Bhola Correspondent:

Petrobangla and the Energy Division have moved to convert natural gas from the island district of Bhola into LNG for large-scale supply to factories in and around Dhaka. At least nine domestic and foreign firms expressed interest, but an initial screening narrowed the list to four. The shortlisted companies said they could begin deliveries within 12 to 24 months after final approval. They also proposed building infrastructure at both ends to hold five days’ worth of LNG reserves in case of weather-related disruptions.

Energy Division and Petrobangla officials said four companies — based in Russia, China, and Singapore — have been selected for the LNG transport and supply plan. The list includes Gazprom EP International Investment Limited, China National Machinery Import & Export Corporation, CNPC Chuanqing Drilling Engineering Company Limited, and Singapore-based GCG LNG Company.

The Energy and Mineral Resources Division is pushing ahead with plans to convert Bhola’s gas into LNG for industrial use, said Mohammad Saiful Islam, the division’s secretary. “We have shortlisted several potential companies for this purpose,” he told journalists, adding, “There are some challenges around setting up factories in Bhola and extending gas connections to local residents. But efforts are still being made. Demand from factory owners is strong, driven by an acute gas shortage in Dhaka and nearby areas.”

Under a special act, the ousted Awami League government had earlier assigned local firm Intraco CNG to transport gas from Bhola as compressed natural gas. The company currently supplies about five million units a day, a volume far below demand. The interim government, after taking office, decided to shift to LNG-based gas supply from Bhola to ease shortages across industries. That decision drew interest from a wide range of local and foreign firms. As part of that push, the Energy Division is now seeking to move to final approval for LNG-based gas supply from the island.

Meanwhile, a pricing proposal has been sent to the Bangladesh Energy Regulatory Commission seeking approval to set the delivered price of Bhola gas supplied as LNG at BDT 47.50 per cubic metre, including transport costs. The proposal is scheduled to be placed before the commission’s meeting on December 23. If the price is not finalised at that meeting, officials said the issue will be resolved through a public hearing.

A senior BERC official, speaking on condition of anonymity, told journalists, “Supplying Bhola gas in LNG form presents an entirely new technology for Bangladesh. Technical aspects are therefore under close review. A technical committee is working. They’ll submit a report, after which the matter will be tabled at the commission’s meeting later this week.”

Intraco is currently selling gas brought from Bhola as compressed natural gas at BDT 47.50. Of that amount, BDT 17 covers the purchase price of gas, while BDT 30.50 reflects transport and other costs, as set out in a government gazette issued under an executive order. That gazette, published on May 8, 2023, is now being amended to include LNG. Because changes to the law no longer allow gas prices to be fixed by executive order, officials said BERC has been formally notified.

Energy Division officials said a decision has been taken to transport 30 million cubic feet of gas per day from Bhola in LNG form by river routes. Once brought to Dhaka, the gas will be supplied to factories in the capital and surrounding industrial areas. The selected companies will purchase gas from Bhola and sell it at a fixed rate to interested industrial users.

In the franchise area of Titas Gas Transmission and Distribution Company Limited, 32 industrial firms have expressed interest in taking Bhola gas, according to people familiar with the matter. Titas has drawn up a list of these companies. Their combined demand stands at just over 15 million cubic feet a day.

Three gas fields have so far been discovered in Bhola. Nine wells have been drilled, with a combined production capacity of 190 million cubic feet a day. Current output, however, is limited to about 70 million cubic feet due to supply constraints. The government has already moved to establish private industrial plants and a state-owned fertiliser factory on the island, developments that would raise local gas demand. If LNG transport proceeds, officials believe full utilisation of Bhola’s gas will become possible. Against that backdrop, Petrobangla is working towards drilling another 15 wells.