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Bangladesh - Power & Energy - February 14, 2024

Gas crisis not ending even after imports

Staff Correspondent : Due to lack of adequate infrastructure for transportation and disposal of own and imported gas, supply cannot be normalized even by increasing imports. The current shortfall is more than double the capacity to transport liquefied natural gas (LNG) from terminals to the national grid. However, the energy department has always considered import as an alternative to meet the demand of its own gas shortage and emergency situations. Also, due to the weakness of the transmission network system and pipelines for transportation to the national grid, gas produced at the local level including Bhola is not being added to the national grid. Meanwhile, the amount of LNG import is increasing despite the limitations in gas transportation. Analysts say the energy department has been lax and underinvested in its own mineral exploration and extraction for more than a century. The situation has reached this stage as a result of lack of investment in the infrastructure sector, especially in the creation and operation of lifting capacity.
Meanwhile, there is a demand of about 4 thousand million cubic feet of gas per day, but the supply in the national grid is only 2 thousand 500 million cubic feet. Since one terminal closed, the supply of imported LNG has decreased by about 400 million cubic feet. Those concerned say that reluctance to invest in the infrastructure sector has created today’s situation. The capacity of the terminals has not been increased despite the continuous increase in imports.
On the other hand, despite the lack of infrastructure, imports are increasing, along with the long-term, spot import contracts have been signed with about half a dozen foreign companies till next July. Which means taking a big loan. Last Thursday, the Jalani and Mineral Resources Department signed a loan agreement of $2.1 billion for the next financial year to import new fuel and pay dues from the emergency fund of Jeddah-based International Islamic Trade and Financial Corporation. Of this, $600 million will be spent on LNG imports alone. Apart from this, loans have been taken from domestic and foreign companies to pay the import bill of fuel. On the other hand, Tk 1 thousand to Tk 1,200 crore are being spent every month for importing two cargoes of LNG from the international spot market.
However, Petrobangla has undertaken mega projects to build pipelines and new LNG terminals and increase capacity to transport imported gas. The company may have to wait till 2029 to avail the benefits of these projects. As such, doubts have arisen about increasing LNG imports and normalizing supply.
Petrobangla has signed four new LNG import contracts for 10 to 15 years by 2026. Another 6 million tonnes of LNG is to be transported annually under this contract. However, Petrobangla officials said that the new contract gas can be supplied through existing pipelines. However, the planned construction of a 295 km long pipeline (Maheshkhali/Matarbari-Bakhrabad) has been initiated to speed up the implementation of LNG supply to the national grid. Although this project is still in the Planning Commission.
According to the company, the construction of this pipeline cost about 1.4 billion dollars. But the deadline for its construction is 2029. As such, energy analysts believe that LNG supply may be disrupted under long-term import contracts in 2026. As a result, there is uncertainty about the benefits of this huge investment in imports and pipelines.
Director of Petrobangla (Operation and Mines) Engineer Md. Kamruzzaman said that the LNG supply capacity in the existing pipeline is 1,700 million cubic feet. On the other hand, 750 to 800 million cubic feet are being supplied through two floating terminals (FSRU). As a result, Petrobangla will be able to supply another 800 million cubic feet of gas in this pipeline if Adani starts under the new contract.
Potential LNG contracts
Three long-term LNG import contracts have been signed in addition to the two existing contracts signed in 2018. This includes a 10-year deal with Oman’s OQ Trading Limited (OQT) from 2026, from 1.25 million tonnes per year to a maximum of 1.5 million tonnes of LNG; 1.5 million tons of LNG per year for 15 years with Qatar Energy Trading LLC; The import contract will begin in 2026. Similarly, the government will buy one million tons of LNG per year from private US firm Accelerate Energy.
Apart from this, it is also known that under the 15-year agreement with the Summit Group, another one and a half million tons of LNG has been planned to be purchased annually. According to the agreement, imports will begin in 2026. In total, 4 million tonnes of LNG will be imported annually under the existing contracts in 2026 and another 6 million tonnes under the four new contracts.
At present there are two floating terminals in the country for regasification of imported LNG. The two terminals owned by Summit and Accelerate are expected to supply 1,000 million cubic feet of gas per day. However, this capacity is now 1,100 million cubic feet.

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