Govt moves to ramp up LNG terminal capacity as demand slows down

IEEFA analysis projects sluggish days ahead for LNG thru 2028

Published : 25 Apr 2024 09:03 PM

Despite plans to ramp up LNG terminal capacity, fiscal challenges the country is presently mired in may limit a drastic LNG demand growth in the short-term.

The observation was made on Monday by the Institute for Energy Economics and Financial Analysis (IEEFA), which styles itself as a 'global think tank' focused on the international energy market, in its “Global LNG Outlook 2024-2028”.

In an analysis, it said that new nuclear facilities, coal-fired plants and renewables may limit full capacity utilization of gas-fired plants in the near term.

“Bangladesh may opt for gas-fired peaking plants instead of only base-load plants to accommodate more renewable energy. It may seek to limit the LNG demand growth rate by frontloading energy efficiency in industrial processes and captive generation,” said the IEEFA.

The IEEFA launched its Global LNG Outlook 2024-2028. The report offers IEEFA's outlook on the global LNG demand from 2024 to 2028.

Regarding Bangladesh, Shafiqul Alam, IEEFA's Lead Analyst for Bangladesh Energy says, "Low spot market LNG prices resulted in a rebound in demand from Bangladesh by 17.9% in 2023 after imports fell by 14.4% in 2022, but sensitivity to volatile LNG prices, fiscal challenges and competing energy resources in the power sector point to a moderate medium-term demand growth."

About the global LNG demand, the IEEFA said lackluster demand growth combined with a massive wave of new export capacity is poised to send global liquefied natural gas (LNG) markets into oversupply within two years.

LNG demand in Japan, South Korea, and Europe—which together account for more than half of the world’s LNG imports—is expected to fall through 2030.

In emerging Asia, LNG demand growth will face significant economic, political, financial, and logistical challenges that may not be fully resolved in an oversupplied market. Global LNG supply capacity is set to reach 666.5 million metric tons per annum by the end of 2028—a 40% increase in just five years—despite uncertain demand. 

The IEEFA said sluggish demand growth for LNG, combined with a record increase in global export capacity through 2028, will likely thrust markets into an extended period of oversupply.