Bangladesh Gas Crisis Exposes Weaknesses in LNG Supply Chain

According to a recent report from Bangladesh-based The Daily Star, the country is facing a severe gas crisis due to logistics weaknesses and concentration risks. With a national demand of about 3,800 million cubic feet per day (MMcfd), but only a total availability of around 2,420 MMcfd in mid-August, the shortage has affected factories, filling stations, households, and power plants.

The report states that the supply disruption is not due to a single procurement problem, but rather a failure in the country's LNG import chain. The Excelerate Energy's FSRU went offline following a fire and technical problems, while weather-related unloading delays at a terminal left inventories exhausted and supplies interrupted.

Excelerate's terminal later also exhausted its LNG inventory while waiting for its next cargo. This exposed the weakness of the country's LNG supply chain, which does not have enough redundancy. The report notes that even if one important link fails in this supply chain, the consequences can travel through the entire economy.

Bangladesh imports LNG through two Floating Storage and Regasification Units (FSRUs) established off Moheshkhali Island, which now supply an estimated 30-37 per cent of national gas needs. The report argues that concentration creates a single-point vulnerability, where a technical failure or shipping delays at Moheshkhali can quickly cascade down the supply chain.

The country's domestic production continues to decline, and replacement with imported LNG exposes the economy to international prices, foreign exchange requirements, and maritime disruption.