Bangladesh LNG bill is no longer a stopgap, it’s structural

Bangladesh sharply increased spending on LNG imports in 2025, underscoring how emerging South Asian economies are still structurally exposed to volatile global gas markets.

The government-run BSS News reported last month that Bangladesh spent approximately US$3.88 billion on LNG imports in calendar year 2025, up around US$855 million from US$3.02 billion the year before. Import volumes rose from 86 cargoes in 2024 to 109 cargoes in 2025.

But this wasn’t just a price story. It was a volume story that continues to unfold.

The driver is straightforward: domestic gas production continues to lag demand from power plants and industry. State energy firm Petrobangla has ramped up LNG procurement to offset declining output from local fields and to avoid power shortages that could hit industrial activity and economic growth.

Imported gas vulnerability was established in 2019 during a period of low prices and increased spot-market reliance, but the situation escalated, creating both fiscal and political fallout for Bangladesh and other South Asian countries.

How Bangladesh got here

Bangladesh first imported LNG in 2018 as a balancing fuel, with hopes of cheap and abundant supply. Now, it’s still edging toward baseload. Rising electricity demand, particularly during peak summer months, combined with gas-intensive industrial expansion, has tightened the domestic system. Authorities have increasingly turned to the spot market to plug gaps left by long-term contracts that no longer cover consumption needs.

Industry estimates suggest Bangladesh’s LNG imports reached between 7.16 million and 7.41 million tonnes in 2025, nearly 19% higher than 2024 levels. Much of that growth came from spot cargo purchases. That strategy stabilises short-term supply, but it also amplifies exposure to international price swings.

The worst and most recent price volatility occurred between 2021 and 2022, characterised by unprecedented price shocks. The Japan-Korea Marker (JKM) surged from under US$5/MMBtu in 2020 to a peak of US$32.50/MMBtu in January 2021 due to winter supply constraints. Then, the Russian invasion of Ukraine pushed spot prices to an all-time high near US$85/MMBtu in August 2022. This 1,600% increase over historical norms effectively priced emerging economies out of the market, forcing a shift from spot-market reliance to energy rationing.

Mohammad Tamim, a former professor of petroleum and mineral resources engineering and now Vice Chancellor at the Independent University, Bangladesh, told Gas Outlook that the country’s indigenous supply is dwindling with declining gas fields so importing LNG is essential to meet demand.

“Bangladesh has two long term contracts covering half of its 7.2 mtpa regasification capacity. The rest it buys from the spot market which is very vulnerable to price shock but it has no other option unless prices go as high as in 2021-22. However, the country is planning to add two more floating storage regasification units (FSRUs) to meet the future demand,” he said.

Fiscal implications

All the while, the fiscal implications of Bangladesh’s LNG procurement are becoming harder to ignore. Government documents for fiscal year 2025-26 show projected LNG import expenditures vastly exceeding allocations for domestic gas exploration and drilling. In simple terms, Bangladesh is spending far more to import molecules than to find new ones at home.

Added to the fray, the country faces a domestic gas shortfall of roughly 1 bcf per day. Sure, LNG fills that gap but reliance at this scale shifts energy security risk outward toward global supply balances, shipping routes, and pricing cycles beyond Dhaka’s control.

Policy and academic reviews of Bangladesh’s power sector point to a deeper structural issue. Gas remains the dominant fuel for power generation, yet domestic production has plateaued. Renewable penetration remains modest. Grid inefficiencies persist. The result is a system increasingly anchored by imported LNG to maintain reliability.

This makes the 2025 spending spike look less like an anomaly and more like trajectory. International Energy Agency (IEA) outlooks suggest Bangladesh could become South Asia’s second-largest LNG importer by 2035, behind India. Those numbers matter. Combined imports by Pakistan and Bangladesh are projected to reach roughly 75 bcm by that date, around 60% higher than 2024 levels. If that trajectory holds, South Asia’s exposure to global LNG pricing cycles will deepen materially over the next decade.

Regasification capacity expansions will further enable higher intake. As infrastructure improves, Bangladesh’s integration into global LNG trade flows will accelerate, and so will its exposure.

The fiscal strain of this import dependency has not gone unnoticed by international lenders. In recent consultations regarding Bangladesh’s US$4.7 billion loan programme, the International Monetary Fund (IMF) has repeatedly flagged the energy sector’s growing financial requirements as a primary risk to debt sustainability.

The IMF has urged Dhaka to move away from the “stopgap” fiscal approach which relies on heavy subsidies to insulate consumers from global price volatility and instead implement a periodic formula-based pricing mechanism. Without these reforms, the IMF warns that the ballooning cost of LNG procurement could further deplete foreign exchange reserves and crowd out essential social spending, turning a sectoral energy crisis into a broader macroeconomic vulnerability.

Broader regional picture

The broader regional picture has to also be put into focus. South Asia’s LNG importers share common fundamentals: rising electricity demand, constrained domestic supply, and limited fiscal flexibility. As volumes grow, these markets become increasingly sensitive to developments in Atlantic Basin exports, Northeast Asian weather demand, and geopolitical disruptions.

In 2026, much hinges on global supply additions. New export capacity in the U.S. and elsewhere could improve liquidity and moderate spot volatility. But weather shocks, project delays, or geopolitical flare-ups could quickly tighten balances again.

For Bangladesh, the policy challenge is no longer whether to import LNG. That decision has effectively been made by the market. The challenge is managing exposure. Expanding long-term contracts, accelerating domestic exploration, improving energy efficiency, and gradually diversifying the power mix will all be part of the equation.

The 2025 import bill sends a clear signal that LNG is no longer marginal to Bangladesh’s energy system. It’s foundational. And as that foundation deepens, the country’s economic stability will become increasingly linked to global LNG market cycles.

Emerging economies across South Asia are tying their growth models to imported gas just as global supply-demand balances remain structurally volatile. The strategic question for 2026 and beyond is not whether LNG demand will grow, it’s whether governments can absorb the fiscal and pricing risk that comes with it.

(Writing by Tim Daiss; editing by Sophie Davies)