Thailand's LNG demand saw an increase in the first quarter of 2024 amid hotter and drier weather conditions with Thai buyers having issued a total of 14 tenders, double the number of buy tenders issued in the same period last year.

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PTT, Thailand's oil and gas major, issued 10 tenders seeking a total 27 cargoes over February to June 2024. At least 17 cargoes were awarded via these tenders, market sources said.

PTT seemed to have changed its spot procurement pattern by placing more focus on the prompter months. In Q1 2023, PTT issued seven tenders, most of which sought strip cargoes over the period of at least eight months.

"PTT is issuing tenders a lot more frequently than usual. We have observed the interval between each tender to have halved, reflecting more gas usage in the country," a market source said.

Another industry source said the lower spot prices compared with the previous year may likely contribute to the increase in activities, with Thailand being a price-sensitive market.

State-owned utility, the Electricity Generating Authority of Thailand, which used to start spot procurement around mid-year previously began early in 2024 by issuing four buy tenders in the first quarter.

EGAT's tender issued in January was awarded at a discount to JKM, while the three tenders issued in March were unawarded because of high offers, market sources said. Nevertheless, Thai buyers were reportedly still actively seeking cargoes in the spot market.

Platts assessed JKM May cumulative monthly average at $9.647MMBtu March 27, indicating a $1.126/MMBtu increase against the JKM April cumulative monthly average at $8.521/MMBtu, S&P Global Commodity Insights data showed.

The Platts-assessed May Southeast Asia Marker, or SEAM, that is assessed on an outright basis to the JKM, stood $9.350/MMBtu March 27, at 17.3 cents/MMBtu discount to May JKM.

Higher than usual temperatures

Earlier in the month, PTT Exploration and Production Public Company Limited, or PTTEP, said in statement that it had ramped up its G1/61 project gas production to 800 MMcf/d.

"The ramp up could decelerate LNG imports into Thailand starting from the second quarter," according to Huyen Trang Vu, an analyst at S&P Global Commodity Insights.

"However, the region is currently experiencing hotter and drier weather conditions, which could increase demand for gas-powered electricity in the country, potentially leading to an upside in LNG demand," Vu added.

Multiple market sources also said the hot and dry weather was the main reason for the increase in activity from Thai buyers in Q1 2024.

Thailand's Meteorological Department on March 24 warned of high temperatures across the country, with the northern and central regions reaching 40 degrees Celsius. The department also forecasted higher summer temperatures this year, along with lower-than-average rainfall.

"I don't think the demand derived from hot weather can be covered by domestic gas even if Thailand ramped up domestic production," a Singapore-based trader said.

The reduction in the rate of production at gas fields other than Erawan, as well as Myanmar pipeline gas, will likely lead to an upside in the country's LNG demand, keeping LNG import volumes stable, a Thailand-based market source said.

S&P Global analysts projected Thailand to import around 11 million mt/year in 2024, slightly lower than 11.55 million mt/year in 2023.

For the first two months of 2024, Thailand imported 1.75 million mt of LNG, up 27.6% year on year, with cargoes mainly coming from Australia, Qatar and Malaysia, S&P Global reported earlier.

In the event of higher domestic needs due to the weather, market participants expected more Thai buyers to enter the spot market this year.

Currently, PTT and EGAT are the only two Thai players in the spot market. Other licensed LNG importers include Gulf Energy, B. Grimm, EGCO, and Hin Kong Power, a subsidiary of RATCH Group and Gulf Energy that recently imported its first cargo via a term contract.

Vietnam's recent activity

Another Southeast Asian country, Vietnam, issued two buy tenders at the start of 2024. The first tender was awarded to QatarEnergy, for a April 12-13 cargo to Thi Vai LNG Terminal on a DES basis. The second tender that sought a cargo for May 5-20 delivery was also reportedly awarded.

Part of the imported volumes will be supplied to industrial users via the new LNG trucking business that PetroVietnam Gas launched on March 14, while the rest will be supplied to gas-fired power plants in Vietnam, a market source familiar with the matter said.

As Vietnam is experiencing a heat wave and droughts, with the National Center for Hydro-Meteorological Forecasting projecting temperatures to climb to 33-35 C in the following week, the country is expected to see lower hydropower generation and higher gas consumption.