Qatar-Bangladesh Energy Deal: Another Step In The Diversification Of Energy Mix – Analysis
On the 5th of March, Prime Minister Sheikh Hasina articulated a request for augmented energy provisions, particularly in the form of liquefied natural gas (LNG), from Qatar, prompted by the escalating energy demand resultant from the ongoing conflict in Ukraine.
This proposition transpired within the context of a diplomatic encounter between Prime Minister Sheikh Hasina and the Emir of Qatar, Sheikh Tamim bin Hamad Al Thani, held at the Qatar National Convention Center (QNCC) in Doha concurrent with the United Nations Conference on Least Developed Countries (LDC5). According to statements from Bangladesh’s Foreign Minister AK Abdul Momen, the nation is presently importing electricity equivalent to 40 containers, ranging between 1.8 to 2.5 million tonnes per annum (MTA).
Expressing the imperative for assistance, Prime Minister Sheikh Hasina underscored the energy predicaments confronting Bangladesh due to the repercussions of the Ukraine conflict. She explicitly communicated her intent to renew the existing contract and sought an augmented supply of LNG, stating, “We want your assistance. Bangladesh is grappling with energy challenges emanating from the Ukraine war. I seek a more substantial supply… I will be renewing the contract and I anticipate a larger allocation of LNG.” In response, the Emir of Qatar sought clarification on the specific quantity desired by Bangladesh. Subsequently, he was apprised that Bangladesh aspired for an additional MTA, corresponding to a requirement of 16 to 17 containers. Prior to her departure from Qatar, Prime Minister Sheikh Hasina received assurance that the matter would be deliberated further in a subsequent meeting between the Emir of Qatar and the Bangladeshi Prime Minister, in the company of the respective energy ministers. This development serves as an indicative manifestation of the inception of a renewed collaborative framework across diverse domains.
Later on June 1, 2023, Bangladesh has recently entered into a fresh agreement with Qatar, securing an additional annual supply of 1.5 million tonnes of liquefied natural gas (LNG) for the next 15 years starting in 2026. The deal was formalized at a ceremony in Doha, Qatar, where Petrobangla, Bangladesh’s state-owned entity, signed the agreement with Qatargas, Qatar’s state-owned Ras Laffan Liquefied Natural Gas Company Ltd. The contract signing event was attended by Nasrul Hamid, the State Minister for Power, Energy, and Mineral Resources from Bangladesh, and Saad Sherida al-Kaabi, Qatar’s State Minister for Energy, as mentioned in a press release from the Ministry of Power, Energy, and Mineral Resources.
The global supply chain has been significantly impacted by both the ongoing pandemic and the conflict in Ukraine, prompting a comprehensive reevaluation of commodity prices, with particular emphasis on petroleum. Various justifications underpin the necessity for rationalizing energy demands. Firstly, Bangladesh is presently grappling with an escalating energy demand due to its swift economic expansion and population growth. The Bangladesh Power Development Board projects a continuous annual increase in the country’s energy demand for the next decade. To meet this demand and foster economic growth, Bangladesh must seek alternative energy sources.
Secondly, Qatar stands as one of the world’s major producers and exporters of liquefied natural gas (LNG), boasting substantial natural gas reserves and currently holding the position of the foremost global LNG supplier. Given its geographical proximity to Bangladesh, Qatar emerges as an optimal LNG supplier for the nation. Thirdly, amid intensifying competition from other LNG producers, such as the United States and Australia, Qatar is actively endeavoring to expand its clientele. Consequently, Qatar is exploring new markets, with a specific focus on South Asia. Fourthly, a considerable portion of Bangladesh’s energy needs is currently met through the importation of oil. By diversifying its energy mix and transitioning towards eco-friendly sources like LNG, Bangladesh can diminish its reliance on imported oil and concurrently enhance its energy security.
