Bangladesh’s Gas Expansion Plan: Boosting Domestic Supply To Curb LNG Dependency – Analysis

Bangladesh is facing a growing energy crisis, with domestic gas production struggling to meet the rising demand. To tackle this issue, in January 2025 the government has launched an ambitious plan to drill, explore, and develop 34 new gas wells across the country in 2025. The goal is to add 320 million cubic feet per day (mmcfd) of natural gas to the national grid, reducing dependence on costly liquefied natural gas (LNG) imports.

With a projected investment exceeding Tk5,000 crore, this initiative represents a significant step toward enhancing the country’s energy security. However, the success of the plan depends on timely execution, technological efficiency, and skilled manpower. This article explores the key aspects of this gas expansion strategy, its challenges, and the broader impact on Bangladesh’s energy landscape.

The Current State of Domestic Gas Production

As of now, 16 gas wells have undergone workover operations, yielding 184 mmcfd of additional gas. However, only 72 mmcfd has been added to the national grid due to infrastructure limitations.
For example, three wells in Bhola have produced 61 mmcfd of gas, but a lack of pipeline connectivity has prevented their integration into the grid. Similarly, wells in Sylhet and Begumganj remain disconnected, though efforts are underway to resolve these issues.

The Demand-Supply Gap: Why More Gas is Needed

Bangladesh’s current daily gas demand stands at around 3,800 mmcfd, but domestic production falls short, supplying only between 2,500 and 2,800 mmcfd. To bridge the gap, the country imports approximately 1,000 mmcfd of LNG, which comes at a much higher cost than locally produced gas.

According to Petrobangla Chairman Rezanur Rahman, if the planned gas extraction projects meet expectations, Bangladesh could significantly cut back on LNG imports, easing the financial burden on the economy. LNG is currently priced at Tk70-Tk71 per unit, while domestically produced gas costs only Tk4 per unit. This stark contrast highlights the importance of boosting local gas production.

The 34-Well Initiative: A Breakdown

The government’s latest gas extraction strategy involves both new drilling and workover operations.

• 14 wells will be managed by state-run Bangladesh Petroleum Exploration and Production Company Limited (Bapex).
• 20 wells will be developed through international tenders, allowing foreign companies to participate.

This dual approach aims to maximize efficiency while tapping into both domestic and international expertise.

The Role of Workover Operations

A significant portion of the initiative involves workover operations—re-drilling or upgrading existing wells to restore or enhance productivity. Workovers are a cost-effective way to quickly boost gas output without the need for entirely new drilling projects. Energy expert Professor Badrul Imam emphasized that workover operations can rapidly increase production at a lower cost, making them a vital tool in addressing the country’s energy crisis. However, he cautioned that completing work on 34 wells within a year would be a challenging task, requiring well-coordinated execution and sufficient resources.

Financial Commitments and Project Oversight

The estimated cost of this initiative exceeds Tk5,000 crore, a substantial investment that reflects the urgency of the country’s energy situation. A high-level meeting chaired by Energy Adviser Muhammad Fouzul Kabir Khan on January 22 laid out the financial and technical strategies for executing these projects. A five-member subcommittee will oversee the technical aspects of drilling and workover operations, ensuring proper planning and implementation. The committee will also prioritize the most promising sites, conduct feasibility studies, and monitor progress throughout the year.

According to officials, most of the necessary tenders have already been issued. Contracts for several wells, including those in the Sylhet gas field, are already in progress.

Challenges in Meeting the Gas Target

While the government’s plan is ambitious, several challenges could hinder its execution. 

1. Workforce and Equipment Constraints

• Bapex has never undertaken a project of this scale before, raising concerns about whether it has the necessary manpower and equipment.
• To address this, the government is considering acquiring two additional drilling rigs and increasing investments in skilled personnel.

2. Infrastructure Bottlenecks

• Even when new gas is extracted, connecting it to the national grid is not always straightforward.
• Previous workover projects have faced delays in pipeline integration, limiting the actual supply increase.

3. Volatility in LNG Pricing

• Petrobangla has warned that fluctuating LNG prices could further strain the country’s finances.
• In June 2024, Petrobangla faced a Tk0.98 per unit shortfall due to the exchange rate, which has now ballooned to Tk6.5 per unit.

Addressing these issues will be crucial to ensuring that the government’s gas expansion plan delivers the intended benefits.

LNG Imports: A Costly Alternative

Bangladesh has been importing LNG since 2018 through long-term contracts with Qatar and Oman. In FY24 alone, the country imported 83 LNG cargoes—57 from long-term deals and 26 from the spot market. While LNG imports have helped stabilize gas availability, they come at a steep cost. Petrobangla currently supplies gas at an average of Tk22 per unit, but with LNG priced over Tk70 per unit, financial losses continue to mount. Industrial and commercial sectors pay between Tk30.50 and Tk31.50 per unit, but even this pricing does not fully cover the costs. Given the financial burden of LNG imports, energy experts have long advocated for boosting domestic production. The government has invited international tenders for deep-sea exploration, but global companies have so far been reluctant to participate.

Long-Term Energy Plans

The government has outlined a broader strategy for energy expansion beyond the current 34-well initiative. The previous Awami League administration had proposed drilling 100 wells between 2025 and 2028, comprising”

• 69 new wells
• 31 workover projects

If successfully executed, these efforts could add nearly 1,500 mmcfd of gas to the national grid, significantly reducing the need for LNG imports.

Enhancing Gas Processing Capacity

At the January 22 meeting, the Energy Adviser also directed officials to explore purchasing one or more Portable Process Plants (PPP) to quickly integrate newly extracted gas into the national grid. These modular units would help process gas at well sites, speeding up supply integration.

Additionally, feasibility studies for new gas projects will be streamlined to reduce the time required for third-party evaluations. The government is also prioritizing exploration in areas with high gas reserve potential, ensuring that future investments yield maximum benefits.

Conclusion

Bangladesh’s plan to drill and upgrade 34 gas wells in 2025 is a bold move to address the country’s growing energy crisis. By adding 320 mmcfd of domestic gas production, the government aims to reduce dependence on expensive LNG imports and enhance long-term energy security. However, the success of this initiative will depend on efficient execution, infrastructure improvements, and financial sustainability. While challenges remain, the government’s commitment to increasing domestic gas production is a crucial step toward ensuring a more stable and affordable energy supply for the nation. If properly implemented, this initiative could mark a turning point in Bangladesh’s energy policy, shifting reliance away from costly imports and toward greater self-sufficiency in natural gas production.