Impact of LNG import on Bangladesh energy sector

Abstract

In Bangladesh gas is being used for different purposes but the entire country is now suffering from gas shortage. There is now almost 500 MMCFD gas shortage in the national grid. According to Petrobangla Report, shortfall commenced as early as 2007 for proved reserves. Gas demand in coming years will increase in such a way that during 2019-20 the demand will exceed the total summation of proved, probable and possible reserves. That is why floating LNG terminal and LNG regasification plant has been proposed. In Bangladesh the financial parameters of gas sector perspective reveal that the project is not financially viable with a very low domestic gas price. This needs a thorough financial analysis for clear understanding of the project. The effect of price and also the pipeline gas quality need to be thoroughly examined. The main objective of the study is to analyze the effect on local gas price due to imported LNG by considering extra cost that have to be managed by the Government per unit of gas and the minimum price that the Government has to select to reduce subsidy and to study the outcome of the mixture if the gas from LNG is mixed with the existing pipe line gas. This study covers the History of LNG, latest Developments, LNG process chain, different types of LNG receiving and regasification units and the latest energy sector scenario, discussion of world LNG pricing system. Difference between the sale and cost price of 500 MMCFD gas from LNG is calculated. Demand of Gas is estimated by using statistical tools SPSS by regression analysis. From the demand approximate yearly LNG cost is also calculated for the future. Besides this the impact on the gas pipe line and the end user’s equipment problem is discussed when the gas from the LNG is mixed with the domestic gas. Steps to improve the system are also discussed.