Depleting reserves, deepening crisis: Why gas shortfall has no quick fix

Infographic: TBS

In 2017, Bangladesh had no gas crisis to speak of. The mismatch between demand and supply was so slight it barely registered on policymakers' radar. The following year, the shortfall crept up to just under 100 million cubic feet per day (mmcfd). Manageable. Largely ignorable.

Fast forward to the present: the deficit has ballooned to over 1,100 mmcfd – nearly a third of total demand now goes unmet. As the economy has expanded, demand for gas has surged. But instead of increasing, supply has dwindled, with existing fields drying up and no significant new discoveries to fill the gap.

The numbers tell a stark story. In fiscal year 2017, Bangladesh produced 972 billion cubic feet of natural gas. That same year, garment exports totalled just over $28 billion. Seven years on, exports have climbed past $36 billion – but gas production has plummeted to just 747 billion cubic feet.

The equation doesn't add up. You can't grow an economy while shrinking its energy base. Nor can you justify massive gas tariff hikes when factories can't even use the limited gas in the pipelines due to poor pressure.

This is no longer just an issue of energy security – it is a question of industrial survival. How can Bangladesh keep its manufacturing wheels turning when the gas simply isn't there?

In 2023, the government raised gas tariffs by a staggering 179%, followed by another 33% increase this year, hoping to stabilise the market. But stability remains elusive. Export-oriented factories, especially in the garment and textile sectors, are seeing productivity nosedive. Machines sit idle. Deadlines slip. And there's no clear end in sight.

Chevron, which supplies nearly 60% of Bangladesh's domestic gas, is witnessing its own production decline. Bibiyana, its largest and most productive field, is losing steam. Meanwhile, state-run Titas Gas has become a byword for inefficiency and dysfunction.

The government's solution – imported liquefied natural gas (LNG) – has not lived up to expectations. Prices remain volatile, import infrastructure is inadequate, and volumes fall short of what's needed to bridge the growing supply gap. The more the government leans on stopgap imports, the more the hole seems to widen.

Exploration? It's crawling. Even with the most optimistic assumptions, no new domestic discoveries will translate into usable gas before another two to three years. By then, what will remain of the industries already gasping for survival?

Factories on life support

Around 2pm on a sweltering Wednesday (7 May), a TBS reporter walked into Little Star Spinning Mills Ltd in Ashulia. The factory floor was eerily quiet. Of the 85 ring machines, only four or five were running. Four out of six production sections sat idle. Gas pressure: a feeble 2.5 PSI – just a quarter of what the factory needs.

This wasn't an off day. It's been the norm for four years. The company's two 1,500kW gas generators remain unused. Chairman M Khorshed Alam says they require 8 PSI and 32,000 cubic metres of gas per hour – they barely get 2. Production has crashed to 30% of capacity.

The math is brutal. Daily output should be 25,000 pounds of yarn. They now manage just 9,300 – on a good day. Monthly losses? Tk3.5 crore, according to Alam.

The fallback option – power from Palli Bidyut – is just as unreliable, with 9 to 11 hours of daily outages. Machinery damage is common. In February, repairs in just one section cost Tk22 lakh.

"We've invested Tk300 crore here," Alam says, visibly strained. "We even paid Tk3 crore to install a 953-metre, 4-inch gas pipeline from Titas. Over the past four years, we've sent 40 letters to Titas asking for a resolution. This gas crisis is slowly killing us."

Minhazul Hoque, managing director of Fatullah Dyeing and Calendering Mills Ltd, shares the same anguish: "We have the orders. We have the machines. What we don't have is gas."

His factory can dye and print 22 tonnes of knit fabric daily but has been operating below 75% capacity for nearly two weeks. The cause? Vanishing gas pressure. Despite having approval for 10 PSI, pressure frequently drops to 2 – sometimes even 1.

Hoque has tried to adapt, using electricity and diesel. Still, production barely hits 16 tonnes. Worse, he says, is the unpredictability. "If we were told when gas would be cut, we could plan. But with no warning, entire batches – especially printed fabric – get ruined."

