Bangladesh Urgently Needs LPG and LNG Strategic Reserves

Bangladesh faces a significant vulnerability in its energy sector due to the lack of strategic reserves for liquefied petroleum gas (LPG) and liquefied natural gas (LNG). Unlike its food security reserves, which include 2.4 million tonnes of rice and wheat, the country has no comparable buffer for these critical fuels. This gap leaves the economy and consumers exposed to global market volatility, supply disruptions, and sudden price spikes.

The current LPG crisis highlights the urgency of the issue. Despite government data showing imports aligned with demand, the market is experiencing severe shortages. Experts attribute this largely to the absence of state reserves, which would have helped stabilize supply during emergencies. Plans to build 100,000 tonnes of LPG storage capacity under the previous Awami League government never materialized, leaving private operators to dominate 98% of the market.

Efforts to address the shortage are now underway. LP Gas PLC is developing a 100,000-tonne annual throughput storage facility at Mongla, with an 8,500-tonne capacity. The project aims to finance the infrastructure without government funds, involving BPC and marketing companies. Additionally, plans for a large LPG terminal at Matarbari in Moheshkhali are in the works, though progress has been slow. The Bangladesh Petroleum Corporation (BPC) has also faced challenges in importing LPG, leaving private operators to fill the gap.

The situation is equally critical for LNG. Without storage capacity, Bangladesh relies entirely on spot markets and long-term contracts, making it susceptible to global price fluctuations and supply disruptions. Severe weather and geopolitical tensions further exacerbate the problem, leading to idle terminals and suspended supplies. Energy expert Professor M Tamim emphasizes the importance of buffer stocks, noting that even one month’s storage could mitigate price increases and supply disruptions.