US gas exporters are among the biggest beneficiaries of President Donald Trump’s war with Iran, while Asian governments struggle to find alternatives to Middle Eastern fuel.
Asia, more dependent than other regions on fuel passing through the Strait of Hormuz, is shaken by its closure by Iran and Iranian attacks on gas installations in the Persian Gulf, in retaliation for American-Israeli attacks, writes Whashington Post.
The demand for US liquefied natural gas (LNG) exports is growing here, much to the delight of the Trump administration, which is taking advantage of the shortage to boost US gas sales, even though it requires other governments to intervene to open the strait.
"We must sell energy to our friends and allies so they don't have to buy from adversaries, so they don't have to rely on energy sources that can be controlled," said US Interior Secretary Doug Burgum last week in Tokyo, where he announced $57 billion in energy agreements with suppliers from Asia.
"This has been part of President Trump's energy dominance policy from day one," he said.
Although technological production centers in Taiwan, Japan, and South Korea have spent years trying to reduce their dependence on Middle Eastern gases, American LNG has often been considered too expensive and transported too far to be a viable alternative.
This began to change last year when Trump pressured these governments, threatening them with tariffs to reduce trade deficits with the US. With the deterioration of Qatar's gas infrastructure, the shift is meant to accelerate.
Unexpected Gain for Gas Companies
However, as US short-term gas export capacity is limited, these cargoes have been advantageous, promising an unexpected gain for gas companies like Cheniere and Venture Global, whose stock prices have soared.
Executives of both companies have made major donations in support of Trump.
"High prices for security reasons - we have to accept that," said Kuan-ting Chen, chairman of the Foreign Affairs and National Defense Committee of Taiwan's legislature, in an interview on Thursday.
Although China is also a major importer of LNG, it has managed to mitigate the supply shock by boosting domestic production and imports from Russia. The same cannot be said for its neighbors.
Taiwan relies almost entirely on imported fuel - including for its energy-intensive tech manufacturing industry, which produces over 90% of the world's advanced semiconductor chips. A third of its LNG comes from Qatar and it has the lowest gas reserves in East Asia.
Taiwanese officials say they will increase LNG imports from the US starting in June, through a contract with Texas-based Cheniere. New agreements with the US would more than double Taiwan's share of LNG imports from 10% to 25% by 2029, said Minister of Economic Affairs Kung Ming-hsin in front of legislators.
Similarly, relying on Qatari gas, Japan and South Korea have signed a series of new energy agreements with the US, including multi-year LNG supply contracts, officials announced last week. Thailand said it is requesting Cheniere to increase LNG deliveries under an existing contract.
Fears in Taiwan
American sellers - who have long sought to increase exports, despite the Biden administration's opposition to climate concerns and potential internal price increases - can maximize operations and postpone maintenance work to meet the increased demand.
But they cannot fully replace short-term Qatari supply loss, said David Kang, head of research for Japan, Korea, and Taiwan at BloombergNEF. Instead, they will benefit from "wider margins and a stronger commercial debt level," Kang said.
The stock prices of American gas exporters Cheniere and Venture Global rose on Thursday following reports of Iranian rocket attacks on Qatar's largest gas hub, Ras Laffan. Glenfarne, the main developer of a $44 billion LNG project in Alaska that aggressively courted Asian investments, said there has been increased investor interest. Taiwan, South Korea, and Japan are all in the process of finalizing commitments.
"There is real interest, especially given everything happening in the Middle East right now. Everyone would like preliminary agreements to turn into long-term agreements," said Adam Prestidge, president of Glenfarne Alaska LNG, to Reuters.
In Taiwan, an autonomous territory that China has vowed to annex, the fuel crisis has simulated long-standing fears about what could happen if Beijing tries to encircle the island and cut off maritime routes.
The Taiwanese government has ensured sufficient LNG reserves until May, officials said. From June, Taiwan's contract with Cheniere should add at least two new LNG shipments per month, said Tsaiying Lu, an energy analyst at the Institute for Research on Democracy, Society, and Emerging Technology, based in Taipei, a government-supported think tank. In addition, Taiwan will likely purchase more LNG from the US on the so-called spot market - even at exorbitant prices, Lu said.
Taiwan's strong fiscal reserves place it in a better position than poorer nations in Asia. Hundreds of gas stations in Cambodia and Laos have closed due to supply disruptions and price uncertainty. The Philippines and Thailand, both US allies, are implementing fuel rationing measures as they cannot afford to purchase enough fuel on the spot market.
"For Taiwan, diversification matters at this moment. How to better balance the price between the US and other sources like Australia and Brunei - that's what the government is doing right now, trying to compare the new offers," Lu said.