LNG import diversification in Asia

• The Herfindahl–Hirschmann index applied to measure LNG import diversification in Asia.
• Regional LNG import portfolios have become more diversified over the past decade.
• There is much contrast in the extent of LNG import diversification between cases.
• Six possible explanations provide justification for variation among cases.

Asia's share of global demand for natural gas has increased from 13 to 18 per cent over the past decade, and the overall consumption has nearly doubled. At the same time, there is a growing gap between regional natural gas demand and supply, with increasing reliance on imports. Regional liquefied natural gas (LNG) imports are forecast to increase by 60 per cent by 2030, and natural gas has been described as Asia's “fuel of the future”. Asian LNG importers seek to diversify their supplier mix as much as possible to lower the prices and to reduce economic vulnerability to future disruptions or the failure of any one producer to provide adequate supplies. This paper explores major regional importers' approaches to LNG import diversification between 2002 and 2012 and explains why patterns of LNG imports differ between states and over time. The focus of the paper is on five largest LNG importers in the region: China, India, Japan, South Korea and Taiwan.