Bangladesh is a densely populated country with a growing demand for energy. The country relies heavily on natural gas for its power generation, industrial production, and domestic consumption. However, the domestic gas reserves are depleting fast and cannot meet the rising demand. According to a report by Ramboll, a research firm, Bangladesh will need to import around 30 million metric tons of LNG per year by 2041 to meet the demand from various sectors.

The country’s gas reserve is expected to run out by 2033 if no new gas fields are discovered. By then, the demand will exceed 6,000mmscfd. Currently, the total gas production in Bangladesh, including imported LNG, is about 3,000-3,100mmscfd, while the demand is around 3,700mmscfd.

The Benefits of LNG Imports

LNG is natural gas that has been cooled to a liquid state at -160 degrees Celsius. It occupies about 600 times less space than natural gas in its gaseous form, making it easier to transport and store. LNG can be regasified at the destination and injected into the gas pipeline network. LNG imports can offer several benefits for Bangladesh, such as:

Diversifying the energy mix: LNG imports can reduce the dependence on domestic gas and provide a cleaner alternative to coal and oil. LNG can also complement renewable energy sources such as solar and wind by providing backup power when needed.

Enhancing energy security: LNG imports can reduce the risk of gas shortages and price volatility. Bangladesh can source LNG from different suppliers and regions, such as Qatar, Oman, Australia, and the US. LNG can also be stored in floating or land-based terminals for emergency use.

Boosting economic growth: LNG imports can support the development of various sectors, such as power, industry, fertilizer, and transport. LNG can provide reliable and affordable energy for the existing and new gas-fired power plants, which can increase the electricity access and quality. LNG can also enable the expansion of industries such as textiles, ceramics, and steel, which can create more jobs and exports. LNG can also be used as a fuel for vehicles, ships, and trains, which can reduce emissions and costs.

The Challenges of LNG Imports

Despite the benefits, LNG imports also pose some challenges for Bangladesh, such as:

High costs: LNG imports are more expensive than domestic gas production. The cost of LNG includes the liquefaction, transportation, and regasification processes, as well as the terminal and pipeline infrastructure. The high cost of LNG can affect the affordability and competitiveness of gas for the consumers and industries. However, global LNG prices seem to be on the downward trajectory; with prices reaching c. 10 $/mmbtu, despite ongoing red sea situation. Furthermore, Bangladesh’s growing demand for gas must be met.

Lack of infrastructure: Bangladesh lacks adequate infrastructure to import, store, and distribute LNG. The country currently has two operational floating storage and regasification units (FSRUs) with a total capacity of 1 billion cubic feet per day (bcfd), which is equivalent to 7.5 million metric tons per year of LNG. However, the FSRUs face technical and operational issues, such as low pressure, congestion, and weather disruptions, which limit their utilization. The country also needs to expand and upgrade its gas pipeline network to deliver LNG to the end-users.

Policy and regulatory barriers: Bangladesh faces some policy and regulatory barriers to facilitate LNG imports. The country lacks a clear and consistent framework for LNG pricing, taxation, and subsidies. The country also needs to streamline the approval and implementation processes for LNG projects and contracts. The country also needs to enhance the coordination and cooperation among the relevant stakeholders, such as the government, Petrobangla, the state-owned company in charge of LNG imports, and the private sector.

The Way Forward

Bangladesh has a huge potential to benefit from LNG imports, but it also needs to overcome the challenges. The country needs to adopt a holistic and strategic approach to develop its LNG market and infrastructure. Some of the possible steps are:

Optimizing the LNG portfolio: Bangladesh needs to optimize its LNG portfolio by balancing the long-term and spot contracts, as well as the lean and rich LNG cargoes. The country needs to diversify its LNG sources and suppliers, and leverage its geographical location to access the regional and global LNG markets. The country also needs to take advantage of the low and flexible LNG prices in the current market situation.

Investing in LNG infrastructure: Bangladesh needs to invest in LNG infrastructure to increase its import, storage, and distribution capacity. The country needs to expedite the construction and operation of the planned LNG terminals, such as the Matarbari and Maheshkhali projects. Bangladesh also needs to expand and modernize its gas pipeline network to improve the connectivity and efficiency. It is also crucial  to explore the potential of small-scale LNG and LNG bunkering facilities to serve the remote and maritime areas.

Reforming the LNG policy and regulation: Bangladesh needs to reform its LNG policy and regulation to create a conducive and competitive environment for LNG imports. Bangladesh could establish a transparent and market-based mechanism for LNG pricing, taxation, and subsidies. The country also needs to simplify and expedite the approval and implementation processes for LNG projects and contracts. 

Planned Expansion Already on Table

Terminals:

Petrobangla has announced its intention to construct three new LNG terminals in the country. These terminals will have a combined regasification capacity of 2,000 to 3,000 mcf/d (21 to 31 bcm/year) and will be located in Payra, Moheshkhali and Matarbari. The terminals in Payra and Moheshkhali will be floating storage and regasification units (FSRUs), while the one in Matarbari will be a land-based terminal. The projects are expected to help the country cope with the soaring gas demand, which is estimated to increase by more than 60% by 2030.

At present, Bangladesh has two LNG terminals, both situated near Moheshkhali and with a regasification capacity of 500 mcf/d (5.2 bcm/year) each. The US’ Excelerate Energy and the UK’s Summit Group are the developers of these terminals.

Pipeline

A new gas pipeline worth $1.4 billion is in the works by the government to transport more imports to the national grid that is in dire need of gas.

The Gas Transmission Company Limited (GTCL) said that the planned 295km Maheshkhali/Matarbari-Bakhrabad pipeline would be completed by 2029 and would deliver an extra 1,800mmscfd LNG to power plants, fertiliser plants, and other units that use gas.

The GTCL has already submitted the initial project proposal for the new pipeline to the Planning Commission for their approval. After getting the green light, they will seek loans from various development partners, said the GTCL officials.

LNG imports can be a game-changer for Bangladesh’s energy sector and economy. However, the country needs to act fast and smart to seize the opportunity and overcome the challenges. LNG imports can help Bangladesh achieve its energy security, sustainability, and prosperity goals.