Concerns over oil and gas, conservation measures already instructed

War has spread across the Middle East. Iran’s attack last Monday forced the shutdown of the largest fuel refinery in Saudi Arabia. On the same day, Qatar halted production and supply of liquefied natural gas (LNG). The Strait of Hormuz, which carries twenty per cent of the world’s fuel supply, is also closed. This has disrupted fuel supplies globally. In Bangladesh, fears of an energy shortage have emerged. Consequently, the government has already issued instructions to conserve oil and gas.

Sources at the energy and mineral resources division say that daily gas demand is 38 billion cubic feet. Of this, 26 to 27 billion cubic feet had been supplied. From Wednesday, supply was reduced by 2 billion cubic feet. Gas supply to the fertiliser and electricity sectors has been cut. Reduced electricity generation may cause some load-shedding. In some areas, households may face difficulties in obtaining cooking gas.

Bangladesh is almost entirely dependent on imported fuel. All crude oil comes from Saudi Arabia and the United Arab Emirates, while refined fuel is imported from various countries. In addition, 35 per cent of the country’s gas demand is met by imported LNG, the majority of which comes from the Middle East. The ongoing war has created uncertainty over these imports.

To address the potential energy shortage, yesterday the energy minister, Iqbal Hasan Mahmood, held an urgent meeting with senior officials of the sector. The state minister for power, energy and mineral resources, Aninda Islam Amit, was also present.

After the meeting, Iqbal Hasan Mahmud spoke to journalists at an urgent press briefing at the secretariat. He answered various questions regarding the current energy situation. He said that fuel supply has slowed down.

Without fuel, electricity generation would be affected, but any load-shedding will not be unbearable. Some gas shortages may occur. He emphasised that everyone must use energy conservatively. If conservation is maintained, fuel supply can be sustained until March.

In response to a question, the energy minister said that the current situation is more severe than the Russia–Ukraine war. He warned that overcoming a major crisis will be difficult if everyone does not cooperate. Existing resources must be used conservatively. He assured everyone that there will be no load-shedding from iftar to tarawih or during sehri.

The energy minister said that initiatives have been taken to purchase additional fuel from the open market. However, there has been little response. Therefore, managing the crisis is now the primary task. If resources are managed efficiently, the situation can be brought under control. During the Eid holidays, industrial activity will reduce, lowering electricity demand and easing some of the pressure.

Gas supply has decreased. On Tuesday, 950 million cubic feet of gas was supplied from LNG in the country. Yesterday, this was reduced to 750 million cubic feet. Sources at Petrobangla said that this supply rate will be maintained until the Eid holidays.

According to Bangladesh Oil, Gas and Mineral Resources Corporation (Petrobangla), 115 cargoes of LNG are planned for import this year. Of these, 40 cargoes will arrive from Qatar and 16 from Oman under long-term contracts. Oman also supplies LNG sourced from Qatar.

In addition, 59 cargoes are planned to be purchased from the open market. Qatar is one of the largest LNG suppliers in the market. LNG from the country arrives via the Hormuz Strait, which is currently closed. Qatar has suspended LNG supply amid the ongoing conflict.

Gas from a newly arrived cargo was received at the terminal yesterday. Three more cargoes are scheduled to arrive on 5, 9 and 11 March. These have already passed through the Hormuz Strait. Five additional cargoes are expected this month, including two from Qatar on 15 and 18 March, although Petrobangla has received no response from Qatar despite attempts to contact them.

Efforts are being made to bring LNG from other sources. Two cargoes are expected from Australia and Angola.

Previously, in 2022, the Russia–Ukraine war caused instability in the energy market. LNG prices soared beyond reach. The price per unit exceeded 60 dollars. Bangladesh was able to buy only up to $ 36 and could not purchase more afterwards.

From July of that year, LNG imports from the open market were suspended for seven consecutive months. This caused a gas shortage in the country and reduced electricity generation, leading to load-shedding. Now, LNG prices have risen from $ 10 to over $ 25 per unit, and they could increase further.

Petrobangla chairman Md Erfanul Haque told journalists that LNG ships arrive according to a fixed schedule. A one-day delay in unloading a cargo incurs a penalty of $ 78,000. Two ships this month will not arrive on schedule. Therefore, supply has been slightly reduced to manage resources efficiently, with the plan to maintain this until the Eid holidays.

Bangladesh Petroleum Corporation (BPC) sources say about 20 per cent of the country’s total oil imports are crude oil, which comes through the Hormuz Strait. The remaining 80 per cent is refined oil, imported from ports in China, Singapore, Malaysia, and Indonesia. Supply of crude oil has stopped. Refined fuels such as diesel, petrol (octane), and furnace oil are arriving later than scheduled.

BPC says there are 16 days’ petrol stock and 30 days’ octane stock. Furnace oil for electricity generation has a 76-day reserve. There is currently no concern about these fuels. However, diesel stocks stand at 14 days. About 75 per cent of the fuel supplied by BPC is diesel.

Over two days, the global price per barrel of diesel has risen by nearly 50 dollars. On 1 March, the price was $88; by 3 March, it had reached $137. Although purchase orders for fuel extend until June, ships are not arriving on schedule. For example, the 4 March shipment may arrive on 9 March, the 6 March shipment on 9 March, and the 8 March shipment on 10 March.

Meanwhile, diesel sales have suddenly increased. Normally, 12,000 to 14,000 tonnes are sold per day, but for the past three days, sales have reached 20,000 to 25,000 tonnes per day.

A senior BPC official told Prothom Alo that during unloading at the port, fuel costs must be paid based on a three-day average. The price of diesel per ship has risen from $22 million to $25 million. However, under the contract, freight charges for ships are fixed until June, so there is no scope to increase them. At the same time, ship availability has decreased, which could also cause delays in arrivals.

The ministry has requested public cooperation to use electricity and fuel efficiently. A press release issued by the ministry yesterday stated that ongoing instability in the Middle East is disrupting global fuel supply. Consequently, there is a risk of a temporary fuel shortage in the country.

To prevent public inconvenience during the holy month of Ramadan, the Ministry of Power, Energy and Mineral Resources has issued several precautionary instructions. These include avoiding all types of decorative lighting and reducing private vehicle use while encouraging public transport.

The press release also stated that instructions have been given to law enforcement and traders to prevent the sale of diesel and petrol in the open market. District administrations, police, and Border Guard Bangladesh have already been instructed to take necessary measures to stop fuel smuggling.

Former caretaker government’s chief adviser’s special assistant on energy M Tamim told Prothom Alo that the gas shortage is more severe than the fuel crisis.

He said that fuel conservation and purchasing from alternative sources at higher prices currently have no alternatives. China, Japan, Pakistan, and India have begun gas rationing.

He added that the government has made the right decision regarding demand management and conservation. Some load shedding may occur, and the public must accept temporary inconvenience and help through conservation. A prolonged fuel crisis could develop within two weeks if the war does not end.