Published by Norway-Asia Business Review
 

The world is grabbling with its energy consumption and the effects on the environment. Transitioning to renewables is not easy, but liquid natural gas could be the needed step in-between coal and renewables.
 

Liquid natural gas could facilitate the energy transition in developing countries and decrease green house gas emissions compared to coal in the meantime argues Mr Alexander Dodge.
 

Mr Dodge is a PhD student of Geography at Norwegian University of Science and Technology. He is half way into a 4-year research and already conducted research in Singapore, Indonesia, Myanmar and Thailand. His study is mainly qualitative and he interviewed around 50 companies so far.
 

“I look at how countries in Southeast Asia can best enhance their social and economic developments and how the right energy systems can support this development. We lived in a world of cheap electricity where we could just burn and burn without consequences. That’s over.
 

Still coal is growing quite quickly in Southeast Asia despite consequences for health and environment. Could liquid natural gas be an alternative? It has 50% less carbon emissions, a smaller environmental footprint, does not require as much fresh water in the production and does not release mercury into the environment.”
 

The Oxford Institute for Energy Studies concluded last year that the coal capacity of Southeast Asia will increase 139% by 2025 compared with 2015 if the targets of power plants are met (Sylvie Cornot-Gandolfe, The role of coal in Southeast Asia’s power sector, December 2016).
 

In Mr Dodge’s opinion liquid natural gas should not be seen as competing with renewables, but as compatible. “Solar and wind power are becoming a lot cheaper and will make up large parts of the energy future, but it faces storage challenges. As a consequence, the energy supply of renewables is not stable; for example, hydro power can be seasonal.
 

Liquid natural gas power plants could stabilise electricity supply from renewables. It only takes liquid natural gas power plants 15 minutes to sync with the power grid. Coal power plants take 300 minutes to sync with the energy grid making it much more difficult to mix with renewable energy.”
 

Recently Mr Dodge conducted research in Thailand commissioned and supported by the Royal Norwegian Embassy Thailand. The research findings about opportunities for Norwegian companies in the liquid natural gas sector were just published. The research included the social, political and geographical framework of the Thai liquid natural gas sector.
 

“Privatisation of energy sector in Thailand is highly political, this is why it’s important to included the social and political developments in market research,” Mr Dodge explains. “There has been talk of privatisation since the 1990s when the World bank spearheaded the discussion. At this time, state-owned PTT still has a monopoly in the energy sector.
 

At the same time, there are new opportunities. Three new coal fire power plants in Krabi, South Thailand were disputed quite heavily. As a result, the plants are delayed until 2019 awaiting a new assessment of the health and environmental impact.
 

There is a lot of uncertainty, but liquid natural gas could be a more environmental friendly alternative to coal. The challenge for Thailand is that domestic gas reserves are waning. The question now is how to better utilize the reserves to achieve development goals. Thailand has a lot of capacity and capability to import liquid natural gas, but prices will increase if gas has to be imported so efficiency of domestic reserves is very important.”
 

Thailand is by far the only country in Southeast Asia considering the possibilities of liquid natural gas. “President Joko Widodo wants to develop all islands of Indonesia. The gross domestic product of Java is much higher than the other islands. Indonesia relies heavily on fuels for its energy with a lot of subsidies.
 

50% of energy costs go to heavy fuels but only 30% of Indonesia’s energy comes from heavy fuels. This system is too expensive to build up sufficient capacity for all islands of the country. Different small scale liquid natural gas plants could offer the much needed electricity to the islands.
 

Another example is Myanmar which just opened up to the outside world and desperately needs power. Several liquid natural gas plants are planned for universal electrification of the country, but they won’t come online for another 10 years. The medium term solution could be importing liquid natural gas to meet the power demand.”
 

Norwegian companies could support countries in Southeast Asia meet their power demand. “The technology needed for liquid natural gas was developed in the 1990s for the Norwegian maritime industry. Norwegian companies have the most advanced technology for liquid natural gas out there. By now we can basically ship or truck liquid natural gas to you anywhere in the world.
 

The real challenges lie in the political landscape of these countries and specifically in their support for public-private partnerships or lack thereof. The technology is available, but still small scale liquid natural gas projects struggled to developed. The crashing oil price also didn’t help to maintain urgency for new forms of energy supply.
 

In Thailand specifically the possibilities for foreign companies are limited by several challenges. First of all, Petroleum Authority of Thailand (PTT) still owns all the long term contracts with gas power plants. These contracts last the entire lifetime of the power plant, so there really is no room for a third party to come in. Additionally, Electricity Authority of Thailand (EGAT) controls most of the natural gas demands.”
 

Despite these challenges, Mr Dodge identified three opportunities for Norwegian companies in the liquid natural gas sector in Thailand. “Opportunities for Norwegian companies lie with possible new power plants instead of current ones that have a contract with PTT. Expansion of terminals is expensive, so here might lie an opportunity for outside companies.
 

Secondly, EGAT could decide to increase the number of Floating Storage and Regasification Units (FSRU). Three out of four companies around the world that make FSRUs are Norwegian. And lastly, to better utilise capacity expansion of a small scale distribution chain along coastal Thailand could be build. This would help industrial development in peripheral Thailand.
 

With all these opportunities the question remains if PTT would be interested in expanding since they have the most control. In every case, Norwegian companies interested in the Thai gas sector have to be very reflexive. They have to be aware of the developments in the Thai gas sector, make quick decisions and follow up with the political and social sphere. Norway can not just supply technology, but needs to engage in partnerships.
 

This is the general approach Norwegian companies need to take and the Norwegian embassy can support companies with this. More specifically, companies should develop a roadmap to better understand the stakeholders of the Thai energy industry. This roadmap includes industrial stakeholders, maritime stakeholders, independent power producers that need or want liquid natural gas projects together with the needed distribution technology to do so. This way companies can identify where they can help out.”
 

Mr Dodge’s next step regarding Thailand it conducting a case study about the benefits of liquid natural gas. “There is a lot of uncertainty but also large opportunities for liquid natural gas. It’s cost-effective and a reasonable alternative to coal with a lot less environmental impact.” He again makes the case for an all-inclusive approach to studying the liquid natural gas market. “You really need to understand global, national and political developments in these cases, and a geographer can study just that.”
 

Facts:

• Coal is growing in Southeast Asia with 139% between 2015 and 2025 according to The Oxford Institute for Energy Studies;
• Liquid natural gas has 50% less carbon emissions than coal;
• Liquid natural gas power plants take 15 minutes to sync with the power grid compared to 300 minutes of coal power plants;
• 50% of energy costs go to heavy fuels in Indonesia, but only 30% of the energy comes from heavy fuels;
• Several liquid natural gas plants are planned in Myanmar, but they won’t come online for another 10 years;
• Building three new coal power plants in Thailand is delayed until 2019;
• Three out of four companies around the world producing Floating Storage and Regasification Units are Norwegian (the above statements are according to Mr Dodge unless specified otherwise).