Gas crisis: Govt considers transporting gas from Bhola in LNG form

The government is struggling to manage the gas crisis. Domestic gas production has been declining steadily, while additional imports cannot be arranged even if desired, as the necessary infrastructure is not in place. In this situation, the Energy Division has become active in utilising idle gas from Bhola.

During the previous government’s tenure, Intraco was given approval to transport gas from Bhola to Dhaka under the pretext of meeting industrial gas shortages. The gas began to be transported in compressed natural gas (CNG) cylinders in December 2023.

The initial plan was to supply 5 million (50 lakhs) cubic feet per day, with a later target of increasing this to 25 million (2.5 crores) cubic feet. In reality, the maximum supply achieved was only 800,000 to 900,000 cubic feet per day, and the volume is now declining further.

As the plan to transport gas to Dhaka in CNG form has effectively failed, a new approach is now being considered. Under this plan, the Energy Division wants to convert the gas into liquefied natural gas (LNG) and transport it to Dhaka by ship.

Through private-sector initiatives, there is a proposal to bring in 30 million (3 crores) cubic feet of gas per day for industrial use. In this connection, the Bangladesh Energy Regulatory Commission (BERC) held on Tuesday a hearing to determine the consumer-level price of LNG. The hearing was held at the commission’s office. A price of Tk 47.50 per unit of LNG has been proposed, the same price currently set for CNG brought from Bhola.

However, sector stakeholders have expressed surprise over the proposed LNG pricing. They note that the Energy Division had previously stated that Bhola gas would be supplied locally at a comparatively lower price.

At present, the price of gas for new industrial connections is Tk 40 per unit, while it was proposed that industries in Bhola would receive gas at Tk 30 per unit. Yet LNG pricing is being determined without first finalising these rates.

This comes despite the fact that three government advisers visited Bhola last November to encourage investment in the region.

Land has already been acquired with government funding to establish a fertiliser factory in Bhola. The government has also announced plans to develop BSCIC facilities for small and medium enterprises, an industrial zone for large investors, and an export processing zone (EPZ) to attract foreign investment.

Meanwhile, the Sheltech Group has been operating a ceramic factory in Bhola since 2019, and leading business group PRAN–RFL has announced an investment of Tk 60 billion (6,000 crore).

Observers fear that the move to transport gas as LNG could create a negative perception among potential investors in Bhola.

At the hearing, many participants opposed the plan to convert Bhola gas into LNG.

Syed Zulfikar Ali, additional director (finance) of the Bangladesh Power Development Board (BPDB), said the cost of LNG conversion and transportation has been estimated at Tk 29.90 per unit. If 30 million cubic feet are transported daily, the annual cost would be around Tk 9.3 billion (930 crores), rising to Tk 93 billion (9,300 crores) over 10 years.

Instead of wasting such public funds, he argued, approval should be given to establish a 200-megawatt power plant in Bhola.

BPDB representatives further stated that one cubic metre of gas can generate four units of electricity, and transporting that electricity to Dhaka would cost only Tk 1.24 per unit, without requiring any additional investment.

At the hearing, BERC chairman Jalal Ahmed said more gas might yet be discovered in Bhola and that pipelines would inevitably be required in the future.

He added that the commission would consider all opinions before taking a decision.

According to Petrobangla data, daily gas demand stands at 3.8 billion (380 crores) cubic feet, while supply peaks at only 2.7–2.75 billion cubic feet, leaving a shortfall of 1.05–1.10 billion cubic feet.

Exploration and production activities are being intensified through new well drilling. Bhola currently has a production capacity of 120 million cubic feet per day, of which 90 million cubic feet are being used. New wells are being drilled to further increase production capacity in the area.