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Energy Majors Boost Gas Investments in Southeast Asia to Power Growing AI Data Centers

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Major energy companies are significantly increasing investments in natural gas exploration and production across Malaysia and Indonesia to meet the surging electricity demand driven by expanding populations and a rise in data centers in Southeast Asia.

At the Energy Asia conference in Kuala Lumpur, Shell announced plans to invest an additional 9 billion ringgit ($2.12 billion) in Malaysia over the next two to three years to bolster gas production. Shell CEO Wael Sawan highlighted the urgent need to replace an expected 20% drop in regional gas output by 2035, identifying liquefied natural gas (LNG) as the most practical solution due to existing infrastructure.

French energy giant TotalEnergies recently expanded its stake in Malaysian gas assets through acquisitions from state-owned Petronas, emphasizing the region’s growing energy needs as population and industrial demand increase. Italian company Eni, together with Petronas, is preparing a joint venture to further develop gas fields in both Malaysia and Indonesia, with a formal agreement anticipated by year-end.

Japanese firm Inpex has reentered the Malaysian market, focusing on offshore exploration near Sarawak and Sabah while continuing work on Indonesia’s Abadi LNG project. CEO Takayuki Ueda noted that LNG demand will rise steadily until 2040 and possibly beyond, driven by local consumption strategies amid geopolitical uncertainties.

U.S.-based ConocoPhillips also plans investments in Malaysia’s Sabah region after withdrawing from a previous project in Sarawak, signaling continued interest in Southeast Asian gas development.

Natural gas and LNG are seen as vital fuels to replace coal-fired power plants and reduce emissions, while providing stable, reliable energy for the growing network of power-intensive data centers supporting artificial intelligence and cloud services.

Petronas CEO Tengku Muhammad Taufik Tengku Aziz confirmed the company is focused on meeting the expected doubling of global data center power demand to 945 terawatt hours by 2030, aligning energy strategies accordingly.

Energy expert Daniel Yergin of S&P Global emphasized that natural gas is becoming increasingly essential, stating countries cannot meet growing electricity needs and support data center growth without expanding gas production.

Russian Gas Flows to Austria Persist Despite OMV Cut-Off

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Background on Gazprom-OMV Dispute

Gazprom halted gas supplies to Austrian energy firm OMV over the weekend due to a contractual dispute involving compensation claims by OMV following an arbitration victory. Despite this, Russian gas continues to reach Austria through other buyers and middlemen, as revealed by supply data on Monday.

OMV had been receiving 17 million cubic meters (mcm) daily before the disruption. These volumes are now being purchased by other European buyers and possibly resold, though the exact buyers remain unidentified.

Gas Transit Routes and Flows

The Urengoy-Pomary-Uzhgorod pipeline remains one of the two remaining routes for Russian pipeline gas to the EU, delivering gas via Ukraine to Slovakia and then onward to Austria. Flows to Austria from Slovakia decreased by 17% to 22.6 mcm/day on Sunday and were projected at 22.3 mcm/day for Monday, according to Eustream.

However, Ukraine has announced its intention not to renew the transit agreement with Gazprom, signaling a potential closure of this critical route by year-end.

Wider Impact on European Gas Markets

While Russian gas deliveries to Slovakia, Hungary, and Serbia remain steady, Austria is now sourcing its gas indirectly through middlemen. In the Czech Republic, where companies have no direct contracts with Gazprom, Russian gas may still be entering the market indirectly. Analysts suggest that surplus Russian gas, cheaper than alternatives due to full storage and lower delivery costs, may be traded through intermediaries.

Elsewhere, colder weather forecasts, reduced Norwegian supplies, and redirected LNG cargoes to Europe have influenced market dynamics. Dutch TTF gas prices rose to €46.90/MWh on Monday, while LNG prices for January delivery in northeast Asia increased to $14.20/mmBtu, reflecting global adjustments to supply disruptions.

European Shift Away from Russian Gas

Since the invasion of Ukraine, the EU has drastically reduced its reliance on Russian gas, turning to alternative sources like Norway, the Middle East, and the United States. However, Russian gas remains competitively priced, enabling it to retain a foothold in certain markets.

Five LNG shipments recently redirected from Asia to Europe underscore the continent’s evolving energy strategy, balancing immediate demand with efforts to diversify away from Russian energy dependency.