According to Business Monitor International (BMI), access to natural gas in Bangladesh is going to significantly increase over the coming years. This boost will come from the Bibiyana expansion project, combined with LNG imports expected from 2015. BMI anticipates that this will improve reliability in gas supply to the power sector and industry, supporting a solid growth forecast for 2015 and 2016.
Chevron has announced the completion and first gas from the Bibiyana Expansion Project in the north east of the country. New development wells and an expansion of gas processing facilities will see the project increase gas output by approximately 15 billion m3. Bibiyana is now Bangladesh’s largest producing gas field. The developments will also enable production of natural gas liquids to more than double, to 9000 bpd.
The Bibiyana project acts as a considerable boost to the country, which remains vastly undersupplied with gas. It is also a positive development for the new government, which since coming into power in early 2014, specifically focused efforts on developing the oil and gas sector to boost the availability of fuels.
Over the year to July 2014 Bangladesh produced approximately 1.9 billion m3 of natural gas per month. All of this was marketed domestically, predominantly to the power sector and industry. However, unrestrained gas demand remains far higher. In October, only approximately 670 million m3 of gas was supplied to the power sector over the month, while total demand was closer to 1.2 billion m3. Other sectors, such as the fertilizer industry, were also undersupplied compared to unrestrained potential.
The extra 3 billion m3/y of production from the Bibiyana expansion will therefore help in supporting the gas supply deficit as it ramps up over the coming months. This should drive an approximately 13% increase in domestic gas production by the end of 2014.
In 2015, Bangladesh is expecting the delivery of an Excelerate Energy floating storage and regasification unit (FSRU). The facility is to be moored at Moheshkali Island on the Bay of Bengal and will offer a further 5.1 billion m3 LNG import capacity, with a maximum delivery of 14 million m3/d. The country could receive its first LNG import in mid-June 2015, if it follows through with a Memorandum of Understanding (MOU) signed with Qatar to import approximately 5 billion m3 of LNG per year.
According to BMI, combined the Bibiyana expansion and the FSRU are expected to increase availability of gas in Bangladesh by over one third by 2016, compared to the first half of 2014. Further improving the outlook, unrestrained gas demand is expected to be slightly less, following the government’s proposal to increase domestic gas tariffs to match production costs. The improved supply and expected damping of demand will help to improve challenges with energy shortages in Bangladesh. If a more reliable power supply is developed as a result, industry will be the key benefactor. BMI’s Asia country risk team forecasts 6.3% GDP growth for FY2014/15.