Alam and Hoque's experiences mirror those of countless gas-dependent factories across Savar, Ashulia, Gazipur, Narsingdi, and Mymensingh. As the struggle for gas worsens, so do financial losses.

The cost spiral is merciless, say industrialists. Energy prices are up, production lines falter, materials get wasted, and orders miss deadlines. In an industry driven by precision and tight margins, this combination is devastating.

"This isn't just a supply issue," Hoque says. "It's a planning failure – and it's bleeding us dry."

A crisis long foreseen, poorly managed

The current gas crisis throttling Bangladesh's industries and households didn't strike without warning. It has been years in the making – a slow-burning disaster that experts predicted, but policymakers failed to prevent.

Since the early 2000s, energy specialists have cautioned that domestic reserves would run out without major new discoveries. Bapex projected that, without fresh finds, Bangladesh could exhaust its gas by 2039 – or sooner. The 2022 Integrated Energy and Power Master Plan (IEPMP) forecasts an even grimmer outlook: domestic production could plummet from today's 2,100 mmcfd to just 580 mmcfd by 2040.

Yet, despite winning maritime boundaries rich in hydrocarbon potential, Bangladesh did not capitalise on offshore exploration. This prolonged inaction has made the country increasingly reliant on costly LNG imports – a dangerous pressure point for foreign currency reserves.

Experts also cite technological negligence. There has been no meaningful investment to modernise aging gas fields. The result: a steady decline in production capacity.

In response to mounting pressure, the interim government has recently suspended the Quick Enhancement of Electricity and Energy Supply Act 2010 and tasked Petrobangla with reviving domestic exploration, including new wells and seismic surveys.

Bangladesh has discovered 29 gas fields since 1955, with initial recoverable reserves of 28.79 trillion cubic feet (TCF). By June 2023, 20.33 TCF had already been extracted, leaving only 8.46 TCF in reserve. Twenty fields are still producing – but at dwindling rates. Bibiyana, operated by Chevron, produced 1,223 mmcfd in FY2020; in FY2024, that dropped to 1,032 mmcfd. Chevron's overall production fell by 228 mmcfd over five years.

Domestic gas production declined from 2,423 mmcfd in FY2020 to 2,049 mmcfd in FY2024 – a 375 mmcfd drop. Meanwhile, demand has soared beyond 3,900 mmcfd. Though an additional 200 mmcfd of LNG was added this week, most of it has been allocated to power plants, offering little relief to industries.

"For a country whose economy relies heavily on energy-intensive exports, such systemic policy failure is costly," says Dr M Masrur Reaz, chairman of Policy Exchange Bangladesh. "This crisis didn't appear overnight. We saw it coming – and we chose to wait."

Reaz, a seasoned public policy expert, harshly criticised the decision to halt exploration in 2012. He suspects the pause may have favoured vested interests linked to LNG imports, at the cost of national energy security.

"You need dollars to import LNG, but we didn't have them – something that became painfully clear in 2022. It was a risky gamble," he says.

Reaz emphasises that exploration must become a top priority, with the lead time drastically reduced. "If exploration currently takes five years, we need to bring it down to three." He also advocates exploring alternatives to LNG.

Relief in sight? Industries to get more gas

There is a glimmer of hope. The interim government has decided to divert 150 mmcfd of gas from power plants to industries and add another 100 mmcfd from four incoming LNG cargoes. In total, industries are set to receive an additional 250 mmcfd.

The announcement came during a meeting with business leaders on Wednesday. AK Azad, former president of FBCCI and managing director of Ha-Meem Group, who attended the meeting, said the increase would go a long way in addressing current demand.

"This is an encouraging move, especially when industrial output is declining," says Dr Reaz. "Businesses have been vocal and recently ramped up pressure to secure a stable gas supply."

According to the Energy Division, the industrial sector needs 1,306 mmcfd of gas but currently receives only 994 mmcfd – resulting in a shortfall of 312 mmcfd. The new allocation is expected to significantly close that gap.