Bangladesh Expands LNG Import Capacity Amid Declining Domestic Gas Production

The government of Bangladesh is planning to expand its LNG import capacity by installing a new floating storage and regasification unit (FSRU) and a land-based terminal. The move comes as domestic gas production continues to decline, with Petrobangla data showing that domestic gas production dropped 22.1 percent over five years to 19.60 billion cubic meters in fiscal 2024-25.

The government is considering hiring a new FSRU capable of supplying around 550-600 million cubic feet of gas per day, while also moving ahead with plans for a land-based LNG terminal at Matarbari in Cox's Bazar. The proposed new FSRU would provide additional regasification capacity, while the Matarbari land-based terminal is expected to add longer-term capacity to the country's LNG import infrastructure.

The rising cost of imported LNG has also increased the government's subsidy burden, with the annual subsidy rising from Tk 2,500 crore in fiscal 2018-19 to around Tk 14,600 crore in fiscal 2025-26. The latest FSRU disruption highlighted the risks associated with the country's growing reliance on imported gas, with the shutdown of the terminal reducing gas supply to the national grid by around 450 million cubic feet per day.