Liquefied natural gas could allay energy security concerns in the country, but finance issues could leave the country leaning toward coal.
April 26, 2018 (BE2C2) — Bangladesh docked its first LNG cargo at a floating terminal less than a year after financing was secured, bolstering energy security, analysis finds. The super-cooled liquid gas was sent from Qatar.
Excelerate Energy led a $180 million project with Bangladeshi company Petrobangla to build a floating storage and regasification terminal at the port of Moheshkhali. The International Finance Corporation and Excelerate signed off on the final investment mechanisms for the facility in July.
Bangladesh enjoys one of the more expansive economies in the world. A history of political unrest, however, could ding investor confidence. Domestic gas production, meanwhile, is on pace to decline by about 25 percent by 2025, leaving the country increasingly dependent on imports.
Liquefied natural gas offers more options for delivery compared to piped gas. Nicholas Browne, an LNG researcher at consultant group Wood Mackenzie, said the delivery from Qatar to the floating terminal could allay gas and power shortage concerns.
“Combined, these gas and power shortages impact economic growth,” he said in a report cited by UPI. “The introduction of LNG into the fuel mix is a critical step in overcoming these challenges.”
U.S. supermajor Chevron Corp. in October reconsidered after signalling last year it may be departing from gas operations in Bangladesh. Chevron’s subsidiary in Bangladesh started operations from an expansion project at the Bibiyana gas asset in the northeastern part of the country in 2014.
The offshore terminal sends gas through a pipeline to the second-largest city in Bangladesh and on to existing power plants. A second LNG terminal is expected to start up in 2019.
Browne said the Qatari delivery is just the first step for lower-carbon LNG in Bangladesh, but the move could backfire.
“Key risks to LNG demand will come from concerns around the affordability of an increasingly LNG based power sector,” he said. “This may lead the government to renew its push to build more coal capacity.”