ASEAN Beat | Environment | Southeast Asia

Thailand Walked Into Its LNG Trap With Its Eyes Open – Long Before Hormuz 

Bangkok’s gas bet was always going to hurt consumers. A distant conflict has merely made that reckoning impossible to defer. 

Over the past three years, Thailand’s state power utility paid 61 billion baht – roughly $2 billion – to seven gas-fired power plants during months when those plants were expected to generate no electricity at all. The money went to availability payments: fixed charges owed to plant operators regardless of whether a single kilowatt is produced. For the first tariff cycle of 2026, such payments are estimated to add 0.63 baht to every kilowatt-hour consumed – nearly a fifth of the base tariff, levied on households and businesses to service infrastructure that sits idle. 

That figure deserves to sit at the center of any debate about Thailand’s energy future, and about the wisdom of expanding it further. As Iran-U.S. tensions send oil and gas prices climbing, attention has naturally turned to the geopolitical trigger. But Thailand’s LNG expansion was deeply problematic long before the Israel-U.S. strikes on Iran began. 

In late 2025, Thai energy authorities halted operations at four power plants and delayed the opening of a fifth as weakening demand collided with a structural glut. Seven out of 11 privately owned gas-fired plants in the country operated at below 10 percent capacity in 2025; several of them were less than 15 years old. Thailand was already on track for its steepest decline in electricity generation in recent history, and its largest drop in LNG imports. 

Against this backdrop, the continued push to build more gas capacity defies economic logic. The 540 MW Burapa gas-fired plant, co-owned by Gulf Development Plc, has already been delayed from 2027 to 2029, yet construction seems to be moving forward.  

More striking still, Gulf has signed two long-term LNG supply agreements in the past six months: a 10-year deal with Italian major Eni for 0.8 million tonnes per annum from 2027, followed by a 15-year contract with French utility Engie for the same volume from 2028. In other words, Thai companies are increasing supply even while not fully using the capacity that already exists. Thailand’s own draft Gas Plan 2024 acknowledged that existing LNG terminal capacity is sufficient until 2037. 

The economics of Thailand’s power sector have shifted in ways that make this expansion look not merely ill-timed but fundamentally ill-advised. BloombergNEF identified solar as the country’s cheapest source of new electricity. By 2025, the levelized cost of utility-scale solar had fallen not only below new gas and coal but below the short-run marginal cost of running existing combined-cycle gas plants. This means that it is now cheaper to build new solar than to........

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