LNG import costs push gas-sector deficit to nearly Tk 27,000 crore in five months as subsidy pressure mounts

Rising costs of importing liquefied natural gas (LNG) on the international market and falling domestic production have pushed Bangladesh's gas sector into a deepening financial crisis. Importing each cubic metre of LNG now costs about Tk 117. After blending with domestic gas, the average purchase price stands at Tk 52.18, yet gas is being sold at an average of only Tk 23.90 — and that gap is the main driver of the deficit.

According to Petrobangla's accounts, the deficit in the first three months of the current 2026-27 fiscal year, from July to September, was Tk 13,300 crore. A further Tk 7,500 crore deficit arose in October, and in November the figure could reach Tk 6,155 crore. All together, the deficit in the first five months of the fiscal year stands at Tk 26,955 crore. Of this, Tk 13,300 crore in subsidy has already been released, it has been learned.

Comparison with the previous fiscal year makes the depth of the crisis clearer. In fiscal 2025-26, against a gas-sector deficit of Tk 16,500 crore, the government gave Tk 14,600 crore in subsidy. In the current fiscal year, however, the subsidy allocation for the energy sector is only Tk 6,000 crore. As a result, major uncertainty has arisen over arranging the extra money needed to cover the deficit.

Petrobangla Chairman Abdul Mannan told the media that the Iran war has made the situation complicated. Buying LNG from the spot market costs about Tk 600 crore extra per cargo. With government-to-government (G2G) gas supply from Qatar and Oman stopped, losses are rising further. He also said that when a vessel was able to cross the Strait of Hormuz this month, it was procured quickly.

On covering the deficit, the chairman said the government will decide on the matter. Energy is an essential commodity, so there is no scope to stop supply. According to his figures, before the war one cargo of LNG cost about Tk 500 crore to buy; now it costs up to Tk 1,200 crore. Gas that was once available at $10 per MMBTU now costs $22 to $28.

According to Petrobangla, in the first nine months of fiscal 2025-26 the average purchase price of gas was Tk 27.64 per cubic metre. From April to June it rose to Tk 45.79. With the average selling price at Tk 23.63 in that period, the deficit was Tk 21.82 per cubic metre.

An initiative to raise prices was also taken at one stage to reduce the deficit. Petrobangla had proposed raising the price of gas for power generation from Tk 16 to Tk 25 per cubic metre and the price of CNG used in vehicles from Tk 43 to Tk 65. However, when the price-rise initiative drew criticism amid a gas crisis in the country caused by a fire at an FSRU, the process was suspended for the time being.

How much more imported gas costs than domestic gas is clear from source-wise prices. Gas is bought from Sylhet Gas Fields Company and Bangladesh Gas Fields Company at Tk 1 per cubic metre, and from Bapex at Tk 4. Chevron Bangladesh's gas costs about Tk 12 and Tullow's about Tk 10. By contrast, in the first seven months of fiscal 2024-25, LNG imported from Qatar cost about Tk 46 per cubic metre and Omani gas about Tk 44.

At present, about 30 percent of gas supply depends on imports. Although the average purchase price of domestic gas is Tk 6.07 per cubic metre, the addition of imported gas has pushed the overall average to Tk 52.18. Sector insiders fear the deficit will grow further if the import share reaches 70 percent in future. In their view, increasing dependence on imports without emphasising exploration and new well drilling as domestic reserves decline is one of the main causes of the current crisis.

There is also a picture of slowness in building infrastructure to use domestic gas. The Tk 1,931 crore Bhola-Barishal pipeline project to bring Bhola's surplus gas to the mainland remains stuck, while the roughly Tk 24,000 crore Moheshkhali-Bakhrabad parallel pipeline project is progressing. The work of appointing a contractor for the Feni-Bakhrabad section is also nearly final.

Plans for drilling new wells are likewise stuck in administrative complications. About 19 development project proposals (DPPs) are stuck at various stages including the Planning Ministry, and so far only one DPP has been approved during the current government's tenure. Projects financed by the Gas Development Fund (GDF) are also stuck in administrative complications. The Petrobangla chairman said he has gone to the Planning Ministry for discussions and hopes two DPPs will be approved soon.

The supply picture also shows the depth of the crisis. According to Petrobangla, against daily demand of about 4,000 million cubic feet of gas, supply is roughly 2,600 million cubic feet. Of this, about 1,620 million cubic feet comes from domestic sources and 950 million cubic feet from imported LNG. Power generation alone needs about 2,500 million cubic feet daily. In addition, although Titas Gas has a committed load of 380 million cubic feet against 379 industrial establishments, those establishments are not receiving the necessary supply.

Domestic gas fields once produced about 2,800 million cubic feet daily; that has now fallen to about 1,624 million cubic feet. Production at the largest field, Bibiyana, has also fallen from about 1,350 million cubic feet daily to 731 million cubic feet — yet about 45.5 percent of the country's total gas supply still comes from this field. Taken together, sector insiders say that alongside subsidies, without effective initiatives in domestic gas exploration, new well drilling and using gas from promising sources such as Bhola, import dependence and the financial deficit will only grow — and the whole sector is now looking to the government's decision.