Bangladesh Defense
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The current gas crisis needs governmental focus
How does the government plan to tackle the looming gas shortfall in the upcoming summer?
The current gas crisis needs governmental focus
VISUAL: ANWAR SOHEL
Why and how did we arrive at the current precarious state of the gas crisis? The answer lies in how the last government managed the sector. To achieve rapid economic growth, industries were allowed to be built without adequate assurance of energy. Additionally, all gas-consuming sectors were allowed to grow, while the relevant authorities knew full well that a severe gas shortfall was looming. Bangladesh Oil, Gas and Mineral Corporation, also known as Petrobangla, started to produce more and more gas at the behest of the government; gas production per day went up from approximately 1,400 MMcf to 2,800 MMcf—doubling in less than eight years. This was only possible because the international oil companies (IOCs) were managing several gas fields, including the large Bibiyana field. During this rapid production growth period, there was practically no addition to gas reserves; the remaining reserves are less than 10 Tcf, projected to be nearly exhausted by 2030. Continuing production from the existing reserves with no exploration activities meant that we would hit a peak, after which the production would start to decline. That is exactly what has happened: the annual production has fallen from the high 2,800 MMcfd to just above 1,900 MMcfd.
As can be seen from Petrobangla's gas demand projection, prepared several years back, the demand for gas would be 3,777 MMcfd in 2024-25. However, Petrobangla now estimates that it is actually closer to 4,000 MMcfd. The supply of gas on December 8 was 2,740 MMcfd, of which domestic production was 1,919 MMcfd and imported LNG was 821 MMcfd. Therefore, even compared to the conservative demand projection, there is a shortfall of more than 1,000 MMcfd—the actual shortfall is more than 1,200 MMcfd. Demand in all sectors except fertiliser is increasing. Therefore, the situation in the middle of next year, when power demand is expected to surge, may be alarming, especially for industrial customers.
It is interesting to study Petrobangla's natural gas demand forecast. According to this, the share of the power sector is projected to decrease from 38.5 percent in FY2024-25 to 37.4 percent in FY2030-31. However, the industry's share including captive generation is projected to increase from 41.3 percent to 46 percent during the same period. This increase will mainly come from a reduced share of the domestic and CNG sectors. Therefore, it is already in Petrobangla's plans to decrease the share of gas to the domestic and CNG sectors. Needless to say, this plan was chalked out to protect industries and the economy. The question is: will the government adhere to Petrobangla's plan for gas supply?
Then again, how does the government plan to tackle the looming gas shortfall in the upcoming summer? Whenever this issue was raised, the previous administration mentioned the drilling of 50 wells by this year and 100 more in the coming years. These kinds of reassurances seem encouraging, but will the required actions follow these promises? Are enough rigs active to accomplish this task, and are the requisite funds being provided on time? Most experts and those knowledgeable with how the government works doubt whether the full implementation of the drilling of 100 wells within the stipulated time is possible. Even if the drilling of 100 wells is accomplished, what is the certainty of finding enough gas? The other question that arises is, even if we find significant quantities of gas, how long will it take to add that to the grid? It would appear that the authorities are trying to weather out the next year without firm plans to tackle the situation.
Since the liquefied natural gas (LNG) supply will be limited by the capacities of the two regasification units now being managed by Excelerate Energy, it is imperative to import the maximum possible quantity of gas so that a constant supply of 1,100 MMcfd can be maintained throughout the year. Moreover, all efforts should be made to import coal so that all the coal-fired power plants are running at full capacity. Additionally, import from the Adani power plant as well as the previously contracted electricity import from the Indian grid have to be kept fully active. These sources of electricity will lessen the power sector's gas demand and allow more gas to be supplied to the industry sector, which is vital for our export earnings. To prevent further increases in the price of electricity and/or to keep subsidies to a minimum level, oil-fired power plants must be limited to the peak hours. Of course, some load-shedding will become inevitable when the demand becomes very high, but that can be kept at a tolerable level with planning.
There are several things that the government can do to improve the situation and prepare for long-term stability, such as: i) reduce system loss of gas; ii) encourage more rooftop solar PV panel installations; iii) help build more solar power plants; iv) encourage more use of liquefied petroleum gas (LPG); and v) promote energy conservation and energy efficiency.
System loss has become a cancer in the gas supply system. System loss, which Petrobangla calls "unaccounted for gas" (UFG), has been an average of 9.8 percent for the years 2020, 2021 and 2022. In a situation where the country cannot find enough dollars to meet all its obligations, this loss must be accounted for in LNG cost terms and needs to be given utmost importance. Of course, not all of it can be attributed to theft or pilferage, because there is a technical system loss of four to five percent due to leaks in pipes and valves. UFG is acknowledged by Petrobangla, but there is another gas pilferage hidden in the domestic sector consumption. The domestic sector is shown to consume 11-13 percent of the total gas; since there is no metering, this consumption figure is the result of a theoretical calculation based on hypothetical gas consumption per household. Sector experts believe the actual domestic sector consumption is no more than six to seven percent. Therefore, nearly five percent is unauthorised usage. If this is added to the theft/pilferage portion of UFG, the total gas loss is nearly 10 percent. The magnitude of the problem can be appreciated from the following calculation: assuming the daily supply of 2,800 MMcfd and regasified LNG price of $12 per MMBtu, this loss amounts to $1.2 billion annually.
