Bangladesh plans to clear LNG debt, boost imports, gas production

Bangladesh will clear outstanding payments to LNG suppliers after taking loans worth around $500 million from International Islamic Trade Finance Corporation, or ITFC, State Minister for Power, Energy and Mineral Resources, or MPEMR, Nasrul Hamid said in an interview.

The ITFC-led syndicated loan, of which $100 million is being co-financed by the Bangladesh central bank, to allow state-run Petrobangla to import LNG from international suppliers and make payments in US dollar, is expected to be disbursed this month, Hamid said.

Hamid said that payment to LNG suppliers and local gas producing international oil companies has been slow due to the country’s ongoing dollar shortage.

He said the coming winter could be challenging for Bangladesh as oil and gas prices in the international markets are rising due to firm energy demand in Europe and other countries.
To overcome the crisis Hamid stressed on cost cutting measure by shutting oil-fired power plants and increasing efficient gas-fired power generation. The minister was speaking ahead of Bangladesh’s general elections slated for January 2024.

“Some 800 MW capacity gasoil-fired power plants have already been shut this year,” he said, adding that another 800-900 MW capacity of high-sulfur fuel oil or HSFO-fired power plants will also be shut within the next one year.

According to data from state-run Bangladesh Power Development Board (BPDB), several new gas-fired power plants with capacity of around 1,289 MW have started operations. These include — 200 MW at Ghorashal Unit-4, 100 MW at Shahzibazar, 383 MW at Bibiyana South, Ghorashal Unit-3’s 206 MW and 400MW at Ashuganj.

The 330 MW capacity Khulna gas-fired combined cycle power plant will begin operations within the next several weeks, according to BPDB. The construction of three LNG-based power plants with 1,885 MW capacity is almost complete, according to the official data.

Replacing gasoil plants with gas-fired power plants will save the government around Tk 18 ($0.16)/Kwh, as gasoil plants cost the government around Tk 30/Kwh, while gas-fired plants cost around Tk 12/Kwh, Hamid added.
Boost gas supply

The minister also chalked out a plan to boost domestic gas production and LNG supplies from the international market to meet the mounting domestic demand.

Bangladesh plans to drill 15 exploration wells in the next one year, 31 more wells in the coming years and build a 65-km pipeline to bring stranded gas off Bhola island to the mainland, Hamid said.

According to Bangladesh’s lone state-run oil and gas exploration company, Bangladesh Petroleum Exploration and Production Co Ltd, or BAPEX, Bhola has around 1.5 Tcf of recoverable gas in three discovered gas fields but production is limited to one gas field at around 60,000 Mcf/d of gas, which is used for local consumption.

BAPEX has plans for more exploration around Bhola island and Russia’s Gazprom is set to initiate drilling of five new wells to find new gas reserves, Hamid said. Gazprom completed drilling three wells in Bhola early this year.

Hamid said Chevron Bangladesh also plans to augment natural gas supplies from new areas by 2027, after being awarded a new flank area adjacent to the country’s largest producing Bibiyana gas field for exploration.

Chevron Bangladesh is also in talks with Petrobangla to expand its exploration area further especially in unexplored onshore Block-8 and Block -11 and is in talks with the government to carry out offshore exploration with ExxonMobil, he said.

The government intends to engage international oil companies in offshore exploration after the result of a recent survey in the Bay of Bengal and has already approved a new model production sharing contract that sweetens fiscal terms for future offshore contractors, Hamid said.

Regarding LNG imports, Bangladesh’s has received proposals from Nigeria and some other countries to ink more sales and purchase agreements, or SPAs, following the recent deals with QatarEnergy and OQ Trading of Oman for up to 3 million mt/year starting 2026, Hamid said.

The South Asian country’s cabinet committee on economic affairs has also approved three new SPAs to import LNG from Malaysia’s Perintis Akal Sdn Bhd, local Summit Oil and Shipping Company Ltd (SOSCL), and Excelerate Energy Bangladesh Ltd, a subsidiary of the US-based Excelerate Energy.

Bangladesh will build two more FSRUs with Excelerate Energy and Summit Group with a regasification capacity of 3.75 million mt/year each by 2027 to accommodate new LNG imports, adding to two existing ones, Hamid said.

The country also plans to build its first onshore 7.50 million mt/year LNG terminal by 2027 and squeeze imports from the spot market after 2027 when prices are expected to decline, Hamid said.

Bangladesh is planning to import around 300,000 Mcf/d of RLNG from India’s H-Energy through pipeline by 2027, and Petrobangla may get additional 200,000 Mcf/d of RLNG from a private company, Dipon Gas, in the next couple of years, Hamid said.

Dipon Gas is looking to import around 500,000 Mcf/d of RLNG from India, out of which it will sell 200,000 Mcf/d to Petrobangla and the remaining 300,000 Mcf/d to private consumers, he added.

Price hikes

Hamid said further hike in natural gas and power tariffs are needed to meet funding shortages and called for industrial gas tariffs to be hiked to Tk 35/cu m from Tk 30/cu m and to Tk 25/cu m from Tk 14/cu m for gas-fired power plants.

The country’s power tariff should be market-driven and an increase of Tk 5/kWh can bring about fiscal stability, but hiking tariffs would be challenging, he said.

Bangladesh had raised retail prices of natural gas by as much as 178.9% for industries, power plants and commercial establishments from Feb. 1, retail level electricity prices by 5% each month from January-March and faced resistant from the industry.

Bangladesh’s overall natural gas output is currently around 2.87 Bcf/d, of which 2.09 Bcf/d comes from local gas fields and 781,000 Mcf/d comes from re-gasified LNG, according to official data of Petrobangla as on Sept. 26. Chevron Bangladesh alone is producing around 1.26 Bcf/d of gas, which is around 56% of total domestic gas productions and all local production comes from onshore gas fields, according to the data.
Source: Platts