Bangladesh plans $2.6b LNG import build-out: GEM Survey

Bangladesh has planned a $2.6 billion cost estimation for liquefied natural gas (LNG) import capacity, placing it among the top 10 Asian countries targeting LNG import expansion, according to a recent Global Energy Monitor (GEM) survey. 

The energy watchdog noted that Asia is still positioned to build the majority of new terminals to import LNG even as the global gas crisis upends the liquefied natural gas (LNG) trade.  

According to the survey, LNG projects totalling 442 million tonnes per annum (mtpa) of new import capacity are at various stages of development in Asia, 65% of new developments globally, and enough to theoretically absorb the entire global LNG trade of 2021.

In Bangladesh, 15.1 mtpa of new LNG import capacity is being proposed, while 26.3 mtpa were cancelled and 9.3 mtpa of LNG projects are in operation.

However, this $119 billion investment plan of Asian countries could lock Asian economies into reliance on a volatile, expensive energy source and challenge global efforts to address the climate crisis. 

The report mentioned that new Asian LNG projects face a difficult market. In the wake of Russia's invasion of Ukraine, European countries have rushed to secure new gas supplies, elevating the cost of LNG worldwide. High LNG prices have already had a significant impact across Asia. 

According to the International Energy Agency (IEA), LNG imports were down 7% year-on-year between January and August, with spot cargoes down 28% over the same period. Price-sensitive South Asian LNG buyers, particularly Pakistan and Bangladesh, are however, finding it difficult to pay high spot prices as the region moves into the winter. 

IEA and Rystad Energy also forecasted Asia's future gas demand; and reports that in countries like Bangladesh, new LNG projects are being dropped or delayed due to poor economics. 

Moreover, developing economies, like Bangladesh and Pakistan have been priced out, failing to secure LNG shipments and resulting in rolling blackouts. These conditions could depress future gas demand in emerging Asian economies.

Robert Rozansky, Research Analyst at Global Energy Monitor, said, "Doubling down on gas is a recipe for disaster with no end in sight for sky-high prices and a tight supply. Asian economies would be wise to leapfrog gas directly to sustainable, clean energy, insulated from the volatility of global fossil markets."

"Investors in planned LNG import infrastructure run the risk of low utilization rates and ultimately possible stranded assets, as high prices are expected to continue for years to come." 

Hence, unaffordable LNG prices to climate disasters, the events of 2022 have underscored the risks of LNG consumption. Asia's $120 billion buildout of LNG import terminals would represent an enormous step toward doubling down on gas over the coming decades. As renewable energy continues to grow more affordable and secure, Asian economies would benefit from meeting new demand with clean energy, insulated from the volatility of global fossil markets, and ultimately more sustainable investments in the global energy transition.