Thailand's EGAT to Halve Spot LNG Reliance, Seek Long-Term Deals

Thailand's state-owned Electricity Generating Authority of Thailand (EGAT) plans to reduce its reliance on spot liquefied natural gas (LNG) purchases and secure long-term supply agreements with producers in the Americas, its governor said on Tuesday.

EGAT, the country's largest utility, intends to lower the share of spot LNG in its procurement mix to 15% from the current 30%, Governor Narin Phoawanich said. The utility is looking to sign long-term contracts with suppliers including those in the United States and Argentina. Narin did not specify a timeline for reaching the reduced spot level.

The shift comes as Thailand grapples with the effective closure of the Strait of Hormuz, a key shipping route disrupted by the U.S.-Israeli war with Iran. Before the conflict, the Middle East accounted for nearly half of Thailand's oil and gas imports, and those supplies have now ground to a halt.

The disruption has pushed the Southeast Asian nation to buy more LNG on the spot market, even as prices have more than doubled since the war began and hit their highest level since 2022 last week.

"The government will focus on long-term contracts. We are trying to find balance after the conflict started," Narin said, adding that EGAT plans to import 1 million metric tons of LNG annually over the next 20 years.

Beyond procurement changes, Narin said the utility would build new gas-fired power plants and expand renewable energy capacity as it retires older, less efficient generating units. The measures are aimed at cutting costs and ensuring reliable supply.