pipeline deliveries from Myanmar were replaced by inward shipments, domestic output decreased in the first five months of this year.

Since the plan began to take effect, overseas purchases have dropped by 35% from May, according to Bloomberg shipping data.

According to a PTT representative, curtailing LNG imports due to high prices is being considered.

By using more diesel and fuel oil, a highly polluting energy source mainly used to power ships, Thailand would emulate Bangladesh. Since LNG imports became too costly, the South Asian nation has been ramping up older fuel oil-powered plants. Additionally, it will result in an increase in greenhouse gas emissions.

To make fuels cheaper to import, Thailand’s government has cut excise taxes. During this year, cleaner fuels have already produced more electricity. The energy ministry reports that diesel’s use in power generation in the first four months of 2022 was 14 times higher than a year ago.

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