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Bangladesh’s liquefied natural gas (LNG) imports over the next two or three years is unlikely to rise significantly, due to the ongoing USD crisis and devaluation of Taka, said Australian think tank Institute for Energy Economics and Financial Analysis (IEEFA).
These findings were revealed in IEEFA’s new Global LNG Outlook published on Wednesday, which analysed LNG supply and demand across the world.
IEEFA’s findings indicate that if Bangladesh implements the 40 per cent renewable energy target drafted in the Mujib Climate Prosperity Plan, it could reduce the pressure of importing LNG at a high cost.
Global LNG supplies are likely to remain tight throughout 2025, curbing imports in key Asian markets. LNG demand in Europe may remain strong by 2030.
Due to high prices, Bangladesh’s LNG imports dropped by 16 per cent in 2022, which in turn increased fuel prices and electricity tariffs, affecting power supply. Meanwhile, the government expects to reduce the occurrence of frequent power cuts in the upcoming summer months by utilising coal-fired power plants.
Bangladesh recently hiked gas prices for various sectors, excluding household, transport, and fertiliser, to reduce fiscal burdens.
After a dip in Asian spot market prices in January 2023, the government started spot purchase of LNG for the first time in eight months on January 25, and now aims to make up to 12 spot purchases in 2023.
Yet, long-term contractual arrangements remain a priority. Bangladesh is currently negotiating a 1.5 million tonnes per annum (MTPA) supply contract with Brunei, though any potential deal would not begin until 2025 at the earliest, said IEEFA.
The analysis says that in 2022, European countries boosted LNG imports by 60 per cent to make up for the declining pipeline gas supply from Russia. Europe’s demand drove global spot prices to all-time highs, forcing price-sensitive Asian buyers to slash purchases and import plans.
China cut 2022 LNG purchases by 20 per cent, due to a combination of high prices, Covid-19 shutdowns, and slower economic growth. High LNG prices have pushed the country’s gas buyers to rely more heavily on domestic production and pipeline imports.
The South Asian nations India, Bangladesh, and Pakistan combinedly slashed LNG imports by 16 per cent last year. Concerns over fuel security, unaffordability, rapidly depleting foreign currency reserves, and demand destruction could limit the region’s medium-term LNG imports.
