The gas supply crisis in the entire gas franchise is getting more intense daily. Despite various initiatives taken to increase production, no roadmap for improvement is visible yet. It was expected that RLNG would come from India through a pipeline on a limited scale by early 2026. The 3rd FSRU will go into operation by the end of 2026. It was also expected that the implementation of the deep-water LNG infrastructure off the coast of Kuakata and pipeline transportation of RLNG to Khulna would also advance. Pipeline gas transportation from Bhola to Barishal will also start after the evaluation of reserves. Expectations were also there that new gas resources would be added to the reserves through exploration and development. These may not increase production, but at least could assist in maintaining production above 2,000 MMCFD. Between now and 2026, RLNG was expected to add 1,700-1800 MMCFD. Consequently, the expected total gas production was estimated at 3,700-3,800 MMCFD. These could assist Petrobangla in catering to the gas demand of bulk consumers alongside meeting the demand for gas-based power generation.
Present Projects for Increasing Gas Supply
The projects were launched under the provisions of the Speedy Power and Energy Supply Special Act 2010, during the tenure of the previous Awami League government. There are many allegations of irregularities and corruption in these initiatives. The interim government put on hold the operations of the special act to create an ambiance of fair competition in the sector. It is almost certain the gas supply is unlikely to increase within the stipulated time as expected. Energy advisor Fouzul Kabir Khan has recently categorically said that the exploration of gas onshore and offshore will continue. In addition to the ongoing 48 wells-drilling program by 2025, 100 more wells will be drilled. National E&P Company BAPEX will execute part of the projects. For the remainder, drilling companies will be engaged through a fair and open tendering process. The present government will attach due priorities to completing the works by 2028. The government, however, has canceled an earlier initiative to drill 16 exploration wells by three foreign companies. Preparations have been made to let out tenders for this work. Negotiation with Excelerate Energy for the 4th FSRU and pipeline transportation of RLNG to Khulna has also been suspended. Negotiation for concluding a contract between H-Energy India and RPGCL to import RLNG from India through a pipeline has also been stalled. Petrobangla has also stalled the negotiation with Saudi Bangla Pipeline Limited (SBPL). SBPL is a joint venture company between Dipon Group and Saudi Investment Company EDII, which obtained the license for importing 550 MMSCFD under the Private Sector LNG/RLNG Import Policy. Earlier Petrobangla was negotiating with SBPL to purchase 115 MMCFD RLNG through India from SBPL’s basket. The entire amount was supposed to be supplied to the power plant at Rupsha within 18 months from the formal signing of the contract.
Gas supply to the greater Khulna region has become uncertain yet again. GTCL constructed a 163-kilometer 20-inch outer diameter Bheramara-Khulna gas transmission pipeline in 2016 to supply gas to the Kushtia, Jessore, and Khulna regions. The objective of constructing the pipeline was to supply gas to the 225 MW dual fuel power plant of NWPGCL and the 230 MW combined cycle power plant of BPDB. Some gas was supplied to these plants for a few months to test and commission these plants. But gas is no longer available for these plants now. Occasionally, expensive diesel is used to run these plants. Though this pipeline was constructed to supply gas to industries and power plants in the Khulna region, it remained idle over the past 8 years. Petrobangla assured of supplying gas to a highly fuel-efficient 880 MW capacity combined cycle power plant despite its failure to supply gas to 435 MW combined cycle plants. The Asian Development Bank provided a loan to NWPGCL to construct the power plant based on the gas supply commitment of Petrobangla. The plant is now almost ready to go for testing and commissioning. The first unit can be commissioned by the end of the year and the second within 6 months. Petrobangla may be able to supply gas for it for a while but cannot assure when gas for commercial operations of the plant can be supplied. Consequently, the huge investment of NWPGCL is now at great risk.
