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Direct LNG import to be cost-effective: Experts say

Published : 09 Oct 2021 09:58 PM | Updated : 10 Oct 2021 02:02 PM

The country's import-dependent energy sector is facing the risk of frequent price hike as Bangladesh is not purchasing LNG directly from the producing countries or under bilateral trade agreement.

At present the government is importing LNG from spot market via third country’s company.

Direct purchase from the producers would be the wiser course of import, experts suggest.

Energy expert Prof Dr Ijaz Hossain told Bangladesh Post, “It is a wrong decision to import LNG from spot market through third party. Because, prices in this market is not stable. So, the government will have to buy LNG under long-term agreement. If the government can implement it, the LNG price will be comparatively lower.”    

The government is moving ahead with a comprehensive plan to import fuel to address the long-time deficit. As the import of fuel oil is increasing under this plan, huge amount of gas (LP gas and LNG) and coal are being added to the list of imports.

Experts say that a full dependence on imported gas is not good for the economy. The construction of infrastructure for importing fuel is very costly and time consuming, along with high price of imported fuel. Therefore, the use of imported energy in large quantities may stand in the way of the development targets set by the government to become a middle-income country by 2021 and a developed country by 2041.

According to sources in the Energy Division, the government has stopped buying LNG from the international spot market for several months due to rising prices. As a result, the country’s gas crisis has also increased. To handle this crisis, it has decided to buy three tankers of LNG on an emergency basis. One of the three tankers has already arrived in the country. The other two will come this month. Of the two tankers that are coming, one will be delivered by Vittal and the other by Ganvar. The price of LNG for Vittal cargo is $36.95 per MMBTU, which is about Tk 3,071 in Bangladeshi currency. The price of Ganvar is $36.95. 

And the price of LNG for first cargo has dropped to $32. Petrobangla has spent around Tk 3,000 crore to buy these three tankers of LNG. However, the LNG was bought for $10 in last January. As a result, Bangladesh has incurred an additional expenditure of Tk 2,000 crore on the three newly purchased tankers.

They suggested the government to resolve the crisis urgently. To this end, deep drilling in depleting gas fields as well as gas exploration should be increased. Besides, all have to put emphasis on energy savings. On the othe hand, arrangements have to be made for the fast construction of land-based LNG terminals.

According to Petrobangla, gas production in the country has started declining at a rate of two to eight percent per month. Currently, 2438 million cubic feet (MMCFD) of domestic gas is being extracted daily. Even three years ago, the country used to produce about 3,000 million cubic feet of gas.

The country's energy sector is mainly dependent on gas, which meets about 70 percent of fuel demand.

According to Petrobangla, the country has 35.80 trillion cubic feet (TCF) of gas reserves. Of this, 28.47 TCF is considered to be extracted. However, around 15 TCF gas has been extracted. Gas consumption in the country averages 1 trillion cubic feet (TCF) to 1.1 TCF per year. 

According to a recent report of Energy Divsion, daily gas production could fall to 2.3 billion cubic feet this year. If no large gas field is discovered, the daily production from the country's fields could be reduced by 18.4 crore cubic feet in 2022-23. Daily production may decrease by 43.5 crore cubic feet in the year of 2023-2024. 

According to the master plan of the gas sector in 2017, the demand for gas in the country will be 440 crore cubic feet in 2025. On the other hand, domestic gas production may decrease causing acute gas ciris.

Currently the daily demand of gas in the country is 420 crore cubic feet. Last Thursday, Petrobangla supplied 310 crore cubic feet. Of this, 67 crore cubic feet was obtained from LNG.

Multiple oil and gas exploration initiatives at sea have repeatedly stalled the tendering process. A few projects have been pending for decades. This has had a negative impact on the energy sector.

There are allegations that year after year, selfish influential quarters have acted as a major obstacle to the development of the energy sector. Tenders have been repeatedly cancelled due to non-availability of work by the preferred company. As a result, although the country has surplus power generation, the energy sector has lagged behind in oil and gas discovery.

When the Awami League government assumed power in 2009, it took several decisions to improve the power and energy sector. Success in power generation comes despite some criticisms. But the overall energy sector has not seen much progress.

In 1975, Bangabandhu Sheikh Mujibur Rahman had bought five gas fields from a foreign Company for 4.5 million pounds sterling (then at taka 17.86 million only). Gas fields have become a major source of energy security for the country. On an average, about 71 crore cubic feet of gas was being supplied daily from these five gas fields. But due to the long supply of gas, the surface gas of the fields was gradually decreasing. It has now come down to 32 crore cubic feet this September.

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