Petrobangla spends $3.27b in 7 months to meet LNG, foreign payment obligations

Highlights:

• Petrobangla spent $3.27B April–October 2025 on energy obligations
• LNG imports consumed 82% of total spending, $2.69B
• System loss and subsidies cost $292M, straining finances
• Imported LNG costs nearly 9,000 times local gas per unit
• Rising LNG dependence threatens Bangladesh's economy, reserves, energy security
• Experts urge domestic exploration, efficiency, and policy reforms urgently

The state-owned Oil, Gas and Mineral Corporation, Petrobangla, has spent a staggering $3.27 billion between April and October 2025 to settle import bills for liquefied natural gas (LNG), make payments to international oil companies (IOCs) operating in the country, and repay loans to the Islamic Trade Finance Corporation (ITFC).

Of the amount, $2.69 billion went to meet LNG import liabilities, accounting for 82.3% of total spending over the seven-month period.

Around $292 million was paid in subsidies – averaging $41.7 million per month – to bridge the shortfall from system loss and selling gas to various public and government entities below cost.

According to Petrobangla data for FY25, roughly 174 million cubic feet per day (mmcfd) of gas, worth over $333 million, was lost from the distribution network due to system loss and pilferage, inflicting significant financial strain on the corporation.

AKM Mizanur Rahman, director (Finance) of Petrobangla, said, "We have been paying all our obligations on time since April. As of October, payments of $3.27 billion have been made to LNG suppliers, IOCs and ITFC."

He said making payments on due time is necessary to maintain uninterrupted gas supplies amid falling domestic production and mounting arrears to overseas suppliers. "The payment pressure remains intense, but delays could risk fuel supply disruptions to the national grid," he added.

LNG takes the lion's share

Between April and October, Petrobangla imported 196,020 mmcf of LNG at a cost of $2.69 billion. In contrast, it paid $449.21 million to IOCs for 296,368,014 mmcf of domestically produced gas, representing 13.7% of total payments.

The average cost per mmcf of LNG stood at approximately $13,725, compared to just $1.52 per mmcf from locally produced gas. The remaining $130.2 million – about 4% of total payments – went to ITFC.

The comparison reveals that each unit of imported LNG costs nearly 9,000 times more than gas sourced from IOCs – a worrying trend for Bangladesh's fiscal sustainability. 

The International Energy Agency (IEA), in its World Energy Outlook 2025 released yesterday, also warned that Bangladesh's growing dependence on imported LNG could further weaken the country's economy and energy security in the coming decade.

The agency projects that by 2035, combined LNG imports by Bangladesh and Pakistan will reach around 80 billion cubic metres – a 60% increase from 2024 levels.

April marks peak spending

April was the costliest month of the seven-month period, with Petrobangla disbursing $790.73 million. Of this, $538 million went to LNG imports, $219.42 million to IOCs, and $33.31 million for ITFC debt servicing.

Officials said the spike in April's payments was linked to overdue LNG bills carried over from earlier months, as the government prioritised clearing arrears to secure fresh shipments from the spot market relatively at a cheaper price.

In May, total payments declined to $487.15 million, largely due to lower settlements with IOCs. Of this, $472 million went to LNG suppliers and $15.15 million to IOCs.

The downward trend continued in June, when payments totalled $388.9 million, including $338.32 million for LNG and $50.58 million for IOC dues.

By July, payments dropped further to $353.7 million – $321.13 million for LNG imports and $32.57 million for IOC settlements. 

Officials attributed the decline to fewer LNG cargoes arriving from long term contracts during the summer months and a government effort to curb costly spot market purchases amid ongoing foreign currency shortages.

Pressure resumes from August

Payment pressure began to rise again from August, with Petrobangla spending $404.75 million – $342.9 million for LNG and $61.85 million for IOCs.

In September, payments increased to $419.90 million, including $352.30 million for LNG, $37.34 million for IOCs, and $30.26 million for ITFC repayments.

The upward trend continued in October, when Petrobangla paid $428.62 million. LNG imports accounted for $329.69 million, IOC payments $32.3 million, and ITFC loan servicing $66.63 million.

Officials said the higher ITFC payments in October reflected a scheduled instalment under the state's petroleum import financing arrangement.

Strain on reserves

Petrobangla's foreign payments continue to to weigh on Bangladesh's external balance, with the central bank's reserves hovering just above $20 billion between April and June. 

Energy-related import bills remain one of the largest drains on the country's dollar holdings.

Policy makers said the high outflow for LNG and fuel imports has forced the government to prioritise energy payments over other internal obligations – such as paying power purchase bills to local power producers as any delay in gas supply could disrupt electricity generation and industrial operations.

"The energy import bill is now one of the biggest challenges for the balance of payments," said an energy division official, speaking on condition of anonymity.

"Without new gas discoveries or renewable alternatives, Bangladesh will remain vulnerable to global price shocks and currency volatility," he added.

Experts urge domestic exploration

Energy analysts have long urged the government to accelerate domestic gas exploration to reduce dependence on costly LNG imports.

Dr Badrul Imam, honorary professor at Dhaka University's Department of Geology, said delta regions around the world are typically rich in oil and gas.

"The Niger Delta in Nigeria, the Mahakam Delta of Indonesia, and the Gulf Coast of the USA are prime examples where concerned countries are producing large volumes of oil and gas," he said.

"As a delta basin country, Bangladesh has similar potential but remains untapped due to a lack of foresight from policymakers," he added.

Experts have also called for policy reforms and greater efficiency in natural gas use across sectors to ensure long-term energy security.

"We must focus on energy efficiency, local production, and diversification," said an energy researcher. "Otherwise, Petrobangla's dollar liabilities will continue to balloon."