A senior executive of Petrobangla, on condition of anonymity, told EP that until new entrepreneurs for supplying RLNG are available or a gas transmission pipeline is built and commissioned from Bhola to Khulna, no guarantee can be given for supplying gas to 1,435 MW gas-based power plants, including the 880 MW power plant. This may take 2-4 years. The website of GTCL states about 5 new gas transmission pipeline projects due for completion by 2026. But till the writing of this story, no investors could be firmed up for these. These projects are the 110 KM Langalband-Mawa-Jajira 30-inch OD pipeline, 62 KM Bhola-Barishal pipeline, 30 KM Kuakata-Payra pipeline, 153 KM Payra-Barishal pipeline, and 48 KM Khulna-Gopalganj pipeline. Negotiation was in progress with US Company Excelerate for the last three pipelines and FSRU off the coast of Kuakata. The negotiation with Excelerate has been suspended for the project. One GTCL executive informed EP that they received no directives from the EMRD about the execution of the pipeline projects after the recent political change. Initiatives for sourcing the finance, feasibility study, and land acquisition for the ROW will start after getting the green signal from the authorities concerned. These projects as a package will take about 4-5 years to complete from the date of launching. The gas from Bhola Island cannot be made available to Khulna until the last 4 pipeline projects are constructed in a package. No further investment in developing the gas resources of Bhola will be justified without making positive policy decisions for the construction of the pipeline projects. The present capacity of gas production at Bhola remains underutilized now.
Controversy over Rupsha Power Plant
In recent discussions, the 800 MW gas-based Rupsha Power plant nearing completion has created controversies. The largest single-unit gas-based power plant is now at the last stage of construction. It is the first zero-waste power plant in the country. The planning for the project started at the end of 2016. The DPP of the project was approved in 2018 by ECNEC after getting assurance from Petrobangla for the supply of gas in February 2017. A contract with the Asian Development Bank (ADB) for financing the project was signed in August 2018. Petrobangla worked out three options for gas supply to the power plant by carrying out a feasibility study. These were (a) supplying gas to Khulna using the Bheramara-Khulna gas transmission pipeline on bringing into operation the Elenga gas pipeline compressor station; (b) construction of gas transmission pipeline from Langalbandh to Khulna via Gopalganj through utilizing the gas pipeline constructed along the Padma Multipurpose Bridge; and (c) importing RLNG through cross border pipeline from India. The first was identified as the preferred option in the study. The reasons for the assumption were that the setting up of two new FSRUs at Maheshkhali and making ready the Elenga compressor station for operation would be completed before the 800 MW Rupsha power plant was thought to be mechanically completed. NWPGCL, the implementing agency, has been directed to construct a distribution line from the City Gate Station Khulna to the nearest power distribution network. ADB provided approval for this. The infrastructure was commissioned in 2020.
When Petrobangla committed to supply gas to the Rupsha Power Plant, its total gas production was 2,800 MMCFD. Petrobangla continued giving pledges to new power plants since then, along with continuing supply to existing consumers. Domestic gas production within a couple of years depleted to 2,000 MMCFD and even with 1,000 MMCFD imported RLNG availability from the floating terminals of Maheshkhali, uncertainties for gas supply to Rupsha power on time started brewing. ADB registered its concern about the gas supply to the plant. Actions for concluding the Gas Sales Agreement (GSA) were launched at that time. The essence of the GSA with Sundarban Gas Distribution Company is the supply of 140 MMCFD gas for the full capacity operation of the Rupsha Power Plant from January 2027. The GSA also mentions gas supply during the winter of 2024 and 2025 for testing and commissioning of the plant. While NWPGCL was looking for an alternative source, US company Excelerate Energy submitted an unsolicited offer for supplying RLNG through a pipeline to Khulna proposing to set up a deep-water LNG infrastructure off the coast of Kuakata. It was decided that Petrobangla would review the Excelerate proposal of RLNG supply when a joint review committee provided a positive signal. Excelerate started negotiations with Petrobangla. The essence of the project was setting up a gas transmission pipeline from Kuakata to Khulna, including a submarine pipeline from the deep-water LNG infrastructure. EP became aware that Excelerate would take 30-40 months from the date of signing the agreement to supply gas to the Khulna region. The present government after assuming office has suspended negotiations on the project.
Negotiations for two other contracts were advancing for RLNG import from India through pipelines. One was with H-Energy. They were supposed to supply 100 MMCFD within 20 months of the agreement. The negotiation under the special act has now been suspended at the advanced stages of negotiations.
On the other hand, Saudi Bangla Pipeline Ltd. acquired a license from the government under the Private Sector LNG Import Policy. Energy companies from Saudi Arabia partnered with Dipon Group in this initiative under which the JV company was supposed to set up fertilizer plants and power plants by importing up to 550 MMCFD of RLNG. The proposal also included a provision for selling gas to Bangladesh. Upon Petrobangla’s intention to purchase gas to supply to the Rupsha Power Plant, negotiations on 115 MMCFD gas started between SBPC and Petrobangla. The proposal was subject to the conclusion of the agreement by December 2024, within 13 months that is by January 2025 gas will be supplied. However, this negotiation initiative was stalled as soon as the special act was suspended.
