Gas crisis persists

Zakia Raihana lives on Road no. 7 in Dhanmondi, Dhaka. Her home has a connection to Titas Gas, but she faces constant hardship. Without gas when needed, she cannot cook. This Ramadan, the problem has reached its peak.

Zakia told Prothom Alo, “For the past four days, no flat in the building has gas. Neighbouring flats also have none. People are suffering a lot. This cannot continue.”

This gas shortage is not new; it has persisted for more than one and a half decades. During this period, gas prices have risen sharply. Though imports were initiated to ease the crisis, it has instead strained the economy. The country faces large debts, yet the gas shortage remains unresolved.

Gas is required not only for cooking, but also for industry, power generation and fertiliser production. Part of the transport sector also runs on gas. Officials of the Ministry of Power, Energy and Mineral Resources and energy experts say one of the major challenges facing the new government is increasing gas supply. If that cannot be done, people’s suffering will not ease.

At the same time, if the industrial sector does not receive gas, investment and employment will be hampered. It will also be difficult for the Bangladesh Nationalist Party government to achieve its economic targets. The party has said it wants to raise the size of Bangladesh’s economy to one trillion dollars by 2034, which currently stands at about 450 billion dollars (one trillion equals one thousand billion).

According to the figures from the energy ministry, total daily gas demand across all sectors stands at 3.8 billion cubic feet. Domestic production and imports together supply 2.65 billion cubic feet, leaving a shortfall of 1.15 billion cubic feet. As a result, gas shortages persist in households, industry and transport.

Sources at Petrobangla say 11 per cent of gas is used for household cooking. The largest share, 41 per cent, is consumed by the power sector. Industry, including captive power, accounts for 36 per cent. Fertiliser uses 6 per cent, the CNG sector 5 per cent, and the tea sector 1 per cent.

Depending on demand, supply is reduced from power to fertiliser and from fertiliser back to power. CNG stations are also shut to manage demand.

After the BNP government took office on 17 February, the daily closure period of CNG stations was increased from three hours to six hours. Even so, gas shortages continue in different areas of the capital.

Earlier, on 12 February, one of the terminals supplying imported liquefied natural gas (LNG) was shut down for maintenance. This led to an acute gas crisis. The terminal resumed operations on 16 February, and supply returned to its previous level yesterday, Sunday. It is scheduled to undergo maintenance again on 24 or 25 February. However, this time the work may be carried out by reducing supply instead of fully shutting it down.

When the LNG terminal is shut, pipelines become empty. As a result, water enters through leaks in the pipelines. The problem is more severe in Dhanmondi, Mohammadpur and Lalmatia, where many of the lines are old. Based on complaints, workers of Titas Gas Transmission and Distribution PLC, which supplies gas in Dhaka, are visiting homes to clear water from the lines.

However, the overall shortfall persists. Sources at Titas say their daily demand stands at 1.9 billion cubic feet, while supply is around 1.5 billion cubic feet. There is little hope of an increase in supply anytime soon.

The shortfall in gas supply compared to demand had existed even earlier. After taking office in 2009, the Awami League government ordered a halt to new residential gas connections across the country from 21 April that year.

On 3 January 2011, a committee was formed under the leadership of the then prime minister’s energy adviser, Tawfiq-e-Elahi Chowdhury, to oversee new gas connections. New connections were provided after scrutiny by that committee.

At the time, allegations of favouritism and corruption in gas connections were raised. Later, on 21 May 2019, the Energy Division officially issued a notice suspending residential, commercial and CNG connections under Titas.

During the Awami League government’s tenure, adequate emphasis was not placed on domestic gas exploration and production. Instead, there was encouragement towards imports. Gas imports began in 2018.

After the war between Russia and Ukraine began in 2022, global gas prices rose sharply. As Bangladesh increased imports, its foreign exchange reserves declined. This led to a rise in the dollar’s price. At the beginning of 2022, the exchange rate was Tk 86 per dollar; it now stands at 122 taka. The higher dollar price has further increased import costs.

Citing the need to increase imports, the Awami League government sharply raised gas prices. In 2009, the monthly bill for a double-burner connection was Tk 450. It was increased to Tk 1,080 under the Awami League government. In the industrial sector, the per-unit price of gas was Tk 5.86, which rose to Tk 30 during its tenure. However, the deficit was not resolved; instead, production costs in industry increased.