Formerly, Bangladesh entered into a 15-year accord with Qatar’s RasGas Co. to import liquefied natural gas (LNG) commencing in 2018, seeking to alleviate a domestic supply deficit for power generation. The agreement, slated for signing on September 25 in Qatar, was disclosed by Mohammad Quamruzzaman, the managing director of Rupantarita Prakritik Gas Co, a division of the state-owned Petrobangla. As per Petrobangla officials, the terms of the agreement stipulated an annual supply of 1.8 million tonnes of LNG by RasGas for the initial five years, followed by 2.5 million tonnes annually for the subsequent decade. This marked Bangladesh’s inaugural LNG import pact and is instrumental in addressing the country’s shortage of domestic natural gas.
The accord with RasGas, the world’s leading LNG exporter, underscores the evolving role of South Asia as a potential new consumer for this fuel. Notably, the agreement encompasses a volume of 4 million tonnes of gas annually. Bangladesh opted for this arrangement following a 2011 Memorandum of Understanding with the state-owned RasGas, as it sought to incorporate more spot cargoes amid a surplus in supply that contributed to reduced prices. Rupantarita Prakritik Gas, as indicated on its website in June, conveyed its intention to finalize suppliers for LNG spot cargoes from the year 2018 onward.
The Prime Minister’s visit and the Emir’s statements have triggered discussions regarding the potential ramifications of a meeting between the Energy Minister of Qatar and the Prime Minister of Bangladesh. Such a meeting carries significant implications for the energy and economic sectors of both nations, as well as their diplomatic relations and regional stability.
A key implication is the prospect of heightened energy collaboration between Qatar and Bangladesh. Given Qatar’s status as a major liquefied natural gas exporter, this collaboration could offer a substantial energy source for Bangladesh, responding to its increasing energy demands. This, in turn, may foster a more diversified energy mix for Bangladesh, reducing dependence on a singular energy source.
Beyond energy collaboration, the meeting may catalyze an expansion of economic ties. This could encompass increased trade and investment, extending beyond the energy sector. Qatar might invest in Bangladesh’s energy sector, while Bangladesh could present investment opportunities in diverse sectors, potentially driving economic growth in both nations. The Prime Minister highlighted Bangladesh’s establishment of 100 economic zones, inviting investments, with Qatar identified as a potential contributor.
Furthermore, diplomatic relations between Qatar and Bangladesh may be positively impacted, indicating Qatar’s commitment to engaging on critical issues and potentially enhancing its regional influence. The meeting could also lay the groundwork for heightened regional cooperation, involving joint efforts to address shared challenges like climate change and regional security.
A noteworthy implication is the potential for technological collaboration in the energy sector between Qatar and Bangladesh, facilitating the exchange of best practices and the adoption of innovative technologies to enhance the efficiency and sustainability of both nations’ energy sectors.
The meeting’s broader geopolitical and regional implications could suggest a shift in Qatar’s foreign policy towards South Asia, influencing Bangladesh’s relationship with other regional powers. Additionally, it may have domestic political ramifications, seen as a positive stride in addressing Bangladesh’s energy needs and as an illustration of Qatar’s commitment to engaging with other nations on crucial matters.
The meeting’s outcomes could extend to employment opportunities for citizens of both countries, particularly in the energy sector, and foster cultural exchange through discussions on various topics between officials.
Finally, the meeting’s environmental implications are noteworthy, potentially promoting increased use of natural gas as a cleaner energy source, thereby reducing Bangladesh’s carbon footprint. Additionally, the enhanced cooperation between Qatar and Bangladesh may contribute to regional stability in South Asia.
The meeting between the Emir of Qatar and the Prime Minister of Bangladesh holds far-reaching consequences, encompassing increased energy collaboration, economic ties, and diplomatic relations, along with technological collaboration and employment opportunities. Its broader geopolitical, regional, and domestic political implications necessitate vigilant monitoring to assess its potential impact on both nations and the wider region.
