Although the government is gearing up for the import and distribution of liquefied natural gas (LNG) to meet the country’s demands, it appears there have been no assessments of demand and no coordinated plan.
There are no decisions yet as to how many floating and land-based terminals will be built and how much LNG will be imported.
Already deals and memoranda of understanding (MoU) have been done for establishing six LNG terminals and also expressions of interest (EoI) have been called for establishing more terminals.
An official of Petrobangla, which is responsible for establishing the terminals and importing LNG, told the Dhaka Tribune, requesting anonymity: “There is no plan yet on how many terminals will be established and how much LNG will be imported.
“Even the planning for importing high priced LNG to meet the demand of natural gas was also not made based on any cost and benefit study. Everything was done based on estimation.”
Discovery of new gas fields has slowed down in the last two decades. The latest gas field was discovered in 2014 in Rupganj, Narayanganj and before that, in 2012 in Comilla. The demand for gas, however, has been on the surge.
Bangladesh is now reeling under natural gas shortage with daily average output of around 2,700 mmcfd of gas against the demand for over 3,500 mmcfd, according to Petrobangla.
An LNG import plan was undertaken in 2010 due to gas shortage. But the price of imported LNG will be higher than the price of natural gas extracted in Bangladesh. The LNG will be added to the national gas grid.
In 2010, the government planned to import LNG to meet gas demands. Deals were made with two organisations to build floating terminals. Petrobangla also signed MoUs with four organisations to build two more floating terminals and two land-based terminals.
The deals and MoUs were signed under the Speedy Supply of Power and Energy (Special Provision) Act 2010, taking the recommendations of local and foreign organisations into account.
The deals were signed with the US firm Excelerate Energy and local conglomerate Summit Group. The MoUs were signed with Indian giant Reliance Group and Hongkong Shanghai Manjala Power Ltd.
MoUs were signed to build land-based terminals with China Huanqui Contracting and Engineering Corp (HQC) and Indian Petronet.
The storage capacity of the LNG terminals in Chittagong and Cox’s Bazar will be 3,000 mmcfd which will be established by six local and foreign organisations.
LNG will be imported by Petrobangla from Qatar, Oman and Switzerland and will be added to the national gas grid by 2020.
Also some organisations from the UAE, Singapore, China and Malaysia have shown interest to build LNG terminals in Bangladesh.
On the other hand, state-owned Rupantarita Prakritik Gas Company Limited (RPGCL), Petrobangla’s company and Power Cell under the Power Division have also invited separate EoIs for building land-based LNG terminals.
The RPGCL wants to build a terminal in Moheshkhali, Cox’s Bazar and in Payra of Patuakhali. The Power Cell has already shortlisted some companies after calling EoI to build terminals in Chittagong’s Anwara and Moheshkhali.
“We are also expediting the preparatory work for installing LNG terminals to meet the ever-growing demand for energy,” Finance Minister AMA Muhith said while reading out his budget speech for fiscal year 2017-18 on June 1.
“We will carry on our initiatives to increase electricity generation capacity by supplying LNG to power plants which closed down for lack of gas supply. Therefore, we will strengthen the activities for installation of LNG terminals and LNG import. We are expecting to import LNG and supply gas by 2018,” he said.
“People are debating the issue of increasing gas prices. Gas will be purchased at international prices when its import begins in 2018.”
Taxes on gas will have to be rationalised and the price of gas will undoubtedly increase, Muhith said, but added that the price will be adjusted by subsidising.
Energy and Mineral Resources Secretary Nazimuddin Chowdhury said: “We will implement the agreements that we have signed so far. There will be some more agreements in future. Not everything happens as planned. In many cases, some plans are not materialised for some reason.”
“Energy is a major driving force of the economy. There has to be a balance between demand and supply. Otherwise, the sector will get unbalanced,” said Professor Mustafizur Rahman, distinguished fellow at the Centre for Policy Dialogue (CPD).
He said gas prices have already been adjusted in Bangladesh.
“It is mandatory to ascertain, through a study, as to how much LNG import is required. Considering the study, a long-term agreement can be sealed,” he said.
“The sector may reel from a price shock due to the construction of LNG terminals and import of LNG in an unplanned way. The affordability of consumers has to be considered in this regard. Hence, a proper survey and proper planning are needed,” Dr Badrul Imam, professor of geology department at Dhaka University, told the Dhaka Tribune.
He said onshore and offshore gas exploration must be brought under attention instead of giving so importance on LNG import.
“If the exploration becomes a success, there will be no tension over gas prices,” he said.