As local gas runs out, $1.4b pipeline planned to boost imported LNG supply
Target is to complete the new pipeline project by 2029
As Bangladesh is set to import more liquified natural gas (LNG) in the future amid depleting local gas production, the government has planned to build a new gas pipeline for $1.4 billion to channel the additional imports to the hungry national grid.
The proposed 295km Maheshkhali/Matarbari-Bakhrabad pipeline will be built by 2029 and will supply an additional 1,800mmscfd (million standard cubic feet per day) LNG to feed gas-based power plants, fertiliser plants, and industrial and commercial units, according to the Gas Transmission Company Limited (GTCL).
The preliminary project proposal for the new pipeline has already been sent to the Planning Commission for approval in principle, said top officials of the GTCL. Loan proposals will be sent to various development partners after the approval.
According to the proposal, the implementation work will start this year and the target is to complete the project by 2029.
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The move for the new pipeline comes at a time when the country's gas reserve is set to completely deplete by 2033 if no new major discoveries of gas fields are made. By then the demand will be well over 6,000mmscfd.
At present, total gas production in Bangladesh, including imported LNG, is around 3,000-3,100mmscfd, while the demand stands at around 3,700mmscfd, according to the GTCL.
The local gas production is around 2,160mmscfd. Another 850-900mmscfd of imported LNG is being supplied to the national gas grid through Maheshkhali-Anwara, Anwara-Fouzdarhat, and Chattogram-Feni-Bakhrabad pipelines.
Petrobangla Chairman Zanendra Nath Sarker told The Business Standard that the proposed pipeline will directly deliver imported LNG from the proposed land-based LNG terminal to Dhaka.
"A review of how much to import by 2030 is underway. This review will be finalised in the next 15 days to one month. Then the import plan, price will be officially informed," he said.
The chairman further said the new pipeline is to be built mainly to supply gas to the additional distance from Chattogram's Anwara. "The existing pipelines are not sufficient to supply LNG to Bakhrabad."
Energy Secretary Md Nurul Alam told TBS that Matarbari will have 1,000mmscfd land-based LNG terminal in future and contract negotiations are underway for other terminals as well. The new pipelines are being planned considering 5 to 7 year's demand and imports.
Engr Abu Sayed Mahmud, general manager of GTCL, told the Business Standard that the feasibility study of the project is yet to be completed.
"The actual cost of the project will be known once the study work is completed within the next one year. " he added.
GTCL's rationale for new pipeline
Bangladesh has long been facing a gas supply crisis. To address the issue, Bangladesh from 2018-2019 Bangladesh started importing LNG.
Two Floating Storage and Regasification Units (FSRU), each with 500mmscfd capacity, were installed by Excelerate Energy (2018) and Summit (2019) at Maheshkhali. These units used to supply 850-900mmscfd of LNG to the national gas grid.
However, only 400mmscfd gas is being supplied from Maheshkhali as Excelerate's unit is undergoing renovation.
According to the GTCL, a study found that around 1,500mmscfd LNG can be supplied to the national gas grid using existing infrastructure at full capacity by April 2024.
Furthermore, Summit plans to install a third FSRU with a capacity of 600mmscfd at Maheshkhali, and Excelerate Energy aims to increase its existing capacity by 100mmscfd.
Consequently, a total of 1,700mmscfd of gas is projected to be supplied from Maheshkhali to the national gas grid by 2026.
By 2031-32, this supply is expected to reach 3,700mmscfd, with plans for the installation of a land-based LNG terminal in Matarbari. Additionally, there is an anticipation of potential gas discoveries in the Bay of Bengal.
Taking all these factors into consideration, the construction of the Matarbari-Bakhrabad pipeline is deemed crucial to accommodate this increased gas supply, according to the proposal.
Energy expert Professor M Tamim said to meet domestic demand, there is no alternative to import more LNG. And to import, it will need pipelines for distribution. "However, there is a risk of waste if the pipeline is built before the land-based terminal in Matarbari."
He said that despite knowing that we do not have enough gas, the government has installed pipelines to supply gas to Rangpur, Rajshahi and Khulna.
"Now the government is not able to earn money for the cost of laying the pipeline as it is not able to collect revenue from it by supplying gas," he added.
He further said it is important to make a land base station first. After spending $1.4 billion dollars on the pipeline, if it is seen that the landbase station in Matarbari is no longer being built, then the pipeline would be a waste.
Hunt for local supply
Nasrul Hamid, state minister for energy, said on 10 December, that Petrobangla has initiated 46 drillings and is gearing up for an additional 100 for gas exploration. The goal is to extract 500-600mmscfd gas within the next two years.
"By 2027, our gas consumption is projected to reach 6,000mmscfd. We aim to achieve self-sufficiency in gas production by that time," the state minister added.
Bangladesh's annual gas demand stands at approximately one trillion cubic feet.
As per the Bangladesh Economic Survey 2023, the country's total gas reserves amount to 40.23 trillion cubic feet, with proven and probable recoverable reserves at 28.62 trillion cubic feet.
The cumulative gas production from 1960 to 2022 reached about 19.94 trillion cubic feet, leaving remaining recoverable reserves at 8.68 trillion cubic feet as of January 2023.
