Bangladesh’s LNG Storage Dilemma Exposed
Bangladesh’s growing dependence on imported liquefied natural gas (LNG) has left the country vulnerable to disruptions in supply, bad weather, and sudden technical failures. The absence of adequate storage facilities is a critical issue that Petrobangla frequently faces, resulting in costly demurrage payments to global LNG suppliers.
The consequences are particularly costly. State-run Petrobangla often has to pay demurrage when cargo vessels cannot unload their consignments. During the monsoon, rough weather can force LNG carriers to remain stranded in the deep sea, while floating storage and regasification units (FSRUs) may suspend ship-to-ship transfer on safety grounds. Reports say that recently Petrobangla had to pay around US$5.0 million to UK-based TotalEnergies Gas & Power Ltd after one of its LNG cargoes remained stranded in the Bay of Bengal because Excelerate Energy’s FSRU was out of operation following a fire.
The Costly Consequences
To receive the cargo at a later date, Petrobangla had to pay more than US$1.0 per million British thermal units (MMBtu) in addition to the contracted price. This is hardly an isolated incident. Petrobangla previously had to cancel at least five spot LNG cargoes and pay penalties when Summit Group’s FSRU was shut down following the devastation caused by Cyclone Remal in May 2024. Deliveries were also deferred during Cyclone Mocha the previous year. Such episodes expose the vulnerability of a system that has little room for immediate remedy.
The Contrasting Case of Petroleum Products
Bangladesh Petroleum Corporation (BPC), despite importing roughly the same annual volume of petroleum products, maintains storage equivalent to about 60 days of consumption and plans to raise it to 90 days. Why should LNG, which has become equally critical to the country’s economy, be treated differently? Bangladesh began importing expensive LNG in 2018 without developing corresponding storage capacity.
The Need for Enhanced Storage
It now has LNG regasification capacity of around 8.0 million tonnes a year and imports more than 7.0 million tonnes annually, yet remains almost entirely dependent on uninterrupted maritime delivery. An enhanced LNG storage facility would provide that missing buffer. Cargoes could be received when vessels arrive, stored for later use and released into the system when required. More importantly, Bangladesh could take advantage of periods of relatively low international LNG prices to build up reserves instead of being forced to purchase fuel when the market is overheated.
The High Cost of Inaction
Storage would also allow regasification to resume quickly after an FSRU returns to operation. Energy security is not merely about securing supplies; it is also about having required storage facilities to keep them. Bangladesh has spent billions on importing LNG but has yet to invest adequately in the buffer that could protect those imports from weather, accidents, price shocks and geopolitical disruptions. That omission is becoming increasingly expensive. Building LNG storage may require substantial investment, but continuing without it is likely to cost the country much more.
Original Article: Building sufficient LNG storage facility — Com