The construction of the Rupsha Power plant has reached the final stage as the testing and commissioning works are set to start from November 2024. It will not be possible if the required gas supply is not available by then. Acknowledging the importance, Fouzul Kabir Khan, Energy Adviser of the Interim Government, visited the project and discussed the issue at a meeting on 30 August 2024. Some decisions were taken regarding the confirmation of the gas supply and financial obligations of the project. It was decided to confirm the gas supply for the testing and commissioning of the plant. 20-75 MMCFD gas supply will be required for the works. Considering the efficiency of the plant, EMRD has been advised to ensure at least 40 MMCFD gas supply for running the plant on part load till full volume gas supply for operating the plant at full capacity can be made. Instructions were also given for the immediate announcement of tenders to set up FSRU at Kuakata and gas transmission pipelines for gas supply to the Khulna region. Instruction has also been for the construction of the gas transmission pipeline from Bhola to Barishal. It has also been advised to consider the possibility of gas transmission from Bhola and FSRU together.
It is not yet guaranteed whether it will be possible to supply the 140 MMCFD gas supply required for the operation of the Rupsha power plant at full capacity from January 2027. But, for the protection of interest and integrity of supplied equipment, a supply of at least 35 MMCFD gas has been sought. Petrobangla is actively considering this.
Challenges of Gas Supply
Not only in the Khulna region but a modern fuel-efficient gas-based power plant of Jera-Reliance at Meghnaghat has also been lying idle since April 2024 due to the non-availability of gas supply. Including the Rupsha plant, the Khulna region has a 1435 MW gas-based power generation capacity. 200 MMCFD gas is required for running all these plants. The gas required for running all the gas-based power plants of Bangladesh now is 2,400 MMCFD. But Petrobangla can supply 900-1100 MMCFD. There is a huge shortage of gas supply for other end users as well. It is not possible to supply more than 3,100 MMCFD now from own fields and imported LNG. An agreement was signed with Summit Group for setting up a 3rd FSRU at Maheshkhali. The contract had a provision for bringing this into operation in October 2026. This could increase gas supply capacity to 3,600 MMCFD if production from local gas fields could be maintained at the present level. But Petrobangla has recently canceled the agreement. It is being told to select new entrepreneurs through open competitive bidding. Sector-relevant experts observed that even if the agreement can be concluded within the next 6 months commercial operation of the 3rd FSRU would not be possible before the end of 2027. There was a possibility of getting an RLNG supply from Excelerate Energy's proposed project proposal by the end of 2027. It is not sure when such an RLNG supply may be available after selecting entrepreneurs.
There are a few thoughts that in the interest of gas supply to Rupsha Power Plants on time the proposals for RLNG supply through pipeline from India can be given fresh considerations. After the negotiated settlement of the agreement about gas price and wheeling charge, these can be verified following the Swiss Channel Tendering process. The third option is taking Bhola Gas to Khulna. As the first step, a feasibility study of the pipeline from Bhola to Barishal has been completed. The study for the pipeline from Barishal to Khulna must be completed as soon as possible. Gas from Bhola to Khulna cannot be supplied before the end of 2028 or the beginning of 2029 even if all feasibility studies are completed by the middle of 2025.
Conclusion
The immediate past regime came under bitter criticism for planning and implementing several less-priority projects in non-transparent manners under the controversial Special Act 2010. An initiative has been launched to review many such contracts concluded under the law. Many projects under negotiation and waiting for the conclusion of the contracts have been canceled. But gas supply is a major challenge now. Time demands taking immediate action to expedite gas supply initiatives. There will be no other options to increase the use of dirty liquid fuel-based power plants if the generation of gas-based power cannot be increased. The final obligation for leaving power plants idle for gas supply will also need to be borne. That will also impact the cost of generation. Smart decisions need to be taken for part supply of gas to power plants in Khulna including the Rupsha power plant till it is possible to ensure the full requirement of gas. All our initiatives must be taken now on a top priority basis to increase gas supply to the Khulna region over the next two years. Failures will transfer the burden on the people to absorb the consequences. Energy Security will be severely impacted.
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