As conflict in the Gulf disrupts shipping through the Strait of Hormuz and sends global energy prices soaring, a new analysis warns that South Asia’s massive expansion of LNG infrastructure could leave the region dangerously exposed to supply shocks.

The escalating war in the Gulf and the disruption of shipping through the Strait of Hormuz are casting a harsh spotlight on South Asia’s growing dependence on imported liquefied natural gas (LNG), with analysts warning that the region’s $107-billion expansion of LNG infrastructure could become a costly and risky bet.

A new analysis by the Global Energy Monitor (GEM) says India, Bangladesh and Pakistan together have about $107 billion worth of LNG terminals and gas pipelines either announced or under construction, making South Asia one of the fastest-growing LNG import markets in the world.

The region now accounts for roughly 17 per cent of global LNG import capacity under development – around 110.7 million tonnes per year – and a similar share of gas pipeline expansion worldwide.

But the unfolding geopolitical crisis in the Middle East has raised urgent questions about the security and economic viability of this strategy.

Gulf War Sends Shockwaves

The warning comes as the ongoing conflict involving Iran has severely disrupted energy shipments through the Strait of Hormuz, a critical chokepoint for global oil and gas trade.

Recent attacks on shipping and threats to close the strait have caused maritime traffic to collapse and sent energy prices sharply higher, with Brent crude crossing $100 per barrel amid fears of prolonged supply disruptions.

The strait handles roughly one-fifth of the world’s oil trade and a substantial portion of global LNG shipments, making any disruption there a major shock for energy-importing economies, especially in Asia.

For South Asia, where LNG imports have become a crucial component of power generation and industrial energy supply, the crisis highlights the vulnerability of relying heavily on imported fossil fuels.

$107 Billion LNG Bet Across South Asia

According to GEM’s Asia Gas Tracker, India, Bangladesh and Pakistan are collectively investing billions in LNG terminals, regasification facilities and gas pipelines designed to dramatically expand gas imports.

These projects are being developed to meet rapidly growing energy demand and to compensate for declining domestic gas production in parts of the region.

India is leading the expansion, with multiple LNG terminals planned along its coastline to support industries, power plants and city gas distribution networks. Bangladesh and Pakistan are also developing new LNG import facilities to address chronic energy shortages.

Together, these projects represent a massive bet that LNG will remain a reliable and affordable fuel for decades to come.

However, analysts warn that such large investments could lock the region into long-term dependence on volatile global gas markets.

Price Shocks Could Hit Emerging Economies

The current Gulf crisis is already demonstrating how quickly geopolitical tensions can disrupt energy supply chains and trigger price spikes.

According to the GEM analysis, countries such as Bangladesh and Pakistan – whose economies are highly sensitive to fuel prices – could face severe financial strain during periods of high LNG prices.

“South Asian economies that import LNG will struggle with these price shocks,” said Robert Rozansky, a global LNG analyst at Global Energy Monitor.

Past surges in global LNG prices have forced countries like Pakistan and Bangladesh to cancel cargoes or revert to more polluting fuels such as coal and oil for electricity generation.

If the Gulf conflict persists, the cost of LNG imports could rise further because many LNG contracts are linked to oil prices with a lag, meaning higher crude prices eventually translate into higher gas costs.

Strategic Shipping Routes Under Threat

Another concern highlighted by analysts is the heavy dependence of South Asian LNG imports on shipping routes that pass through the Strait of Hormuz.

A prolonged disruption to the corridor could force cargoes to take longer alternative routes or reduce available supply altogether.

The ongoing crisis has already demonstrated how quickly maritime insurance costs and shipping risks can escalate during geopolitical tensions, raising the overall cost of energy imports.

Given that much of South Asia’s LNG supply comes from Gulf producers such as Qatar and the United Arab Emirates, instability in the region could have direct consequences for energy security across the subcontinent.

Renewables Offer an Alternative Path

The GEM report suggests that the risks exposed by the Gulf crisis should prompt policymakers in South Asia to reconsider the scale of their planned gas expansion.

Renewable energy technologies such as solar and wind have become significantly cheaper in recent years and are increasingly competitive with gas-fired power generation in several countries in the region.

In India and Pakistan, renewable electricity is already outcompeting gas in parts of the power sector, while emerging technologies such as green hydrogen may eventually provide alternatives for industries currently dependent on natural gas.

Analysts argue that accelerating the transition to domestic renewable energy could reduce exposure to volatile international fuel markets and enhance long-term energy security.

Energy Transition at a Crossroads

Despite the risks, governments across South Asia continue to view natural gas as a transitional fuel that can help reduce reliance on coal while supporting economic growth.

Gas emits less carbon dioxide than coal and oil when burned, making it an attractive option for countries trying to balance energy demand with climate commitments.

Yet the ongoing Gulf conflict has underscored a key dilemma: while LNG can help diversify energy sources, heavy dependence on imported fuels also exposes economies to geopolitical shocks beyond their control.

As South Asia pushes ahead with billions of dollars in LNG infrastructure, the unfolding crisis in the Gulf is a stark reminder that energy security in a volatile world remains deeply intertwined with geopolitics.

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