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LNG import to charge 24 times higher than local production: CPD

Published : Monday, 14 February, 2022 at 12:00 AM  Count : 1139

The price of imported Liquefied Natural Gas (LNG) in the fiscal year 2021-22 is going to be 24 times more expensive than the national production by local companies, said a CPD study.
The Centre for Policy Dialogue (CPD) organised a virtual dialogue on Sunday where Dr Khondaker Golam Moazzem and Abdullah Fahad, senior research fellows of CPD, presented the keynote speech titled "Gas-LNG Debate in Energy Supply: Costs and Consequences of LNG Import for the Power Sector".
    According to the analysis, the government's attempt to alleviate the gas shortfall by increasing LNG imports will have substantial fiscal and budgetary ramifications.
As per the report based on available secondary information, the government's attempt to adjust the shortage of gas by augmenting LNG imports is going to have significant fiscal-budgetary consequences.
The economists suggested that Bangladesh should look for an alternative clean energy source although LNG import would be required to continue to meet the country's growing demand.
Since LNG is found to be one of the unpredictable energy commodities, suppliers of the long-term contracts are not showing interest in stable contractual obligations.
The CPD study noted that the sharp rise in the spot LNG price led Bangladesh to buy LNG at $35.89 MMBTU and $36.95 MMBTU for October 2021 delivery.
Presenting a keynote, Khondaker Golam Moazzem said the increasing price trend of LNG in global markets is not likely to change and regional gas prices have also started to converge, thus making LNG export less profitable.
Reportedly, the economic cost of LNG in FY 2020-21 was Tk31.56 per cubic meter whereas the power plants only paid Tk4.45 per meter cube, leaving an additional cost burden of Tk27.08 per unit of LNG import.
Bangladesh's energy supply has been historically dominated by natural gas although the country's local gas production started declining by the end of the last decade. The remaining gas reserve (10 Tcf) will gradually diminish over the years (one third per day by 2030 and zero by 2041), as per the estimation.
Yet the current energy supply infrastructure in the country hugely depends on natural gas.
In FY2020-21, gas was the major (46%) energy supply source as the share of gas-based power plants was reported to be 52%.
According to the projection of the Gas Sector Master Plan (2017), local supply would be largely unable to meet the local demand and the gap will persist till 2030.
The report revealed that the gap will be the highest in 2023-24 owing to the growing demand rate compared to that of local production.
In order to meet the gap in existing demand, the country shifted to import Liquefied Natural Gas (LNG), 650 MMSCFD, yet the shortage of supply remains.
The country's long term target of the clean energy-based power sector would be difficult to attain unless any short to medium term alternate solution is found, the CPD study noted.

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