The surge in hyperscale data centers across Asia is creating sharply different outcomes for liquefied natural gas consumption, with Southeast Asia poised to become a major new demand source while South Asia remains economically shut out from gas-fired power, according to a new study from Wood Mackenzie. The report, *Data Centres Bolster LNG Demand in Southeast Asia, Not South Asia*, finds that the region's data center capacity will more than triple over the next decade, requiring vastly more natural gas to keep servers running around the clock. The divergence hinges on economics: where gas competes with coal and renewables, it's losing badly.
Southeast Asia's data center pipeline is expected to jump from 2.8 gigawatts today to 9.4 GW by 2035, the report states, while electricity consumption from these facilities will climb from 17 terawatt-hours to 57 TWh over the same span. Combined-cycle gas turbines currently represent the only proven technology capable of delivering the constant, reliable power that data centers require at scale, since grid-scale battery storage won't be commercially ready across the region until the mid-2030s, according to the analysis. Singapore's electricity grid already runs on roughly 95% gas, meaning nearly every additional data center megawatt translates directly into more LNG imports—and with piped gas from Malaysia and Indonesia set to stop flowing by the early 2030s, the city-state's reliance on LNG is headed toward 100%. Malaysia has 3.9 GW of data center capacity under development and is building new import terminals to handle the load, while Thailand—where two-thirds of power generation is already gas-fired—will see LNG account for over half its gas supply by 2035 as domestic production from the Gulf of Thailand and pipeline imports from Myanmar continue falling.
"What makes data centre demand interesting from an LNG perspective is the counterparty profile," said Md Fadhlullah Omarali, principal analyst at Wood Mackenzie. "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." The report emphasizes that Malaysia and Thailand are reaching a critical juncture, with data center investment accelerating just as domestic gas output peaks and begins to decline. New import infrastructure is being developed and the base of importing companies is widening, creating favorable timing for LNG suppliers looking to place volumes, the authors note.
The report's analysis explains why India's massive data center expansion won't translate into LNG demand: generating power from LNG costs two to three times more than renewables paired with battery storage in the country, rendering gas economically unviable as a steady fuel source for data centers. Despite India's data center market being on track to grow fivefold to nearly 12 GW by 2035—making it the second largest in Asia Pacific and drawing an estimated $145 billion in investment between 2024 and 2030—gas currently makes up less than 2% of the nation's power generation and is forecast to stay at that level. Pipeline infrastructure is also missing across key data center corridors in southern, central, and eastern India, adding another barrier. None of India's hyperscale operators have signed gas-backed power agreements, while the commercial and industrial renewable power purchase agreement market has already locked in over 33 GW of contracted data center capacity.
The report concludes that Southeast Asia represents a structural shift in LNG demand, driven by creditworthy customers whose power needs don't fluctuate with business cycles—a fundamentally different risk profile than traditional industrial or utility buyers. Indonesia's Batam is emerging as the third point in the Singapore-Johor-Riau corridor with over 450 MW in development, though grid reliability remains a concern at the scale of incoming demand. For LNG producers with volumes to sell, the window is opening just as domestic Southeast Asian gas fields decline and import infrastructure expands—a rare alignment of supply need and buyer quality that won't repeat in South Asia, where renewables have already won the race.