24 Mar
A Foundation in Freefall
The most fundamental vulnerability is one that no contract or infrastructure project can fix: Bangladesh’s domestic gas reserves are running out, and they are doing so faster than official projections have tended to acknowledge. Production peaked in the mid-2010s at approximately 2,750 MMcfd and has been declining ever since. Over the 16 months to December 2025 alone, domestic output fell by more than 8% — an acceleration that analysts project will steepen to a 12% compound annual decline between 2024 and 2028 as the country’s major fields enter their terminal phase.
The consequence is a structural supply-demand gap that LNG has been filling — partially — for seven years. Total gas demand has remained relatively stable at 3,800–4,000 MMcfd, but the domestic share of that supply has shrunk relentlessly. In FY2024-25, the gap between what Bangladesh could produce and what its economy required was over 1,000 MMcfd. Crucially, even that figure understates the true shortfall: much of the unmet demand simply goes unfulfilled, showing up not in import statistics but in rationed gas for factories, curtailed fertiliser output, and rolling power cuts.
Figure 1: The widening gap between declining domestic gas production, growing LNG supply, and total gas demand in Bangladesh from 2015 to 2025.
Table 1: Bangladesh Gas Supply-Demand Balance
| Parameter | FY20-21 | FY21-22 | FY22-23 | FY23-24 | FY24-25 |
| Domestic Production (MMcfd) | 2,500 | 2,350 | 2,250 | 2,100 | 1,950 |
| LNG Supply (MMcfd equiv.) | 550 | 650 | 550 | 680 | 780 |
| Total Gas Supply (MMcfd) | 3,050 | 3,000 | 2,800 | 2,780 | 2,730 |
| Estimated Demand (MMcfd) | 3,800 | 3,900 | 3,800 | 3,800 | 3,800 |
| Supply-Demand Gap (MMcfd) | 750 | 900 | 1,000 | 1,020 | 1,070 |
The Procurement Trap
Against this backdrop of domestic decline, Bangladesh has had to buy more LNG — and the way it buys that LNG has compounded its exposure to risk. The country’s procurement strategy operates across three layers: long-term supply agreements, short-term contracts, and the spot market. In theory, the balance between them provides flexibility. In practice, an excessive reliance on the spot market has been a recurring source of crisis.
The temptation of spot purchasing is easy to understand. When the COVID-19 pandemic collapsed global demand in 2020, JKM spot prices fell below $2.50/MMBtu — a fraction of the approximately $8–10/MMBtu cost of Bangladesh’s Qatari long-term contract. Buying spot made obvious sense. The problem is that the logic inverts without warning. In 2022, as Europe scrambled to replace Russian pipeline gas, the same spot market surged to $85/MMBtu. Bangladesh, with a sovereign credit rating of Ba3/BB- and limited purchasing power, was simply outbid. Spot cargoes went to wealthier, higher-rated buyers in Europe and Northeast Asia, and Bangladesh was left to ration supply at home. By FY2024-25, spot purchases still accounted for roughly 40% of total LNG imports — far above the 20–25% that most major importing nations maintain as their ceiling.
Figure 2: The evolving breakdown of Bangladesh’s LNG procurement between long-term contracts, short-term contracts, and spot market purchases.
“When global demand surges or supply is disrupted, spot prices can escalate to multiples of long-term contract prices within weeks — and Bangladesh, as a relatively small, sub-investment-grade buyer, is invariably among the last served.”
The financial consequences of this procurement architecture accumulate steadily. From 2018 to 2025, Bangladesh spent a cumulative $18 billion on LNG imports — a sum that exceeds total FDI inflows over the same period. The annual bill has more than tripled since 2019, reaching $3.88 billion in 2025. The government’s response — subsidising gas prices to shield consumers and industries from the true cost — has created a separate spiral: Petrobangla sells gas at $3–5/MMBtu while importing it at $11–13/MMBtu, generating losses that require ever-larger budget transfers to sustain. The IMF has flagged this as a primary risk to Bangladesh’s debt sustainability.
Table 2: Bangladesh LNG Import Volumes and Costs (2019–2025)
| Year | Cargoes | Volume (MT) | Cost (USD Bn) | Avg. Price ($/MMBtu) |
| 2019 | ~42 | ~3.0 | ~1.2 | ~8.5 |
| 2020 | ~58 | ~4.2 | ~1.0 | ~5.5 |
| 2021 | ~66 | ~4.8 | ~2.1 | ~13.0 |
| 2022 | ~72 | ~5.2 | ~3.8 | ~22.0 |
| 2023 | ~61 | ~4.4 | ~2.5 | ~14.0 |
| 2024 | 86 | ~6.0 | 3.02 | ~11.5 |
| 2025 | 109 | 7.16–7.41 | 3.88 | ~12.5 |
| Cumulative 2018–25 | ~509 | ~35.8 | ~$18.0 Bn |
Sources: BSS News, Petrobangla, Gas Outlook, IEEFA.
