Pakistan and Bangladesh are set to join India as major consumers of Liquefied Natural Gas (LNG). Currently, India and Pakistan are the only countries which import LNG, which is almost 8% of the overall market demand globally.
The combined imports of 25 million tonnes between India and Pakistan, and with Bangladesh aiming to become one of the leading consumers of LNG, makes South Asia a global hotspot. More projects are underway in Pakistan and Bangladesh to meet the rising demand for energy due to the rapidly growing population.
Principal Asia LNG analyst at Wood Mackenzie, Chong Zhi Xin said:
“Both countries already have extensive gas infrastructure due to legacy production from domestic gas fields. As domestic production has failed to keep up with demand, both markets are a natural fit for LNG imports”.
Pakistan started importing LNG in 2015 and has already developed its first terminal, surprising many, says the energy analyst. Another terminal is set to begin its operations very soon whereas the third one will be completed next year.
Bangladesh will join hands with India and Pakistan in importing LNG next year, meaning that South Asia will be importing 80-100 million tonnes a year by the mid-2020s. This would make the region a hub for LNG imports, establishing it the second largest importer of the gas.
Bangladesh is investing heavily in LNG to double its power capacity to 24,000-megawatt by 2021, owing to the depletion of its own reserves and increasing energy demand of the country with over 160 million population.
Bangladesh’s State Minister for Energy and Power, Nasrul Hamid says that the country will be importing 2,500 million cubic feet per day (mmcfd) or 17.5 million tonnes per year, by 2025. He also said:
“We are working on two Floating Storage and Regasification Units (FSRUs) from which gas will start flowing (by) next July,”
With a combined capacity of 7.5 million tonnes a year, both the FSRUs will be developed by a US private agency Excelerate Energy deployed at Moheshkhali Island in the Bay of Bengal.
Two more FSRUs worth $950 million having a capacity to import 7.5 million tonnes LNG a year are planned to be developed as well.
Mangesh Patankar, head of Asia/Pacific business development at Galway Group said, “LNG imports in South Asia are expected to rise four-fold from 22m tonnes per year in 2016 to over 80m tonnes per year by 2030”.
South Asia’s Targets
By mid-2020s, India plans to import 50 million tonnes while Pakistan will look to import 30 million tonnes of LNG per year. While North Asia (150 million tonnes per year) leads the way in the LNG imports, South Asia has the capacity to cross the 100 million tonnes mark which would place it ahead of Europe.
With the oversupply of LNG in the global markets, the prices had drifted down by 70% from 2014’s peak to $5.75 per million British thermal units.
Bangladesh is looking to make a deal with Qatar’s RasGas and Indonesia’s Pertamina for long term contracts, Mr. Hamid added. “We are looking for a mixture of both long-term contracts and the spot market”.
While Pakistan and Bangladesh are ambitious to achieve their LNG targets, “It is likely to be an overly ambitious target… China took more than 10 years to reach 20m tonnes of LNG imports. In India, it took 13 years to reach the same amount”, said Mr. Chong.