Thailand faces a fresh LNG squeeze as Hormuz crisis pushes prices toward US$28/MMBtu

Thailand is confronting a renewed energy-security challenge as the crisis around the Strait of Hormuz pushes global LNG prices to about US$28 per million British thermal units, close to levels seen during the Russia-Ukraine energy shock. Bangkok is responding by accelerating domestic gas exploration, reviewing LNG procurement strategy and seeking to diversify away from spot-market exposure.

Key points

• Global LNG prices have reached about US$28/MMBtu, close to Russia-Ukraine crisis levels.
• LNG accounts for around 30% of Thailand’s electricity-generation gas supply, with domestic Gulf production declining.
• Thailand is diversifying through long-term contracts, new suppliers and accelerated Andaman Sea exploration.

The pressure is particularly significant for Thailand because imported LNG already supplies roughly 30% of gas used for electricity generation, while domestic production from mature Gulf of Thailand fields is declining. PTTEP has warned that every US$3/MMBtu increase in LNG prices could raise Thai electricity prices by around 5%, leaving manufacturers, households and power generators exposed to prolonged international price volatility.

The Energy Ministry is therefore looking to secure more long-term LNG contracts and diversify suppliers. PTT is examining sources in Oman, North America and West Africa, while its trading arm has signed a long-term supply agreement with Norway’s Equinor. Thailand is also accelerating plans for new domestic petroleum exploration, including prospective resources in the Andaman Sea.

The immediate objective is to reduce Thailand’s dependence on volatile spot cargoes and create greater flexibility in the national gas portfolio. But new domestic resources will take years to develop, meaning imported LNG will remain critical in the near term. The crisis therefore increases the importance of power-sector reforms, renewable generation, energy storage and demand management alongside conventional gas investment.

Why it matters: Energy costs are becoming a direct constraint on Thailand’s industrial competitiveness. A prolonged LNG shock could raise electricity prices and production costs just as Bangkok is trying to attract data centres, electronics and other energy-intensive investment.