Russia as a superpower now cannot exert its might without Ukraine because of its geo –economic condition as its economic and nuclear lifeline goes through Ukraine. After the collapse of the Soviet Union, unusual expansion of the US-led NATO took place far and wide. With the dismemberment of the union, Russia over the decades has been laying its total attention to revive and rebuild its economy by establishing trade link with European nations through gas pipeline and accordingly the Russian economy significantly rebounded.
Because of the overexercise of power by the US as the lone super power conflict of interests has grown on the one hand, and US power in the world increased to a great extent. In the circumstances, Russia becomes disparate to get back the status of the superpower. On the other hand, consecutive defeats in Vietnam to Afghanistan made the US feeble and the saying goes that because of its internal political situation it cannot afford to attack any mighty nation.
The ground condition of Ukraine is not at all favourable for US and NATO to challenge Russia. Moreover, if mistakenly US engages itself in war against Russia, China may seize the opportunity to join Russia.
If Japan, Australia, India and European countries join the US, it will turn into world war. But before taking the risk, peace-loving European nations and Japan, Australia and India must scrutinize the consequences of war before joining the US. In fact, people of the whole world are against world war as it will not be limited to a conventional war. Rather, it will be a nuclear war.
So, Ukraine has the only option left to compromise with Russia with some special status. But in view of the situation existing, it seems without another crazy Hitler there is no possibility of another world war.
It is apprehended that the conflict between Russia and Ukraine would surge oil and gas prices. As a result, the cost of energy in Bangladesh, which is gradually leaning towards import dependence, will also increase.
According to sources, the price of Liquefied Natural Gas (LNG) per thousand cubic feet was only $10 before August last year in the international spot market but now it has climbed to around $40.
On the other hand, the price of the international benchmark Brent crude oil surpassed $95 per barrel on Friday amid lack of supply and the ongoing tensions between Russia and Ukraine. The price of the American benchmark West Texas Intermediate climbed to as high as $94.65 around the same time – highest since Sept. 30, 2014. Both crude prices were up almost 4% for the day.
The government increased the retail price of diesel and kerosene by Tk 15 a litre in November last year due to the rise in their prices in the international market, resulting in a hike in transport fares and commodity prices.
The global oil market is going through an inadequate supply against high demand as the global economy recovers from the coronavirus pandemic.
The world is watching closely as the geopolitical crisis in Eastern Europe has escalated, with the US promising to provide oil and natural gas to Europe if Moscow cuts off supplies in retaliation for sanctions.
The International Energy Agency raised its 2022 demand forecast and expects global demand to expand by 3.2 million barrels per day (bpd) this year, reaching an all-time record 100.6 million bpd.
Bangladesh had signed two long-term agreements on liquefied natural gas (LNG) imports. After that the demand for imports increased but the government could not sign a new long term agreement. As a result, compensation has to be paid since last year. Because, in the meantime, the price of LNG in the spot market has increased five times last year. Last year, 20 percent of the imported LNG came from the spot market. It has a plan to import around 50 percent of LNG from spot market this year. However, LNG prices are likely to rise in the next two years. So, Bangladesh will have to import LNG at a higher price. As a result, government subsidies will increase along with hike in gas prices at the consumer level.
Petrobangla has set a target of importing 85 crore cubic feet of gas per day this year. Currently, the price of LNG per unit in the spot market is more than $30. On the other hand, under the long-term agreement, LNG is now being imported from Qatar at $10.7 and from Oman at $10.2.
Bangladesh is importing LNG from Qatar Gas and Oman Trading International under a long-term agreement. The first LNG cargo in the country arrived from Qatar in April 2018. Then 63 cargoes came from these two countries in 2019, 66 cargoes in 2020 and 75 cargoes in last year. Apart from this, 16 cargoes have been imported from the spot market last year.
Petrobangla last year sent a letter to Qatar and Oman requesting them to increase supplies of LNG. However, it didn't work. Instead, Oman said it would reduce supplies.
According to the agreement, they will supply 16 cargoes. And Qatar will supply maximum 40 cargoes. However, if the situation in Russia-Ukraine becomes more complicated, fears are there that supplies from these two countries will be reduced. The two countries are also being contacted for LNG imports from Europe. Russia supplies 50 percent of gas in Europe. If this supply decreases, the demand for gas imports from Europe will increase.
Petrobangla officials said that the supply of LNG was offered under a long-term contract two years ago. However, it could not be done, On the contrary the RPGCL cannot buy LNG from the spot market at an instant price even if it wants to, because of the longer government approval process. So, the foreign company wants the price by estimating the price two weeks later, which is also high.
According to Petrobangla, the cost of gas produced by domestic company is at taka 1.27 per unit. And the cost of gas produced from domestic gas field through foreign companies is at taka 2.91 per unit. On the other hand, the LNG price will reach Taka 50.39 this year. So, it would need Tk 44,265 crore to import LNG this year.
The government had to give subsidies amounting to Tk 2,125 crore when it went to buy three ships of LNG from the international spot market on an emergency basis in October last.
Terming the purchase of a huge quantity of LNG from the spot market ‘a wrong decision’, energy experts say a maximum of 10 per cent LNG should be purchased from the spot market and the rest 90 per cent should be procured through long-term agreements with multiple countries.
Experts say the country should give more priority to domestic oil and gas exploration to lessen the dependence on imported LNG, but the issue has long been neglected.
Professor M Shamsul Alam, Energy Advisor of the Consumers Association of Bangladesh (CAB), said, "LNG imports have been made compulsory to provide special facility to some groups by creating a gas crisis.”
Md. Mahbub Hossain, Chairmen of Bangladesh Oil, Gas & Mineral Corporation (Petrobangla) told Bangladesh Post that ‘although the price of LNG has increased in the world market, alternative plans have been made considering the country’s gas demand. Under the long-term agreement, 850 million cubic feet of RLNG is to be imported, but we have a plan to import at least 800 million cubic feet of RLNG. If it is not possible under the long-term agreement, it is being considered to import it from the spot market. However, the price of LNG usually goes down a bit in March-April. However, it will depend on Russia-Ukraine tension.’