The hyperscale data center boom sweeping Asia is generating materially divergent outcomes for liquefied natural gas (LNG) demand across the region, with Southeast Asia emerging as a compelling new demand driver while South Asia remains structurally out of reach for gas, according to new research from Wood Mackenzie revealed on Monday.
The report, Data Centers Bolster LNG Demand in Southeast Asia, Not South Asia, finds that Southeast Asia’s data center pipeline is set to more than triple from 2.8 gigawatts (GW) today to 9.4 GW by 2035, with electricity demand from data centers growing from 17 terawatt-hours (TWh) to 57 TWh over the same period.
Combined-cycle gas turbines (CCGT) are currently the most viable technology capable of meeting data centers’ 24/7 reliability requirements at scale, as grid-scale battery storage remains commercially immature across the region through the mid-2030s.
“What makes data center demand interesting from an LNG perspective is the counterparty profile. These are large, creditworthy off-takers with power needs that remain stable regardless of economic cycles. That does change the risk of calculus for new supply into Southeast Asia,” said Md Fadhlullah Omarali, principal analyst at Wood Mackenzie.
According to the report, the LNG demand opportunity is not uniform across Southeast Asia, and the country-level picture reveals where it is most pronounced.
Singapore’s grid runs on approximately 95 percent gas today, meaning virtually every new data center megawatt translates almost directly into incremental LNG offtake.
With piped imports from Malaysia and Indonesia expected to cease by the early 2030s, the city-state’s LNG reliance is on course to reach 100 percent
Meanwhile, the report sees Malaysia and Thailand offer the biggest chance for growth.
Both are seeing steady drops in domestic and piped gas supply, making LNG the only fuel option to support new gas power plants.
Malaysia has 3.9 GW of data center capacity under development, with new regasification terminals being built to meet growing power demand.
Thailand, where two-thirds of the grid is already gas-fired, is expected to see its LNG share of gas supply exceed 50 percent by 2035 as Gulf of Thailand production and Myanmar pipeline imports continue to fall.
Indonesia (Batam), on the other hand, is emerging as the third node of the Singapore-Johor-Riau (SIJORI) corridor, with over 450 MW in the pipeline and strong policy support supporting its data center ambitions.
The binding constraint is power deliverability – grid reliability remains a concern at the scale of incoming demand.
“Malaysia and Thailand are at a turning point. Data center investment is growing quickly just as domestic gas output peaks and declines,
“New import infrastructure is being developed and the importer base is broadening. For LNG suppliers with volumes to place, this timing is important,” Omarali added.
The report also highlighted that India’s data center market is set to grow fivefold to nearly 12 GW by 2035, making it the second largest in Asia Pacific and attracting an estimated $145 billion in investment between 2024 and 2030.
Despite this scale, Wood Mackenzie finds that LNG is structurally unable to capture the opportunity.
It is noted that LNG-to-power generation costs two to three times more than renewables paired with battery storage in India, making gas economically unviable as a baseload fuel for data centers.
Gas currently accounts for under 2 percent of India’s power generation mix and is forecast to remain at that level through the outlook period, as coal and renewables continue to dominate.
Pipeline infrastructure gaps across key data center corridors in southern, central and eastern India add a further barrier to gas penetration.
Meanwhile, none of India’s hyperscalers have announced gas-backed power supply agreements, with the commercial and industrial renewable power purchase agreement market having already exceeded 33 GW of contracted data center capacity.
Pakistan and Bangladesh present further constraints, with persistent load-shedding, grid instability and macroeconomic pressures limiting data center demand and deterring hyperscale investment, said the report.
Southeast Asia’s $30 billion data center boom is racing into a power wall