Now gas prices going to hike

Demand-supply mgt getting tough

Staff Correspondent: The escalating price of liquefied natural gas (LNG) has put the Energy and Mineral Resources Division into a “trouble” over its demand and supply management following the diesel and kerosene price hike.
According to official sources, top policymakers are now weighing different options, including further upward adjustment in gas price, enhancing LNG import from long-term contracts and increasing local gas production.
“But There’s no easier option for the government to find a suitable solution to manage the situation, particularly in 2022,” said a top official at the Energy and Mineral Resources Division, wishing not to be named.
Eminent energy expert Dr M Tamim, a professor at Petroleum and Mineral Resources Engineering Department of Bangladesh University Engineering and Technology (Buet), said there is little option for the government to pursue without an upward readjustment in the gas price as there is an indication that the higher energy price will continue in the coming days until the end of 2022.
“There should have been a thorough analysis of energy prices. Also, steps like increasing the LNG import from long-term contracts should have been taken much earlier. But the policymakers missed those opportunities when the LNG price was much lower on the international market,” he told.
Official sources said the government is planning to send a team, headed by senior secretary of the Energy and Mineral Resources Division, to Qarar and Oman to manage the increasing import of LNG from long-term contracts.
The government has long-term contracts with the two nations to annually import 2.5 million metric tons of LNG from Qatar and 1.5 million MT from Oman. It also imports another 1.5 million MT from the international spot market to meet the growing demand for natural gas.
Currently, the sources said, the import of LNG from long-term contracts is preferable for the government as its cost is about $10 per million MMBtu, which is almost static, while the import from spot market cost $36.60 MMBtu which is dynamic or fluctuating.
They said the government wants to increase the LNG import by 2.2 million MT annually from a long-term contract to raise the total import to 7.2 million MT from the current 5 million MT.
“It’ll result in a daily increase of imported LNG to 1,000 MMCFD in place of the current 640.7 MMCFD,” said a source as the country’s re-gasification capacity is 1,000 MMCFD.
Bangladesh’s current demand for natural gas is 4,000 million cubic feet per day (MMCFD) while it could supply a maximum 3041.1 MMCFD. Of this, local production is 2400.4 MMCFD and imported gas (LNG) is 640.7 MMCFD.
On the other hand, the sources said, the government is trying to increase the local production by 100 MMCFD from three gas fields-Koilashtila, Bianibazar and Haripur — by conducting exploration and work-over wells, said Petrobangla director (planning) Ali Iqbal Md Nurullah.
“We’re making our best efforts to enhance local gas production by at least 100 MMCFD,” he told.
Dr. M Tamim is, however, not that much hopeful of Petrobangla’s immediate success in boosting local gas production. “This is a very time-consuming step which is unlikely to make any headway.”
Meanwhile, the Energy and Mineral Resources Division has asked its officials to calculate the financial loss and its possible impact from the LNG import at a much higher price.
The government had to import LNG at $36 per million MMBtu last month which was below $10 per MMBtu early this year.
Official sources said the Energy and Mineral Resources Division has also asked Perobangla and its subordinate gas distribution companies to prepare a proposal on readjustment of gas price.
They said the proposal will be discussed with top policymakers and then, if any green signal is found from top level, it will be sent to the Bangladesh Energy Regulatory Commission (BERC) for public hearing.
About this move, Dr Tamim said, now the government has actually no more option but to readjust the gas price as it already raised the prices of diesel and kerosene.
It was not a pragmatic decision to hike diesel and kerosene prices as it will have multiple effects on many sectors, including transport, power and agriculture, as they are dependent on such primary fuel. “It’s not a good step at this point of time when the economy has just started making a recovery,” he said.
The price of natural gas was last increased on June 30, 2019 when the monthly price of gas for household users was raised Tk 975 from Tk 800 for double burner users and Tk 925 from 750 for single burner users.
The price of gas for pre-paid household consumers was increased to Tk 12-60 per cubic meter while the price of CNG was fixed at Tk 43 per cubic metre.
The gas price for power plants and fertilizer factories was fixed at Tk 4.45 per unit while the rate was fixed at Tk 23 per cubic meter in the commercial consumers, Tk 13.85 per cubic meter for captive power plants, Tk 10.70 per cubic meter in industries and tea gardens and Tk 17.04 per cubic metre in small and cottage industries.