Bangladesh imported 3.89 million tonnes of liquefied natural gas (LNG) in 2019 which is six times higher than the imports in the previous year.
It brought the country to the second position behind China in terms of Asian LNG demand growth markets for 2019, says a recent Bloomberg report.
This consumption also left the country accountable for 8 percent of global LNG demand growth in that year.
The report also predicted that due to a decline in local gas supply in the South Asian emerging economy, a six-fold increase in LNG imports would be seen over 2019-40 to meet gas demand.
However, the gap between gas tariffs and supply cost will be the main problem to facilitate higher LNG imports, because the government supplies gas with a subsidy.
Bloomberg's report suggested revising the gas tariff policies to narrow the gap and to build importing infrastructures.
The initial reserves of the discovered gas fields in Bangladesh were 27.81 trillion cubic feet (TCF). From that, 16.44 TCF have been used, leaving the country's total reserves at only 11.47 TCF.
The demand for the gas has been growing over the years, while the production side remains at the same position as it was one decade ago.
However, energy experts and economists say that the increasing dependency on imported energy will slow down the country's economic growth in the future.
Professor M Shamsul Alam, energy adviser to the Consumers Association of Bangladesh, told The Business Standard that this expensive energy will not be supportive of the ongoing and expected GDP growth.
"Increasing dependency on the imported fuel instead of exploring the indigenous or local sources will be a burden for the industries and other consumers, because the cost of per unit LNG is seven times higher than the local gas."
To meet the gas demand, both in the industries and domestic levels, he suggested expediting the gas exploration in domestic wells.
AB Mirza Azizul Islam, a former caretaker government adviser, said that LNG could be burdensome for industries if they cannot increase their exports.
"It is good if LNG increases our overall energy consumption. But if it takes over our local energy, then it will have the worst effect on businesses," he added.
On the other hand, Towfiqul Islam Khan, a senior research fellow at the Centre for Policy Dialogue, said that LNG is being supplied to expand the economy.
"We are importing LNG because our natural gas reserve is depleting and we do not have an alternative option. But this is not the ultimate solution in the long run. The government has to be keen to explore new gas fields," he added.
The Bloomberg report further said that industrial and residential sectors will lead the gas demand growth. Industrial gas demand will rise with economic output, whereas rising household income will allow urban areas to replace Liquefied Petroleum Gas (LPG) with regasified LNG and promote gas over biomass in rural areas for cooking.
Currently, the two sectors are the second and fourth consumers – industries consume 16.96 percent, while domestic usages 16.09 percent of the total gas.
The power sector is the biggest user with a 40.60 percent consumption, followed by captive power sector which usages 16.35 percent gas.
However, due to the government's energy mix policy, coal and renewables will take bigger space in power sector by 2030.
Currently, Bangladesh is importing 590-600 mmcf gas per day, which is 19 percent of the country's total consumption, through its two facilities at Moheshkhali.
Rupantarita Prakritik Gas Company Limited (RPGCL) – a subsidiary company of Petrobangla which is responsible for importing LNG – started importing LNG through Excelarate Energy's Floating Storage Regasification Unit (FSRU) from August 2018.
The Summit LNG terminal, the second of its kind in the country, started deliveries in April 2019. The combined capacity of the terminals is 1,000 mmcfd gas per day.
Bangladesh has two long-term purchase contracts, a 2.5MMtpa contract with Qatar Petroleum and another up to 2.5MMtpa with Oman Trading International Ltd. Qatar was the primary source of supply in 2019. Only one cargo originated from Oman, as Oman Trading delivers LNG from its portfolio of supply.
The RPGCL is setting up the third LNG facility, which will be the first land-based terminal with a capacity of handling 1,000 mmcf gas per day.
Md Kamruzzaman, managing director of the RPGCL, told The Business Standard that they have decided to build the new terminal considering the increasing LNG demand.
"We do not have an alternative to importing LNG for meeting the growing demand in industries," he added.
Sensing the government's plan, some international oil and gas companies including Royal Dutch Shell PLC, Total SA, Exxon Mobil Corp, Saudi Arabian Oil Co and Jera Co Inc. are looking to build more regasification terminals in the country.
Besides predicting the growth, Bloomberg report also suggested that Bangladesh get the advantage of oversupplied spot markets and sign long-term contracts with cost-competitive future supply projects.
According to the Royal Dutch Shell's annual LNG outlook report, the worldwide demand for the gas rose by 12.5% to hit 359 million tonnes in 2019.
Citing forecasts, the energy giant says LNG demand is expected to double by 2040 to 700 million tonnes.
At present, Japan is the top importer of LNG, while China is the second-largest importer.