However, the Awami League government was deposed from power in the face of student-people mass uprising in July and August 2024. At that time, the government’s debt in the gas sector stood at around Tk 90 billion.

After taking office, the interim government did not raise households gas prices. However, it increased gas prices for new industrial connections by about 33 per cent. It also cancelled the contract signed during the Awami League government’s tenure with Summit Group for setting up a floating terminal.

The Awami League government had also signed a term sheet with US company Excelerate Energy to establish another terminal, but the interim government decided not to convert it into a formal agreement.

The interim government has placed emphasis on drilling new wells and renovating existing ones in the gas sector. It has also repaid almost all of the previous government’s outstanding dues.

However, during its 18-month tenure, it has not been able to significantly increase production or supply. Instead, it has attempted to offset the decline in domestic output by slightly increasing imports.

Production from domestic gas fields is falling at an alarming rate. Officials of Petrobangla say that as recently as 2017, daily production from local gas fields stood at 2.7 billion cubic feet. It has now declined to 1.7 billion cubic feet per day.

According to data from the Energy Division, the country has 29 gas fields. The total recoverable reserve is 29.74 TCF. Of this, 21.78 TCF had been produced until June last year, leaving 7.96 TCF in reserve. At the current rate of production, the remaining reserves may last seven to eight years. However, production usually has to be stopped while leaving a portion of gas in the field.

Of the remaining reserves, around 1.25 TCF is located in Bhola. However, one of the three gas fields in Bhola is producing at half of its capacity, while production has not yet started in the other two. There is no infrastructure to transport Bhola’s gas outside the district. The gas is compressed into CNG, filled into cylinders and brought to Dhaka, but only in small quantities.

Production at Bibiyana in Habiganj, the country’s largest gas field, is declining rapidly as its reserves near depletion. Petrobangla says output will continue to fall over time. To increase domestic production, new gas field exploration and well drilling are required.

Compared with the level of exploration, Bangladesh’s success rate in discovering gas fields is higher than the global average. However, proper exploration has not been conducted. Even 14 years after the maritime boundary verdict, no oil or gas has been discovered in the Bay of Bengal. During the Awami League government period, four foreign companies – ConocoPhillips (USA), Santos (Australia), POSCO Daewoo (South Korea), and ONGC (India) – began work. They later proposed revising contracts and raising gas prices, but when negotiations failed, they left. Onshore gas exploration was also not prioritised.

During the last interim government, no company participated in tenders for offshore oil and gas exploration. A new tender process is now being prepared.

After 2022, the Awami League government planned 50 well drillings combining exploration, maintenance, and development, due to rising global prices and lack of foreign currency for imports. If all 50 wells had been drilled, about 650 million cubic feet of gas per day could have been added to the national grid. However, this was not implemented as a priority.

BNP’s pledges for the gas sector

BNP’s election manifesto contains three pledges regarding the gas sector. First, BAPEX (Bangladesh Petroleum Exploration and Production PLC) will be strengthened to boost onshore and offshore gas exploration through geological surveys and well drilling, ensuring a transparent, technology-based resource management system. Second, to keep fuel prices affordable and transparent, the effectiveness of the tariff-setting system will be enhanced, and independent review processes will be introduced as needed. Third, to ensure fair, uninterrupted, and affordable gas supply for households and industry, the distribution system and pricing policies will be reviewed.

Analysts believe the new government faces at least four challenges in the gas sector: increasing domestic gas production, building new infrastructure for LNG imports, reducing waste by curbing corruption and gas theft, and controlling prices.

According to analysts, over Tk 40 billion worth of gas was wasted last year in the name of technical loss, much of it due to theft. Operations to remove illegal connections continue, but results are limited. A strong crackdown by the new government may slightly relieve the gas pressure without increasing imports or production, but bridging the deficit is impossible without boosting domestic output and imports.

M. Tamim, special energy adviser to the former caretaker government’s chief adviser, told Prothom Alo that no major solution exists at present. Gas must be rationed. Increasing supply to other sectors may be possible by importing fertiliser. LPG should be promoted as an alternative fuel for homes and transport, and electricity generation from oil and coal must be increased.

In the medium and long term, he said, increasing supply will require new gas exploration, storage management, energy conservation, and building import infrastructure.