Saturday, June 22, 2024


Dhaka Tribune


Is it time to reconsider our own gas reserves?

With the world energy market in turmoil due to the Ukraine war, there is no better time for Bangladesh to renew domestic gas production efforts

Update : 08 Aug 2022, 12:01 AM

In Bangladesh, where the government recently celebrated 100% electrification of households, the impact of the Ukraine war is being acutely felt. With 52% of electricity generated from gas-based power plants, the country is struggling to deal with surging gas prices in the international market. 

Russia’s invasion of Ukraine has pushed up oil and gas prices. Bangladesh buys a lot of its gas from the East Asian spot market, where gas prices have surged to record highs due to the war in Ukraine. The Japan-Korea Marker (JKM) gas price and the JOGMEC gas price have seen the steepest rise.

The halt of Russian gas supplies to Europe has led to a scramble for new sources. Alternative gas suppliers are likely to experience a windfall. Britain, itself an oil and gas producer in the North Sea, recently announced a 25% windfall tax on the profits of oil and gas companies. The chancellor who introduced the tax -- Rishi Sunak -- is now running to be prime minister. 

African producers like Algeria and Nigeria are among the alternative sources. Nigeria reportedly has 28% plant capacity to produce LNG but needs to pump more gas to process into LNG. Algeria has to increase capacity because it is bogged down in domestic consumption and underinvestment. 

Increasing capacity in the short term has a timeframe of six to eighteen months. Medium and longer term investments stretch into two years and beyond. Exploring and developing new offshore gas fields can take several years over the medium and long term.  

The world is also embarking on a historic green energy transition. Oil and gas exploration is currently at an all time low. However, even with the green transition, certain industries like chemicals will continue to rely on oil and gas. 

Is Bangladesh missing out?

Bangladesh itself is a major gas producer. But all of its gas is directed towards domestic consumption. The policy of successive governments has been to not export gas. The ban on gas export exists despite the proximity of major energy markets like China and India. Bangladesh’s own increasing consumption has also led to the import of LNG from the international spot market. 

In 2014, Bangladesh was hailed as Asia’s next energy superpower after it secured control of maritime territory in the Bay of Bengal following the resolution of disputes with India and Myanmar. According to one estimate, Bangladeshi territory in the bay contains the largest gas reserves in the Asia-Pacific outside the Middle East. Oil and gas companies once used to say that Bangladesh is literally floating on gas. Yet till today, not a single deep sea gas field exists in Bangladesh’s territory. 

India and Myanmar have both developed deep sea gas fields. But Bangladesh currently has no significant offshore production. The time has surely come to rethink our domestic gas production policy. By not increasing domestic production with the possibility of exporting gas, the government is now facing an acute gas shortage and relying on the war-affected spot price market. 

Not only would increased gas production strengthen Bangladesh's energy security, gas exports could be a significant source of revenue for the state exchequer, allowing for bigger financial reserves and potential investment in more big infrastructure projects at home. Is Bangladesh leaving money on the table by not investing in further domestic gas exploration and production?

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