‘Growing LNG import to hurt country’s energy security’
Bangladesh will have to spend $20 billion annually every year till 2030 if the current trend of importing Liquefied Natural Gas (LNG) continues instead of exploring its own resources, according to energy experts.
They blame the lack of effective steps for hydrocarbon exploration in the country and the pressure from vested quarters to import LNG by the private sector in order to make Bangladesh a fully-import dependent energy user. According to the annual report published by the International Group of LNG Importers (GIIGNL), Bangladesh ranked 15th among the LNG importing countries in 2020.
Expressing grave concern over the country's energy situation, energy expert and former professor of Chemical Engineering Department of Bangladesh University of Engineering and Technology (BUET) Dr Ijaz Hossain said Bangladesh is moving towards a dangerous situation as Petrobangla has failed to conduct necessary exploration in hydrocarbon sector.
Speaking at a recent discussion he said: "Currently, we're importing 20-25 percent of gas in form of LNG from abroad. If there's no more gas discovery within the next 10 years, we will have to import more than 90 percent of required gas from foreign sources."
"The government has to ensure at least 15 percent drilling -- 5 percent by Petrobangla and 10 percent by foreign companies -- to avert the future crisis.
Official data of the state-owned Petrobangla reveals, currently 20 percent of the total gas requirement in the country has to be met by import. The use of gas stands at 2,970 million cubic feet per day (mmcfd) against a demand for 4610 mmcfd.
As per the country's Gas Master Plan 2017, the demand will increase to 5257 mmcfd in 2022-23, 6228 mmcfd in 2024-25 to meet the needs of different sectors, including power and industry, in line with average 7 percent economic growth.
According to a Petrobangla forecast, the country's gas production from the local fields will be depleting and imports will continue to rise to meet the growing demand in power, industry and other sectors.
Petrobangla's Annual Report 2020 says the country's total initial recoverable proven plus probable gas reserve of 27 fields has been estimated to be at 28.29 trillion cubic feet (TCF). Up to December, 2020, as much as 18.24 TCF gas was produced, leaving only 10.05 TCF of recoverable gas in 2P category. Currently, 20 gas fields are in production with 105 wells on-stream.
Data from the Rupantarita Prakritik Gas Company Limited (RPGCL), a subsidiary of Petrobangla, shows that the government had to import 4.16 million tonnes of LNG in fiscal year 2019-20 and 4.46 million tonnes in 2020-21.
Bangladesh's overall natural gas output is currently hovering over around 2974 million cubic feet per day (mmcfd), of which 581 mmcfd is regasified LNG and the remaining around 2400 mmcfd of gas output comes from local gas fields.
Petrobangla has been purchasing LNG at around 11.9 per cent of the three-month average of Brent crude oil prices plus $0.40 cents per mmBtu and the payments are to be made within 25 days of delivery. Petrobangla started the regular LNG import on September 9, 2018.
Contracted, long-term LNG suppliers have slashed the sales commitment to Bangladesh for next year to cash in on 'volatile' spot-market prices amid post-corona business rebound. The short-supply commitment on LNG might lead to the country's overall natural gas-supply shortfall next year if local gas output does not increase.
Besides, the government has not yet adopted any plan to import LNG from the spot market next year although it imported a total of 16 LNG cargoes from the spot market in 2021. They prefer trading in LNG on the volatile spot market where prices surged around fivefold of the rates under term deals.
Earlier, on September 22, a meeting of the Cabinet Committee on Public Procurement approved a proposal to import 3,380,000 mmBtu LNG. At that time, the price per mmBtu was US$29.79. The decision was taken not to buy the product from the spot market till December due to rising LNG prices.
But the energy department backtracked on the decision, citing a gas shortage. Experts disagree with the decision to buy LNG from the spot market, as they said Bangladesh does not have the situation to buy LNG from the spot market.
If Bangladesh wants to buy LNG, it has to buy it with a long-term plan. Instead of looking at the international market, Bangladesh has to focus on achieving its own production capacity.
The country needs 75 to 80 crore cubic feet of LNG per day for uninterrupted power supply. But in contrast, the amount of LNG supply in the country is about 400 million cubic feet. The deficit is more than 35 crore cubic feet. The amount of this deficit is constantly increasing.