Figure 3: Bangladesh’s annual LNG import expenditure from 2019 to 2025, illustrating the correlation between global price movements and the national import bill.
One Supplier, One Chokepoint
The deepest vulnerability, however, is geographic. Between 68% and 75% of Bangladesh’s LNG in recent years has come from a single country: Qatar. Add the UAE and Oman, and the Middle Eastern share of total supply exceeds 55% — one of the highest concentrations of any major importing nation in the world. The reasons are partly historical and partly structural: Qatar’s North Field is the world’s largest non-associated gas field, QatarEnergy’s Ras Laffan facility is among the most operationally reliable export terminals on the planet, and Qatar has been willing to sign long-term contracts on terms Bangladesh can accept. But concentration at this level means a single point of failure.
Figure 4: Bangladesh’s LNG import sources in 2025 (left) and comparative Qatari LNG dependence across major importing nations (right).
That single point of failure has a name: the Strait of Hormuz. The 33-kilometre-wide waterway separating Iran from Oman carries approximately 20% of global LNG trade and is the only maritime exit route for Qatari, Emirati, and Kuwaiti hydrocarbon exports. Every LNG cargo bound for Bangladesh from Qatar must pass through it. When Iran closed the Strait on March 1, 2026, the logic of Bangladesh’s supply chain collapsed entirely: QatarEnergy invoked force majeure on March 2, OQ Trading (Oman) on March 5, and Excelerate Energy on March 6. Three suppliers, simultaneously, ceased deliveries. Of the 11 LNG cargoes scheduled for Bangladesh in April 2026, eight were immediately at risk.
What followed laid bare the cost of operating without any strategic reserve. Bangladesh had no buffer storage — no underground reserves, no floating storage units, no cushion of any kind between the tap and the grid. With spot prices surging from $10.73/MMBtu to $28.28/MMBtu within days, the country was forced to compete in the most expensive energy market in recent memory, against buyers with deeper pockets and better credit ratings. Zero Carbon Analytics had warned in February 2026 that 84% of LNG shipped through the Strait is destined for Asian markets; Bangladesh, as one of the most Qatar-dependent importers in Asia, was precisely the kind of buyer the warning was written for.
Figure 5: The Strait of Hormuz as a critical chokepoint for Bangladesh’s energy security, and the estimated annual LNG cost under different disruption scenarios.
“The March 2026 crisis did not create Bangladesh’s vulnerability — it simply made it visible. The structural weaknesses had been present for years, compounding quietly beneath a surface of growing import volumes and signed contracts.”
The three vulnerabilities examined in this article — a domestic gas base in accelerating decline, a procurement strategy over-exposed to spot market volatility, and a supply portfolio dangerously concentrated in a single geopolitical flashpoint — are not independent problems. They reinforce each other. Declining domestic production means more LNG must be bought. More LNG on the spot market means greater price exposure. Greater price exposure, combined with geographic concentration and no strategic storage, means that when a crisis hits, there is no escape route.
The question is not whether Bangladesh can continue on this trajectory — the March 2026 crisis has already shown it cannot. The question is what a credible alternative looks like, and how quickly it can be built. That is the subject of Part 3.
References
- [1] IEEFA. “Bangladesh’s LNG Dependence Raises Concerns about Energy Resilience.” Institute for Energy Economics and Financial Analysis, December 29, 2025.
- [2] The Daily Star. “Restive Hormuz Puts Bangladesh’s LNG Lifeline in Peril.” The Daily Star, March 3, 2026.
- [3] Reuters. “Bangladesh Faces Steep Rise in LNG Prices after Qatar Supply Halt.” Reuters, March 6, 2026.
- [4] The Business Standard. “Powering Bangladesh: Redirecting LNG Investments towards Renewable Energy.” The Business Standard, December 30, 2025.
- [5] Gas Outlook. “Bangladesh LNG Bill Is No Longer a Stopgap, It’s Structural.” Gas Outlook, March 2026.
- [6] Ember Energy. “Spot Market LNG Purchases Can Cost Bangladesh about $11 Billion between 2022 & 2024.” Ember, October 6, 2022.
- [11] S&P Global Commodity Insights. “Bangladesh Leans towards Long-Term LNG Contracts with Recent Deals.” S&P Global, February 1, 2024.
- [12] BSS News. “Bangladesh Increases Spending for LNG Import.” Bangladesh Sangbad Sangstha, January 11, 2026.
- [13] Zero Carbon Analytics. “Asian Countries Most at Risk from Oil and Gas Supply Disruptions in Strait of Hormuz.” Zero Carbon Analytics, February 25, 2026.
- [14] Wood Mackenzie. “Middle East Conflict Set to Drive Oil and LNG Prices Significantly Higher.” Wood Mackenzie, March 2, 2026.
- [15] IEA. “Growth in Global Demand for Natural Gas Is Set to Accelerate in 2026.” International Energy Agency, January 23, 2026.
