The rapid expansion of hyperscale data centers in Southeast Asia is poised to increase LNG demand to provide them with power, according to a report by Wood Mackenzie.
High costs and competition from renewables are expected to limit gas's role in powering India's rapidly-growing data center fleet however, the report said.
Southeast Asia's data center pipeline is expected to more than triple to 9.4 gigawatts by 2035 from 2.8 GW currently, lifting electricity consumption from the sector to 57 terawatt-hours from 17 TWh over the same period.
The report noted that combined-cycle gas turbines were the most viable option for supplying the round-the-clock power required by data centers at scale, while grid-scale battery storage is expected to remain commercially immature across Southeast Asia through the mid-2030s.
Singapore is the most exposed to global LNG markets, as it relies on the commodity for 95% of its power requirements, with piped gas supplies from Indonesia and Malaysia set to cease in the early 2030s.
Malaysia and Thailand offer the biggest growth opportunities for global LNG, according to the report, as declining domestic and piped gas supplies leave LNG as the only fuel option for new gas-fired generation.
"Malaysia and Thailand are at a turning point. Data centre investment is growing quickly just as domestic gas output peaks and declines," said Md Fadhlullah Omarali, principal analyst at Wood Mackenzie.
Omarali also noted that new import infrastructure was being set up across these countries, seeing it as a sign of long-term commitment to LNG.
Pakistan and Bangladesh are currently facing persistent load-shedding, grid instability and macroeconomic pressures, discouraging hyperscale investment, the report said.