What becoming South Asia’s second-largest LNG importer means for Bangladesh

Gas fields in Bangladesh are depleting faster than predicted. The wells that once formed the backbone of our economy are losing pressure, and the days of abundant domestic gas are over. 

At the same time, Bangladesh has grown, and with expansion comes appetite: more factories, more people, more power plants, and greater consumption. Our demand has surged so quickly that the traditional balance between supply and need has collapsed.

To keep the nation running, there is only one immediate alternative on the table: imported liquefied natural gas, or LNG. The volume we now need to acquire has pushed Bangladesh into uncharted territory. 

By 2026, the country is expected to become the second-largest LNG importer in South Asia, surpassing Pakistan—roughly 10 years earlier than several international studies had anticipated.

This is not a ranking we sought, nor one to celebrate lightly. It reveals something deeper: we have crossed a critical boundary. This transition is not just about energy; it underscores economic fragility, foreign currency stress, and the sustainability of our development model.

How have we reached this point so fast?

In the 2019 fiscal year, Bangladesh aimed to purchase roughly 115 LNG cargoes—the highest in our history. New long-term supply agreements with Qatar, Oman, and a US-based firm are set to begin shipping larger volumes from 2026. Our two existing floating terminals are already near capacity, and negotiations for a third are ongoing.

In contrast, Pakistan is scaling back its LNG imports due to financial difficulties and declining demand. When one nation pulls back while another pushes ahead, regional rankings shift naturally.

But surpassing Pakistan is not the point. The real issue is that our domestic manufacturing can no longer keep up. Several major gas fields have matured, and output has plummeted dramatically compared with just five or six years ago. Meanwhile, demand continues to rise. 

Our daily demand is approaching 4,000mmcfd, yet local supply can barely meet 1,800mmcfd. The shortage is both substantial and urgent.

The industrial reality: Gas is not optional 

One concern that is often overlooked is how heavily our businesses depend on gas. Unlike in many countries, where companies draw directly from a stable national grid, Bangladesh took a different path. With the grid remaining unreliable for years, industries developed their own captive power plants—almost entirely gas-based.

Today, most large manufacturers, particularly in the textile and apparel sector, cannot operate without gas powering their own generators. When gas supply falters, the consequences are immediate: production lines halt, workers sit idle, export commitments are delayed, and in some cases, factories shut down entirely. 

This became starkly evident in early 2025, when some mills reported losing as much as a fifth of their output due to inconsistent gas pressure. The push toward LNG, therefore, is not a matter of luxury or choice; it is driven by the harsh reality that without gas, the backbone of our economy simply cannot function.

Why not switch to anything else? 

People rightly ask why Bangladesh cannot move swiftly to solar, wind, or even coal. The honest answer is: not at the pace our situation demands. 

Conquering Pakistan is not the aim. The actual problem is that our local manufacturing just cannot keep up anymore. Several big gas fields have matured. Output has plummeted dramatically from what it was even five or six years ago. Yet demand continues to increase. Our daily need is approaching 4,000 mmcfd, but local supply struggles to fulfill even 1,800 mmcfd. The shortage is substantial and urgent.

Bangladesh is too densely populated to develop the large solar farms common in countries with vast open terrain. Rooftop solar is promising, but its contribution remains modest. Wind energy development faces geographical and technical constraints, while cross-border hydro imports require lengthy negotiations and new transmission infrastructure.

Coal, once part of the national strategy, has become nearly impossible to finance globally due to climate concerns. Several proposed plants were scrapped for precisely this reason.

And the greatest challenge of all: our entire energy infrastructure—from domestic burners to industrial boilers—is built around gas. Transforming this system is possible, but not quickly. It requires new infrastructure, new machinery, extensive training, and enormous expenditure.

LNG, however imperfect, fits into the system we already have. That is why it has become the short-term pillar holding everything together.

2026: The year everything shifts

All major shifts in our energy sector appear to converge on one year—2026. That's when new contracts fully take effect, terminal capacity stabilises, and LNG becomes a significantly larger part of our national energy mix.

But this comes at a cost—a substantial one.

Our LNG import bill is projected to rise sharply. At a time when the nation is carefully managing its foreign reserves, a ballooning LNG expenditure would place pressure not only on the government but on the entire economy.

What does this spike truly signify for Bangladesh? 

A few facts are unavoidable. Bangladesh is steadily becoming an import-dependent gas economy, as domestic reserves can no longer play the central role they once did. With this shift, energy costs will inevitably rise: LNG is far more expensive than local gas ever was, and even with subsidies, part of this burden will ultimately fall on companies and households.

At the same time, our energy security will be increasingly exposed to global volatility, since LNG prices fluctuate with international politics, shipping routes, conflicts, and supply chains—factors entirely beyond our control.

This growing dependence will also put greater pressure on the dollar, as imported LNG must be paid for in foreign currency, adding strain to our reserves. For these reasons, reliance on LNG must remain temporary: it can provide breathing space for now, but it cannot serve as a sustainable long-term foundation.

What should Bangladesh do next?  

This is the most crucial question, and we cannot afford sluggish responses. Bangladesh needs to: restart domestic exploration, both onshore and offshore; scale up rooftop solar and cross-border renewable energy imports; enhance the national grid so manufacturers no longer rely solely on captive generation; guide the industry toward more efficient energy use; and negotiate solid long-term LNG contracts to minimise price volatility.

None of these actions alone will solve the problem, but together, they can chart a more stable path forward. 

A caution wrapped within a milestone 

Becoming South Asia's second-largest LNG importer is hardly a badge of honor. It simply underscores that the era of cheap domestic gas is over. Whether we like it or not, Bangladesh is entering a more fragile and uncertain energy reality.

Yet this milestone carries another message: it presents an opportunity to rethink our energy future with urgency and clarity. For now, we rely on LNG because we have no alternative—but we cannot afford to remain dependent on it indefinitely.

If we manage this transition wisely, it could help build a stronger and more resilient energy system. But if we handle it carelessly, it will deepen our vulnerabilities and slow our progress.

The choices we make today will shape Bangladesh's energy future for decades to come.

Mehdi Khan is currently engaged in research and initiatives focused on entrepreneurship development, digital transformation, and sustainable investment strategies in Bangladesh.

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