South Asia LNG infrastructure plans are facing serious risks due to high LNG prices, project delays, and recent supply disruptions linked to tensions around Iran and the Strait of Hormuz, according to a new report by Global Energy Monitor (GEM).
The March 2026 energy shock has raised fresh concerns over the reliability and affordability of LNG imports across the region.
South Asia LNG Infrastructure Worth $107 Billion at Risk
GEM highlighted that South Asia LNG infrastructure projects across India, Bangladesh, and Pakistan represent nearly $107 billion in planned investment.
Key highlights include:
- 111 million tonnes per annum (MTPA) LNG import capacity under development
- 34,146 km of gas pipelines planned
- Both figures account for 17% of global planned capacity
India leads the region with:
- 85 MTPA LNG import capacity planned
- 19,635 km of pipelines under development
India currently has the second-largest LNG terminal expansion plan globally and ranks third in pipeline expansion.
South Asia LNG Infrastructure Faces Project Failures
Despite ambitious plans, South Asia LNG infrastructure faces a history of project cancellations and delays.
Over the past decade:
- India, Bangladesh, and Pakistan have cancelled 2–3 times more LNG capacity than they commissioned
Breakdown:
- India: 49 MTPA cancelled vs 23 MTPA operational
- Bangladesh: 23 MTPA cancelled vs 8 MTPA operational
- Pakistan: 14 MTPA cancelled vs 5 MTPA operational
This trend raises doubts about future execution and demand projections.
LNG Supply Disruptions Highlight Energy Security Risks
The report emphasized that recent geopolitical tensions have exposed vulnerabilities in South Asia LNG infrastructure.
- Around 20% of global LNG passes through the Strait of Hormuz
- Over 80% of these supplies go to Asian markets
GEM warned:
“Even in a balanced market, disruptions can quickly increase prices and restrict access.”
The March 2026 crisis has demonstrated that LNG supply chains remain highly sensitive to geopolitical shocks.
High LNG Prices Challenge Demand Growth
GEM questioned whether LNG can remain competitive in South Asia.
According to the International Energy Agency:
- Affordable gas price for emerging economies: $3–5/mmBtu
- Required LNG project cost: ~$8/mmBtu
This gap suggests that LNG may struggle to compete with:
- Renewable energy
- Domestic gas
- Coal (in some sectors)
India LNG Utilisation and Fertilizer Sector Impact
In India, South Asia LNG infrastructure faces utilisation challenges:
- 6 out of 8 LNG terminals operated below 50% capacity in 2025
The report also highlighted concerns from the fertilizer sector:
- Reduced LNG supply has already impacted fertilizer production
- Continued conflict could worsen the situation
This is critical as fertilizer plants depend heavily on natural gas as feedstock.
Bangladesh and Pakistan Shift Away from LNG
GEM noted shifting policy trends in neighboring countries:
Bangladesh
- New government may prioritize renewables and domestic gas
- LNG costs are up to 20 times higher than domestic gas
Pakistan
- Government stepping back from LNG-based power projects
- Officials stated LNG expansion is “not a temporary blip”
Outlook: Renewables May Outpace LNG in South Asia
GEM concluded that South Asia LNG infra faces uncertain prospects:
- High costs
- Supply risks
- Policy shifts
The report suggests that:
- Renewable energy
- Energy storage
- Domestic alternatives
could offer a more stable and cost-effective path forward than heavy reliance on LNG imports.
