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LNG supply suspension worsens gas crisis

Jan 19, 2024

| Staff Correspondent | The New Age

Domestic and industrial gas users recently suffered a severe shortage in piped gas supply despite the supply of 500 mmcfd of LNG to the national grid. The authorities was forced to completely suspend the LNG supply Thursday evening as a technical glitch prevented them from putting back in operation a floating storage regasification unit.


The failure further reduced gas supply, bringing it down to about 2,000 mmcfd, less than half the official gas demand of more than 4,000 mmcfd. ‘We hope to fix the problem by tonight,’ director of operation in the state-owned oil company Petrobangla Kamruzzaman Khan told New Age on Friday. Bangladesh has the capacity to import 1,000 mmcfd gas through two floating storage regasification units in the Bay of Bengal.


One of the units went out of operation for regular maintenance in Singapore on November 2, 2023. The unit returned home on January 6. It, however, could not be put back in operation till Friday evening although it was loaded. Petrobangla officials blamed a technical glitch that arose at the last moment for their failure to restore supply from the floating storage regasification unit that also had its capacity expanded to 600 mmcfd during maintenance. The other FSRU also went out of operation on Friday for regular maintenance, leading to the complete suspension of the LNG supply.


Petrobangla officials said that they could not delay the second FSRU going to maintenance as it was rescheduled. The complete suspension of LNG supply hit the country, Chattogram in particular, hard, forcing activities depending on gas to an abrupt halt. The suspension of the LNG supply virtually left Chattogram without any piped gas as the port city’s demand is met mainly through the LNG. The national grid supplies a negligible amount of locally extracted gas to Chattogram, Petrobangla officials said.


They said that some domestic consumers might have got a weak flow of gas but industries and fertiliser companies got no supply at all. Chattogram gets 300mmcfd in LNG supply during normal time, which reduced to 100mmcfd since November 2, 2023, when the first FSRU went out of operation for maintenance. On Friday, people in the port city woke up to see zero gas supply in their pipeline, a situation for which they were not prepared at all as it came without any notice. Restaurants and CNG filling stations remained largely closed because of the gas crisis.


Karnaphuli Gas Distribution Company Limited, which is responsible for supplying gas in Chattogram, said that the company had more than 6 lakh consumers. More than 5.97 lakh of the consumers are domestic users, company officials said.


The gas crisis forced many to remain half-fed as they could not cook, said many port city residents. Bangladesh became an LNG importer in late 2018 following its plan to diversify energy source except investing in renewable energy. The two floating storage regasification units initially set up for importing LNG were scheduled for maintenance in every five years.


Each maintenance takes at least 45 days, Petrobangla officials said. The LNG import immediately caused more than 32 per cent increase in gas price, even after it had been blended with locally supplied natural gas.


Still, Bangladesh’s gas demand remained only half-met, leaving many gas-based power plants out of operation due to fuel crisis. In the third week of November 2021, the mooring line of one of the country’s two FSRUs got torn reducing the LNG supply by half for at least three months. In a regular gas crisis, the summer-time supply stays below 3,500 mmcfd.


The acute crisis also resulted in gas rationing to CNG refuelling stations. Households in Dhaka, on the other hand, kept complaining of a severe gas crisis making their life miserable. The government never seriously considered the expert opinion of relying more on long-term contracts than spot-market purchase in ensuring a sustainable supply of the LNG.


The government neither has a contingency plan for operating FSRUs in one of the world’s most natural disaster-prone areas. Bangladesh pays every month $7 million to the FSRU operators under a 15-year contract. The US-based Institute for Energy Economics and Financial Analysis in a report, released in December 2021, found only a third of the LNG investment in Bangladesh feasible, warning that renewable technology development could lead to the abandonment of LNG infrastructures.


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