Bangladesh’s energy roadmap must balance LNG imports with domestic sources

The government deserves credit for prioritising domestic gas exploration and solar power in its new energy roadmap. Both could help Bangladesh reduce its dependence on imported fuel and ease pressure on foreign exchange.

However, the plan to build three additional liquefied natural gas (LNG) terminals by 2029, increasing import capacity from 1,100 million cubic feet per day (MMcf/d) to 2,700 MMcf/d, raises an important question: why invest in the capacity to import more gas before fully exploring the potential of domestic sources?

LNG is necessary to address Bangladesh's immediate gas shortage. But expanding import infrastructure on such a scale could deepen the country's exposure to international prices, increase financial pressure and leave less room to invest in domestic alternatives. The challenge is not simply to secure more gas, but to secure reliable energy at a cost Bangladesh can afford.

Two different paths to energy security

As reported by TBS, the Ministry of Power, Energy and Mineral Resources presented its report, Challenges in Bangladesh's Power and Energy Sector and the Future Roadmap, to Prime Minister Tarique Rahman on 14 September.

The roadmap targets 10,000 MW of solar power by 2030 and at least 30 percent renewable electricity generation between 2031 and 2040. The government also plans to drill 150 domestic gas exploration wells in the first phase, of which 31 have been completed, followed by another 150 wells in a subsequent phase.

These initiatives could reduce the need for imported fuel. Yet the simultaneous plan to expand LNG import capacity substantially could pull policy in a different direction.

The reason is straightforward: imported LNG requires Bangladesh to spend foreign currency every time it buys the fuel, while solar power generates electricity without requiring recurring fuel imports. Domestic gas, if commercially viable reserves are discovered and developed, could also reduce the need for imported supplies.

Solar projects and domestic gas exploration require upfront investment, and neither guarantees immediate results. But their potential contribution deserves serious consideration before the country commits to decades of greater dependence on imported fuel.

The cost of depending on LNG

Bangladesh cannot control international LNG prices. Geopolitical tensions, supply disruptions and competition among buyers can make imports expensive just when the country needs them most.

Bangladesh has recently faced LNG prices of around $28–30 per million British thermal units (MMBtu). At these prices, purchasing enough LNG to match a supply rate of 2,700 MMcf/d could cost roughly $28–30 billion annually. Even at $10/MMBtu, the bill could be about $10 billion. These are illustrative estimates assuming full utilisation, not forecasts of actual annual expenditure.

The actual bill would depend on import volumes, prices and contract terms. Nevertheless, the scale of these figures highlights the risk of building an energy system that requires ever-larger amounts of foreign currency to keep running.

When LNG prices rise or foreign exchange becomes scarce, Bangladesh may face difficult choices: spend more on fuel, put pressure on public finances or struggle to maintain supplies for industries. Higher energy costs can also weaken the competitiveness of businesses that depend on affordable gas.

There is a further concern. New terminals may carry construction costs, financing charges and contractual obligations even when they are not fully used. If domestic gas production increases or solar power expands faster than expected, some of this infrastructure could become less necessary, leaving Bangladesh with investments that deliver less value than anticipated.

What if Bangladesh invested more in domestic sources?

This is where the government can compare the long-term costs of LNG imports with the benefits of investing in domestic energy.

Suppose a portion of the money earmarked for additional LNG infrastructure and future fuel purchases were instead directed towards repairing existing gas fields, drilling exploration wells, developing offshore reserves and accelerating rooftop solar projects. Such investments would not eliminate LNG imports overnight. But successful projects could gradually reduce the volume of fuel Bangladesh needs to buy from abroad.

Consider solar power. Once a solar plant is operational, sunlight does not need to be purchased from the international market. A factory with rooftop solar can generate part of its electricity without buying additional gas for that portion of its demand. Over time, this can reduce exposure to fuel-price shocks and provide greater predictability in energy costs.

Domestic gas offers another potential benefit. Bangladesh has already developed gas infrastructure and relies heavily on gas for power generation and industry. If exploration identifies commercially viable reserves, investment in domestic production and transmission could help supply these users with less reliance on imported LNG. However, discoveries, development costs and production timelines must be assessed realistically.

These alternatives are not free, and their benefits depend on successful implementation. Solar power also requires grid upgrades and, in some cases, storage or other sources of backup electricity. But unlike imported LNG, successful domestic energy investments can reduce recurring exposure to international fuel prices.

A full comparison of the costs of these options would therefore be a useful basis for deciding how far new LNG terminals should be the response to future demand.

Make the investment decisions first

Before proceeding with all three proposed terminals, a transparent assessment of future gas demand, domestic production prospects, solar deployment and LNG prices would help. It should examine different price scenarios, including $10, $20 and $30/MMBtu, and disclose the expected construction costs, financing arrangements and contractual obligations of the proposed terminals.

It should also explain how much LNG Bangladesh would still need if domestic gas production improved and solar power targets were met. If additional terminals remain necessary, construction could be phased according to demonstrated demand rather than committing to the full expansion at once.

This would not mean abandoning LNG. Bangladesh needs reliable gas supplies today, and domestic exploration and renewable energy cannot solve the immediate shortage alone. The objective should be to use imports where necessary while building alternatives that reduce dependence over time.

Bangladesh's new energy roadmap offers an opportunity to do both. But expanding the capacity to import fuel should not take precedence over determining how much energy the country can realistically produce at home.

Ashraful Islam Raana is an independent energy journalist.

Disclaimer: The views and opinions expressed in this article are those of the author and do not necessarily reflect the views and opinions of The Business Standard.