From Thailand to Bangladesh: Asia Restarts Emergency Coal Power Amid Global LNG Supply Crisis

The Middle East war-triggered Strait of Hormuz blockade is pushing Asia’s energy system into a severe test. Qatar’s LNG production has suddenly halted, and nearly one-fifth of the world’s liquefied natural gas supply has vanished instantly. From Japan to Bangladesh, Asian countries are racing to buy spot supplies and restart coal-fired power plants to cope with this regional energy supply crisis.

On March 18, according to The New York Times, the Middle East conflict has entered its third week, and the Strait of Hormuz has effectively become paralyzed, with Qatar’s production completely halted. Asia is the world’s largest LNG consumer region, receiving over 80% of Qatar’s exports. Economies like 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 spread to policy levels. The Thai government ordered coal power plants to operate at full capacity this month and heavily used the national energy subsidy fund to stabilize prices; Bangladesh’s state electricity transmission company data shows that since the Iran conflict erupted, the country’s coal-fired power generation has significantly increased; South Korea’s industry minister last week announced plans 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 exceed the duration of the conflict itself.

Price Wars and the Resurgence of Coal Power

The Strait of Hormuz is the most critical chokepoint in global LNG trade. Qatar is one of the world’s largest LNG exporters, with most of its exports passing through this strait. The ongoing conflict has effectively closed the strait, halting Qatar’s production, and about one-fifth of global LNG supply has disappeared from the market instantly.

Asia’s geographical particularity makes it especially vulnerable. Due to terrain restrictions on cross-border pipelines, Asian countries are highly dependent on maritime LNG, mainly sourced from the two major producers— the United States and Qatar. The U.S. supplies are distant, and Qatar’s supply has now been cut off by the conflict.

The supply gap has quickly triggered a rush for spot supplies across Asia. Henning Gloystein, Managing Director of Eurasia Group’s energy division, said, “Asia is in full price competition now; any country that can switch from natural gas to coal is doing so.”

Thailand is one of the most affected economies in this round of crisis. Since 2011, Thailand has vigorously promoted LNG imports, building two major import terminals, and by 2022, natural gas power accounted for over 50% of total electricity generation, with LNG contributing nearly a quarter—whereas in 2011, this figure was only 2%. During the 2022 Russia-Ukraine conflict, wealthy European countries flooded the LNG spot market, forcing Thailand to delay the retirement of the Mae Moh coal plant. Now, the same scenario is playing out again, with the Thai government ordering coal power plants to operate at full capacity once more.

Bangladesh’s situation is equally severe. Data from the state electricity transmission company shows that since the Iran conflict erupted, coal-fired power generation has surged significantly. South Korea’s industry minister also publicly announced last week that they are preparing to increase nuclear and coal power capacity to cope with oil and gas supply fluctuations.

Most Asian analysts expect that during the ongoing conflict, countries will continue to temporarily shift toward coal. But after the crisis, energy policies will face deeper choices. Amy Kong, an analyst at Zero Carbon Analytics, pointed out that Pakistan provides a noteworthy reference:

Due to the impact of the 2022 Russia-Ukraine conflict, the country expanded its solar capacity by about double from 2021 to 2024, largely benefiting from the proliferation of low-cost solar panels, which effectively reduced dependence on LNG imports. Although the country still faces energy supply disruptions, the expansion of renewable energy has shielded it from greater shocks.

Kong stated that Asia’s “immediate response will inevitably rely on existing domestic supplies, especially coal,” but looking five years ahead, “there will be more discussions about whether natural gas can truly outperform renewables in terms of cost and supply stability.”

Setyawati described the current situation as a historical turning point: “After the 2022 crisis, LNG was promoted as a stable alternative to pipeline gas because it can be shipped anywhere in the world. Now, the LNG supply chain itself is also facing bottlenecks.”

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