Price volatility fails to deter Dhaka’s LNG expansion

Bangladesh’s new government intends to build new infrastructure to augment imports of expensive LNG despite price volatility during the  Middle East tensions and continued disruption to supply.

Among them, a land-based LNG import terminal having the re-gasification and send out capacity of at least 1,000 million cubic feet per day (mmcfd) along with a storage facility ranging from 500,000 cubic meter to 750,000 cubic meter is planned to be built at Matarbari island in the Bay of Bengal in the Cox’s Bazar district.

The maiden, land-based LNG terminal of the South Asian country will be built through a public private partnership (PPP) model.

Separately, a new floating storage and re-gasification unit (FSRU) with a capacity to re-gasify around 600 million cubic feet per day (mmcfd) of LNG is planned to be built at Kutubzome on Moheshkhali island, in the Bay of Bengal.

The new FSRU, which would be the fourth of its kind in Bangladesh, is planned to be built either through a PPP or a government-to-government (G2G) or private investment model, energy and mineral resources division (EMRD) secretary Mohammad Saiful Islam told Gas Outlook.

Two FSRUs are already in operation at Moheshkhali island on the Bay of Bengal and the third FSRU, which was awarded to local firm Summit and later scrapped by the interim government, are now held up in court cases.

Several companies from different countries, including CMC of China, Aramco of Saudi Arabia, Socar of Azerbaijan, OQ Trading International of Oman and Posco of South Korea, have already expressed an interest in the country’s fourth FSRU, said the EMRD secretary.

The government is planning to complete construction of the FSRU and initiate its commissioning by 2028, said the official.

“Tariff negotiation would not be a tough task as we have tariff benchmarks with us as two FSRUs, one from the US and another of a local company, are already in operation,” Mr Islam added.

Despite mounting demand, Bangladesh cannot import increased volumes of LNG due to infrastructure bottlenecks, he said, regarding justification for the new gas facility.

Bangladesh’s LNG re-gasification reached almost a saturation level over 1,000 million cubic feet/day against the combined capacity of 1,100 million cubic feet/day of two operational FSRUs.

The two conversion facilities re-gasified around 1,022 million cubic feet/day, the highest volume, against the official capacity of 1,100 mmcfd, on March 18th, 2025, according to the official data of Petrobangla.

Bangladesh has been re-gasifying around 950 million cubic feet/day of LNG on average and the country re-gasified 969 million cubic feet/day on February 24th, 2026, according to Petrobangla data.

If the country had more LNG import and re-gasification infrastructures in place, it would import more LNG to meet the mounting domestic demand, which is around 4,000 million cubic feet/day and the demand is surging.

Growing price volatility

Bangladesh has planned for more LNG import infrastructure despite its growing price volatility in international market amid persistent Middle East tensions and restrictions on the passage of vessels through the Strait of Hormuz.

The country’s total LNG spot cargo buys this year will reach 19 so far by late May, of which 17 took place after the commencement of the war in the Middle East.

The country’s total purchase of LNG cargoes from the spot market will jump to seven in May, which is the highest in a single month.

Bangladesh imported the highest seven spot LNG cargoes in a month in April too thereby avoiding any crisis in domestic demand.

Average import costs of the spot LNG cargoes hovers around US$21 per million British thermal unit (MMBTu). Had the war not happened and the Strait of Hormuz not been restricted, Bangladesh would import most of the LNG cargoes from long-term suppliers at a cost of around $9.0 per MMBTu to $11 per MMBTu.

Bangladesh has been buying more spot LNG cargoes since the commencement of the war in the Middle East as most of its long-term LNG suppliers from Qatar and Oman have stopped LNG cargo deliveries announcing ‘force majeure.’

Bangladesh had imported a total of 49 LNG cargoes from the spot market in 2025, said the RPGCL official.

Since starting LNG imports in 2018, the country has imported about 36.43 million metric tons of LNG through 588 cargoes as of March 2026, according to the official data of Petrobangla.

The overall natural gas supplies were about 2.61 billion cubic feet/day, including 935 MMcf/d of regasified LNG, according to official Petrobangla data as of April 26th.

Dwindling local gas supplies

Inadequate oil and gas exploration resulted in the dwindling of natural gas supplies from local gas fields, which has been prompting the government to import augmented volume of expensive LNG from global suppliers.

Bangladesh has been rationing natural gas supplies to industries, power plants and other consumers amid scarcity of the fuel.

The South Asian country is leaning towards building more FSRUs and LNG import infrastructure knowing both the natural and fiscal challenges.

The country’s key LNG infrastructure usually faces nature’s wrath when the sea becomes rough during monsoon season from late April to late August.

One of its two floating LNG terminals was damaged during Cyclone Remal in late May, 2024, and remained out of operation for several weeks.

Summit LNG Terminal was damaged after being hit by a floating pontoon at Moheshkhali Island in the Bay of Bengal during Cyclone Remal that made landfall in Bangladesh and parts of neighbouring India late on May 26^th, 2024.

During Cyclone Remal, a broken stray steel structure weighing hundreds of tons crashed into the Summit LNG Terminal, causing significant damage.

The impact sheared the vessel’s outer hull, approximately one metre below the waterline, leading to water ingress into the ballast tanks.

Bangladesh had to cancel four spot LNG cargoes for June 2024 delivery windows as the FSRU remained shut during the entire month of June.

State-run Rupantarita Prakritik Gas Company (RPGCL) had to cancel three spot LNG cargoes of Gunvor Singapore Pte. Ltd and one of QatarEnergy Trading LLC.

Petrobangla also had requested its long-term LNG suppliers – Qatargas and OQ Trading International — to reschedule several LNG delivery cargoes to cope with the crisis.

Summit LNG Terminal announced ‘force majeure’ following the suspension of operations at its FSRU after its damage during Cyclone Remal, and halt in LNG re-gasification subsequently.

At least one LNG tanker vessel and two oil cargoes were taken off to deep sea near Kutubdia Island in the Bay of Bengal as a precautionary measure to avoid any damage from severe Cyclone Remal.

During Cyclone Mocha in May 2023, both the FSRUs had to cease operations, which had triggered an acute power and gas crisis, hampering businesses across the country.

The country’s main port city of Chattogram, which is dependent entirely on re-gasified LNG from FSRUs, was almost non-functional, with businesses halting operations completely.

During Cyclone Mocha, Petrobangla had to reschedule the delivery of at least five LNG cargoes when the country’s two floating LNG terminals were shut.

Bangladesh had deferred deliveries of LNG cargoes from both long-term suppliers along with spot supplier TotalEnergies during the Mocha mayhem.

The country’s two FSRUs, owned by Summit Group and U.S.-based Excelerate Energy, were both taken offline on May 12th, 2023 as a precautionary measure to avoid any damage from Cyclone Mocha, which hit Bangladesh and Myanmar on the afternoon of May 14th, 2023.

Summit LNG remained tied to its mooring system in the morning and restarted supply of re-gasified LNG on the afternoon of May 15th, 2023.

Excelerate Energy’s FSRU – Excellence — came online on May 20th, 2023, after an eight-day hiatus following its departure to deep sea, after de-plugging of mooring to prepare for Cyclone Mocha.

Bangladesh had sought to apply the force majeure provision to avoid any demurrage or penalty resulting from the late unloading of LNG cargoes from suppliers during Cyclone Mocha.

(Writing by Aziz Rahman; editing by Sophie Davies)