From Thailand to Bangladesh: Asia Restarts Coal Power in Response to Global LNG Supply Crisis

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The blockade of the Strait of Hormuz triggered by the Middle East war is pushing Asia's energy system to a severe test. Qatar's LNG production has come to an abrupt halt, and about one fifth of the world's liquefied natural gas supply has instantly evaporated. From Japan to Bangladesh, Asian countries are scrambling to buy spot cargoes and restart coal-fired power plants to cope with this region-wide energy supply crisis.

On March 18, according to The New York Times, the Middle East conflict has entered its third week, the Strait of Hormuz has effectively come to a standstill, and Qatari production has completely ceased. Asia is the world's largest LNG consumption region, receiving more than 80% of Qatar’s exports. Economies such as Japan, Singapore, Thailand, Pakistan, and Bangladesh rely on natural gas for a third or more of their electricity.

The impact of this crisis has quickly reached the policy level. This month, the Thai government ordered coal power plants to run at full capacity and massively tapped into the national energy subsidy fund to stabilize prices; Bangladesh’s state-owned electricity transmission company’s data shows that since the Iran conflict broke out, the country’s coal-fired power generation has increased significantly; South Korea’s industry minister said last week that they are preparing to boost nuclear and coal power output to hedge against supply fluctuations. Analysts warn that the impact of this shock on Asia’s energy landscape will far outlast the duration of the conflict itself.

Price War and the Coal Power Revival

The Strait of Hormuz is the most crucial chokepoint in the global LNG trade. Qatar is one of the world’s largest LNG exporters, and the vast majority of its export cargoes must pass through this strait. The conflict has led to the actual closure of the strait, a halt to Qatari production, and about one fifth of the global LNG supply has instantly disappeared from the market.

Asia’s geographical characteristics make it particularly vulnerable. Cross-border pipeline construction is limited by terrain, so Asian countries are highly dependent on seaborne LNG, mainly sourced from the world’s two leading producers—the United States and Qatar. The U.S. supply is very distant, while Qatar’s is now blocked by war.

The supply gap has quickly triggered Asian countries to scramble for spot cargoes. Henning Gloystein, Managing Director of Eurasia Group’s Energy division, said, “Asia is in a full-fledged price competition; any country that can switch from gas to coal is doing so.”

Thailand is one of the most typical economies to have been hit by this crisis. Since 2011, the country has strongly promoted LNG imports, built two main import terminals, and increased the share of gas-fired electricity generation to over half of total power by 2022, with LNG accounting for nearly one quarter—whereas in 2011 this ratio was only 2%. During the 2022 Russia-Ukraine conflict, wealthy European countries rushed into the LNG spot market, forcing Thailand to delay the retirement of the Mae Moh coal power plant. Now, the same scenario is playing out again, with the Thai government once more ordering coal plants to operate at full capacity.

The situation in Bangladesh is similarly dire. Data from the country’s state power transmission company shows that since the outbreak of conflict in Iran, coal-fired power generation has risen sharply. South Korea’s industry minister also publicly stated last week that they are preparing to boost nuclear and coal power capacity to respond to oil and gas supply volatility.

Most Asian analysts expect countries to continue the temporary shift to coal as long as the conflict lasts. However, when the crisis is over, energy policies will face deeper choices. Amy Kong, an analyst at Zero Carbon Analytics, noted that Pakistan provides a reference worth attention:

Impacted by the Russia-Ukraine conflict in 2022, the country doubled its installed solar capacity between 2021 and 2024. This transition largely benefited from the widespread adoption of low-cost solar panels, effectively reducing dependence on LNG imports. Although the country still faces energy supply disruptions, the expansion of renewables has protected it from even greater shocks.

Kong said, “Asia’s ‘immediate reaction will inevitably depend on existing domestic supply, especially coal,” but looking five years ahead, “whether gas can truly outperform renewables in terms of economics and supply stability will be subject to more debate.”

Setyawati characterizes the current situation as a historical turning point: “After the 2022 crisis, LNG was touted as a stable alternative to pipeline gas since it can be shipped anywhere in the world. Now, the LNG supply chain itself is encountering its own bottlenecks.”

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