• Sunday, Nov 27, 2022
  • Last Update : 10:24 am

Bangladesh mulls producing LNG locally

  • Published at 02:01 pm September 5th, 2021
Undated photo shows a top view of Moheshkhali Floating LNG Terminal in the Bay of Bengal Collected

It will help reduce imports significantly

The government is looking to produce liquefied natural gas or LNG locally in order to cut down imports as well as costs, and meet the growing domestic demand for fuel.

The Energy and Mineral Resources Division has recently sought the opinion of Petrobangla on whether an initiative to turn gas, extracted from Bhola, into LNG and supply it to the national grid is technically and financially feasible.

If a feasibility test is approved, it will be Bangladesh’s first step towards producing LNG domestically.

Bangladesh entered the LNG era in August 2018 importing it from Qatar to meet the domestic fuel demands.

Bangladesh now buys LNG from Qatar and Oman, and currently procures 600 million cubic feet (mmcf) of LNG per day.

Also Read- LNG import: Foreign companies seek long-term deals, but experts want competitive bidding

If the feasibility test is successful, Petrobangla will be able to produce around 184mmcf of LNG from Bhola, according to the officials concerned.

State Minister for Power, Energy and Mineral Resources Nasrul Hamid told Dhaka Tribune: “Within a few years, the daily domestic gas demand will increase to around 10,000mmcf. We cannot produce this much from the existing gas fields, which is why we are looking for various sources.”

The feasibility test would help figure out the best way to add the gas extracted from Bhola to the national grid, he added.

On Friday, he said, currently 2,900-3,000mmcf gas is being supplied against the daily demand for 3,400mmcf gas from domestic wells and imported LNG.

As Bhola is an island district surrounded by rivers and the Bay of Bengal, gas transmission through pipelines is difficult as well as costly.

Also Read- Nasrul Hamid: 5mmcf gas added to national grid

This is why the government is thinking of liquefying the gas and transporting it via ships, before adding it to the national grid following re-gasification.

When contacted, Energy and Mineral Resources Division Senior Secretary Md Anisur Rahman told Dhaka Tribune on Sunday: “We are currently scrutinizing technical studies on how to use the gas extracted in Bhola. We think it will not be possible to use it via pipelines.”

He said that the government would start digging three more gas wells in Bhola in November. “There is a chance of getting a huge amount of supply from there. We have to decide on how we want to add it to our national grid,” he added.

An average of 50mmcf of gas is extracted from the four wells of Shahbazpur Gas Field in Bhola.

Both demand and expenditure to grow

Officials said the country has to spend about $1.7 billion to annually import four million metric tons of LNG, which is expected to rise in coming days with increased gas consumption.

Also Read - Two recently-relinquished offshore gas blocks remain unexploited

In a recent discussion, energy expert Dr M Tamim said if the present trend on import of LNG (liquefied natural gas) continues, the country will have to spend annually $20 billion by 2030. 

Sources said Petrobangla inked LNG sales and purchase agreements (SPAs) with the two companies after G2G negotiation under which it started regular import of LNG from September 9, 2018.

The country's first-ever sales and purchase agreement with Qatar's RasGas was signed to buy annually around 2.5 million tonnes per year (Mtpa) of lean LNG over 15 years.

During the initial five years of the deal, QatarGas will supply annually around 1.8 Mtpa of LNG, which will be increased up to 2.5 Mtpa in next 10 years.

The purchase price has been set at around 12.65% of the three-month average price of Brent crude oil plus US$ 0.50 constant per MMBtu (million British thermal unit).

If Petrobangla has more demand during the first five years, it can increase the LNG import volume annually to 2.5 Mtpa, and during the next 10 years Petrobangla has the option to reduce the amount by 10% every year.

On the other hand, the entity signed almost a similar deal with Oman trade International to import the bulk LNG.

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