Bangladesh’s LNG Crunch Leaves Little Room for Error
The crisis, compounded by the collapse of a long-term supply deal with Gunvor, highlights how single infrastructure bottlenecks leave the country vulnerable and with little bargaining leverage.
In a Nutshell:
- Bangladesh’s gas system was already under pressure from falling domestic production and disrupted LNG deliveries when a July fault at the Excelerate-operated Maheshkhali terminal cut about 450 million cubic feet of gas a day from the grid—nearly half of the country’s LNG supply.
- The disruption widened an existing shortfall, leaving gas supply well below demand and affecting power generation, factories, CNG stations and household consumers.
- The government responded by approving emergency direct purchases of eight LNG cargoes, saying a conventional tender process would take too long in the circumstances.
- At the same time, Bangladesh was considering a 13-year LNG supply deal with Gunvor USA, with the option of assessing the company’s performance before committing to the full duration.
- That proposal was later withdrawn before cabinet procurement approval. TBS, citing Petrobangla and Energy Division officials, reported that talks stalled after Gunvor raised its quoted price amid a tight LNG market outlook for 2026–28.
Why it matters
The deeper issue is not just a delayed LNG deal. Bangladesh has built an energy system in which a terminal breakdown or disruption in overseas supply can quickly become a problem for power plants, factories and households. In such a situation, the government has little time and limited bargaining power. Suppliers know the country needs fuel, while officials must balance the immediate risk of shortages against the long-term cost of signing a deal that may burden consumers and public finances for years.
What we think
Bangladesh needs emergency cargoes to keep the system running, but it should not allow a short-term crisis to dictate long-term energy policy. Any revived deal with Gunvor or another supplier should be tested openly: Is the price competitive? How much gas must Bangladesh buy regardless of need? Can cargoes be redirected? What happens if supply fails or prices fall? The bigger lesson is that one terminal should not be able to take out such a large share of national LNG supply. More storage, backup regasification capacity, domestic gas exploration, efficient use of power and faster renewable expansion would give Bangladesh more room to negotiate—and fewer reasons to accept a costly deal under pressure.