The role of solar PV in alleviating the energy crisis in Bangladesh can hardly be overemphasised. Neglecting gas exploration and promoting renewable energy in the last decade have been two actions that are at the root of the primary energy crisis and are completely against the national interest. Even after years of efforts, the contribution of solar PV electricity to the national grid is less than one percent. Setting up rooftop solar panels is as simple as buying a refrigerator or TV these days. Achieving 500MW of rooftop solar PV in a matter of months is possible if willingness is there. Grid-tied solar parks have been a bane for Bangladesh. Successive governments have failed to achieve the acceptable level of penetration. Land availability, high tax on solar panels, inverters and accessories, transmission infrastructure requirements, and bureaucratic bottlenecks are some of the issues that have hindered progress. The new government has cancelled the ongoing 40 solar park projects as they were initially awarded without bidding. If these projects are quickly revived, then another 500MW can be easily set up within a short time. Rooftop solar PV and solar parks can substantially lower the need for oil-fired power plants, thus lessening some of the burden of purchasing heavy fuel oil (HFO).
LPG is an excellent fuel that can readily replace gas for cooking and transport, thus lessening the demand for gas. If promoted properly, LPG can be the fuel of choice for both cooking and transport. Even though LPG is more expensive than LNG, its use is being advocated because there is no pilferage or other system loss associated with its supply and distribution. Moreover, because it is more expensive than gas, the consumers use it frugally. The main reason for advocating its use for cooking, however, is that Petrobangla and the distribution companies are unable to control misuse, pilferage and leaks in the distribution system.
Energy conservation and energy efficiency are important measures that can save energy, thus assisting in managing the primary energy crisis. In the future, as the Paris Agreement comes into force for all countries, energy transition will be essential to meet commitments to tackle climate change. Therefore, a solid programme in energy conservation/efficiency must be developed. In the short term, it will help in managing the gas and electricity shortfalls, and in the long term, it will deliver the desired goals of achieving net zero emission. Energy conservation measures are behavioural things—such as switching off light bulbs and fixing dripping taps—while energy efficiency involves technical measures, many of these are no/low-cost actions that can easily be driven through awareness campaigns.
Dr Ijaz Hossain is former dean of engineering at Bangladesh University of Engineering and Technology (BUET).
VISUAL: ANWAR SOHEL
Why and how did we arrive at the current precarious state of the gas crisis? The answer lies in how the last government managed the sector. To achieve rapid economic growth, industries were allowed to be built without adequate assurance of energy. Additionally, all gas-consuming sectors were allowed to grow, while the relevant authorities knew full well that a severe gas shortfall was looming. Bangladesh Oil, Gas and Mineral Corporation, also known as Petrobangla, started to produce more and more gas at the behest of the government; gas production per day went up from approximately 1,400 MMcf to 2,800 MMcf—doubling in less than eight years. This was only possible because the international oil companies (IOCs) were managing several gas fields, including the large Bibiyana field. During this rapid production growth period, there was practically no addition to gas reserves; the remaining reserves are less than 10 Tcf, projected to be nearly exhausted by 2030. Continuing production from the existing reserves with no exploration activities meant that we would hit a peak, after which the production would start to decline. That is exactly what has happened: the annual production has fallen from the high 2,800 MMcfd to just above 1,900 MMcfd.
As can be seen from Petrobangla's gas demand projection, prepared several years back, the demand for gas would be 3,777 MMcfd in 2024-25. However, Petrobangla now estimates that it is actually closer to 4,000 MMcfd. The supply of gas on December 8 was 2,740 MMcfd, of which domestic production was 1,919 MMcfd and imported LNG was 821 MMcfd. Therefore, even compared to the conservative demand projection, there is a shortfall of more than 1,000 MMcfd—the actual shortfall is more than 1,200 MMcfd. Demand in all sectors except fertiliser is increasing. Therefore, the situation in the middle of next year, when power demand is expected to surge, may be alarming, especially for industrial customers.
It is interesting to study Petrobangla's natural gas demand forecast. According to this, the share of the power sector is projected to decrease from 38.5 percent in FY2024-25 to 37.4 percent in FY2030-31. However, the industry's share including captive generation is projected to increase from 41.3 percent to 46 percent during the same period. This increase will mainly come from a reduced share of the domestic and CNG sectors. Therefore, it is already in Petrobangla's plans to decrease the share of gas to the domestic and CNG sectors. Needless to say, this plan was chalked out to protect industries and the economy. The question is: will the government adhere to Petrobangla's plan for gas supply?
