Alexandra Moreno
Southeast Asia LNG demand is poised to rise as data center construction adds to the region’s power needs. Wood Mackenzie says the buildout could lift annual demand growth by 16% through 2035, as local gas supplies decline.
Data centers add a new source of gas demand
The region’s effort to move away from coal has supported gas use for years. Now, the rapid expansion of data centers is emerging as another driver, particularly because operators need dependable electricity around the clock. Wood Mackenzie analysts say combined cycle gas turbines are currently the most reliable option for that job in much of Southeast Asia, where renewable power paired with battery storage is still relatively immature.
The consultancy estimates that the region’s data center project pipeline could grow from 2.8 gigawatts today to 9.4 gigawatts by 2035, more than tripling. Electricity demand from hyperscalers is projected to rise from 17 terawatt hours to 57 terawatt hours over the same period. If gas turbines meet a substantial part of that need, the data center expansion would add to LNG consumption just as several countries face weaker domestic production.
That combination matters to LNG suppliers because data center companies can represent large, financially strong power buyers with relatively steady requirements. Wood Mackenzie principal analyst Fadhlullah Omarali said their demand profile changes the risk involved in securing new supply for Southeast Asia. Long term purchasing interest from these customers could therefore become a factor in decisions about LNG supply and import infrastructure.
Singapore, Malaysia and Thailand face tighter gas balances
Singapore is already highly reliant on gas, which provides 95% of its electricity. Wood Mackenzie expects LNG to account for all of Singapore’s gas supply by 2035, as pipeline imports from Indonesia and Malaysia are expected to stop in the early 2030s. The shift would make LNG imports more central to the city state’s power system, even before accounting for any additional electricity needs from new data centers.
Thailand also faces a growing need for imported LNG. Gas already generates two thirds of the country’s electricity, but declining imports from Myanmar and lower output from the Gulf of Thailand are changing the supply mix. Wood Mackenzie estimates that LNG could make up more than 50% of Thailand’s gas supply by 2035 as those sources recede.
Malaysia is developing 3.9 gigawatts of data center capacity and building regasification terminals to bring in LNG. The timing presents a challenge: data center investment is accelerating as domestic gas production reaches a peak and begins to fall. Thailand is facing a similar supply squeeze. Across both countries, new power demand and reduced local output could increase the role of LNG sellers and traders over the next decade.
The broader outlook is substantial, though it is not immune to disruption. Shell projected that global LNG demand will reach nearly 700 million tons a year by 2050, about 65% above the 422 million tons recorded in 2025. The company has pointed to rising gas use in South and Southeast Asia as a major source of growth. It also said growth this year has been held back by the Strait of Hormuz crisis, a reminder that geopolitical events can interrupt an otherwise strong demand picture.
Power grids could slow Southeast Asia’s data center buildout
More gas demand is not guaranteed simply because developers announce new projects. Grid capacity is a potential constraint. A report from Bain & Company and Standard Chartered found that data centers, electric vehicles and green industrial clusters could add about 100 terawatt hours of electricity demand in Southeast Asia by the end of the decade. Existing networks, built around older patterns of use, may struggle to deliver power where and when new facilities need it.
Transmission limits and delays in connecting new sites could hold back further data center investment, according to a February 2026 Bain survey of Southeast Asian data center operators and hyperscalers. That raises a practical question for gas demand: even if gas fired generation is available, projects still depend on the grid’s ability to connect power plants and large users.
Of roughly $540 billion in announced green capital spending across the region’s power and electric vehicle supply chains through 2030, about $315 billion is considered on a credible path to deployment under current conditions, the report said. The difference highlights the gap between announced investment and projects likely to proceed, with infrastructure readiness among the factors shaping what gets built.
India’s data center growth is unlikely to lift LNG use
The gas connection is not expected to extend to every fast growing data center market. India’s data center capacity is projected to increase fivefold, reaching nearly 12 gigawatts by 2035. But Wood Mackenzie does not expect that expansion to create a material increase in LNG demand, because gas fired electricity is substantially more expensive than renewable power combined with battery storage.
In India, LNG based power costs two to three times as much as renewables paired with batteries, making gas a costly choice for steady supply to data centers. No Indian hyperscaler has announced an agreement for gas backed power. By contrast, commercial and industrial renewable power purchase agreements already cover more than 33 gigawatts of contracted data center capacity.
Gas currently accounts for less than 2% of India’s electricity generation, and Wood Mackenzie expects its share to remain around that level through 2035. Coal and renewables are expected to continue dominating the power mix. The contrast with Southeast Asia is clear: data center growth alone does not guarantee more LNG use; the relative cost of power options and the condition of local supply shape whether gas becomes the fuel of choice.