Then again, how does the government plan to tackle the looming gas shortfall in the upcoming summer? Whenever this issue was raised, the previous administration mentioned the drilling of 50 wells by this year and 100 more in the coming years. These kinds of reassurances seem encouraging, but will the required actions follow these promises? Are enough rigs active to accomplish this task, and are the requisite funds being provided on time? Most experts and those knowledgeable with how the government works doubt whether the full implementation of the drilling of 100 wells within the stipulated time is possible. Even if the drilling of 100 wells is accomplished, what is the certainty of finding enough gas? The other question that arises is, even if we find significant quantities of gas, how long will it take to add that to the grid? It would appear that the authorities are trying to weather out the next year without firm plans to tackle the situation.
Since the liquefied natural gas (LNG) supply will be limited by the capacities of the two regasification units now being managed by Excelerate Energy, it is imperative to import the maximum possible quantity of gas so that a constant supply of 1,100 MMcfd can be maintained throughout the year. Moreover, all efforts should be made to import coal so that all the coal-fired power plants are running at full capacity. Additionally, import from the Adani power plant as well as the previously contracted electricity import from the Indian grid have to be kept fully active. These sources of electricity will lessen the power sector's gas demand and allow more gas to be supplied to the industry sector, which is vital for our export earnings. To prevent further increases in the price of electricity and/or to keep subsidies to a minimum level, oil-fired power plants must be limited to the peak hours. Of course, some load-shedding will become inevitable when the demand becomes very high, but that can be kept at a tolerable level with planning.
There are several things that the government can do to improve the situation and prepare for long-term stability, such as: i) reduce system loss of gas; ii) encourage more rooftop solar PV panel installations; iii) help build more solar power plants; iv) encourage more use of liquefied petroleum gas (LPG); and v) promote energy conservation and energy efficiency.
System loss has become a cancer in the gas supply system. System loss, which Petrobangla calls "unaccounted for gas" (UFG), has been an average of 9.8 percent for the years 2020, 2021 and 2022. In a situation where the country cannot find enough dollars to meet all its obligations, this loss must be accounted for in LNG cost terms and needs to be given utmost importance. Of course, not all of it can be attributed to theft or pilferage, because there is a technical system loss of four to five percent due to leaks in pipes and valves. UFG is acknowledged by Petrobangla, but there is another gas pilferage hidden in the domestic sector consumption. The domestic sector is shown to consume 11-13 percent of the total gas; since there is no metering, this consumption figure is the result of a theoretical calculation based on hypothetical gas consumption per household. Sector experts believe the actual domestic sector consumption is no more than six to seven percent. Therefore, nearly five percent is unauthorised usage. If this is added to the theft/pilferage portion of UFG, the total gas loss is nearly 10 percent. The magnitude of the problem can be appreciated from the following calculation: assuming the daily supply of 2,800 MMcfd and regasified LNG price of $12 per MMBtu, this loss amounts to $1.2 billion annually.
The role of solar PV in alleviating the energy crisis in Bangladesh can hardly be overemphasised. Neglecting gas exploration and promoting renewable energy in the last decade have been two actions that are at the root of the primary energy crisis and are completely against the national interest. Even after years of efforts, the contribution of solar PV electricity to the national grid is less than one percent. Setting up rooftop solar panels is as simple as buying a refrigerator or TV these days. Achieving 500MW of rooftop solar PV in a matter of months is possible if willingness is there. Grid-tied solar parks have been a bane for Bangladesh. Successive governments have failed to achieve the acceptable level of penetration. Land availability, high tax on solar panels, inverters and accessories, transmission infrastructure requirements, and bureaucratic bottlenecks are some of the issues that have hindered progress. The new government has cancelled the ongoing 40 solar park projects as they were initially awarded without bidding. If these projects are quickly revived, then another 500MW can be easily set up within a short time. Rooftop solar PV and solar parks can substantially lower the need for oil-fired power plants, thus lessening some of the burden of purchasing heavy fuel oil (HFO).
LPG is an excellent fuel that can readily replace gas for cooking and transport, thus lessening the demand for gas. If promoted properly, LPG can be the fuel of choice for both cooking and transport. Even though LPG is more expensive than LNG, its use is being advocated because there is no pilferage or other system loss associated with its supply and distribution. Moreover, because it is more expensive than gas, the consumers use it frugally. The main reason for advocating its use for cooking, however, is that Petrobangla and the distribution companies are unable to control misuse, pilferage and leaks in the distribution system.
Energy conservation and energy efficiency are important measures that can save energy, thus assisting in managing the primary energy crisis. In the future, as the Paris Agreement comes into force for all countries, energy transition will be essential to meet commitments to tackle climate change. Therefore, a solid programme in energy conservation/efficiency must be developed. In the short term, it will help in managing the gas and electricity shortfalls, and in the long term, it will deliver the desired goals of achieving net zero emission. Energy conservation measures are behavioural things—such as switching off light bulbs and fixing dripping taps—while energy efficiency involves technical measures, many of these are no/low-cost actions that can easily be driven through awareness campaigns.
Dr Ijaz Hossain is former dean of engineering at Bangladesh University of Engineering and Technology (BUET).
