An overview on the current scenario of Natural Gas

In Bangladesh, approximately 75% of the commercial energy is derived from natural gas. Though
Bangladesh has a considerable amount of gas; with 26 gas fields amongst which two are located
offshore, it is not sufficient to last us for the next 50 years-based on the extraction and demand rate.
Despite natural gas being an important good, the amount of revenue that this sector has contributed to
the country’s GDP has dropped significantly during the past years. This is due to the continuous rise in
the country’s GDP and the production not rising at a similar rate. The second reason is due to subsidizing
gas supply which therefore leads to a reduction in revenue. And finally from 2008 onward the nation
faced gas shortage; even though gas production actually increased, it was not sufficient to meet the
growing demand.

Figure 1- The World Bank provides data for Bangladesh from 1971 to 2014. The average value for
Bangladesh during that period was 1.54 percent with a minimum of 0.05 percent in 1971 and a maximum
of 6.21 percent in 2008.

Gas Distribution to different sectors.

The main uses for natural gas are for power generation, industrial process heating, urea fertilizer
production, captive power generation and household cooking. It has also been in use as fuel for vehicles
in the form of compressed natural gas (CNG) since 2005. Power generation as expected is the
dominant sector and industrial sector, together with fertilizer and captive power uses about 40% of
the total gas which is the second largest share. CNG sector had a modest beginning with only 1.3%
during 2005-06, but rapidly increased to the current level of 5%. At present 51% of total gas has
been produced by four International Oil Companies.
 Gas consumption in different sectors

Electricity Fertilizer Captive Power Industry CNG Commercial Domestic

Addressing problems due to scarcity of Gas.

Power Sector: A major hurdle in efficiently delivering power is caused by the inefficient distribution
system. It is estimated that the total transmission and distribution losses in Bangladesh amount to
one-third of the total generation, the value of which is equal to US $247 million per year. The peak
demand of transmission is approximately 6000 MW whereas the generators can only supply 5000-
5300MW despite having a capacity of 7119 MW. Load shedding uses up to 800MW and gas
shortages result in another 400-600MW reduction in power generation.

Fertilizer Sector: During the summer season, the government is compelled to supply gas to the
power generating units to generate power in order to ease the load shedding, cutting gas supplies
to fertilizer plants. To address the severe power crisis, the authorities temporarily shut down some
of the large fertilizer factories and diverted the gas to the power plants.

Residential Sector: Price of gas in domestic use in Bangladesh was calculated on the basis of number
of stoves used rather than amount of gas being used. This system led to waste of gas in households.
But the price of gas should be decided on the basis of amount of gas used. So government of
Bangladesh has introduced pre-paid gas meter in 2011. But the work of installing prepaid meters to
prevent gas bill manipulation and its misuse has made a little headway as only 4,500 meters have
been set up against the target of 600,000 within 2013.
 Solutions and evaluating the issue.

Power Sector: 23% of the power plants in Bangladesh are over 20 years old and are therefore
extremely inefficient. Actions need to be taken in order to improve their efficiency or replace them.
Demand-Side policies may also be adapted, addressing the efficiency of household gas appliances
and promoting more efficient boilers in order to reduce the wastage of gas.

Fertilizer Sector: Most of the fertilizer plants are too old and inefficient. There is a significant gas
saving potential in this sector, which can be as high as 25 BCF (about 700 MMCM) per year.
Residential Sector: Instead of providing households with meters, the government should encourage
the LPG (Liquid Petroleum Gas) industry to go forward and provide homes with more cylinders,
slowly diminishing the use of natural gas pipes. Not only will this be more efficient, it will provide
more jobs to the people in that field and also contribute significantly to the GDP.
How can we distribute gas efficiently?
With the fertilizer sector being related to the agriculture industry, it is crucial to invest improving
the fertilizer plants. This would save a significant amount of gas; which in return could be invested
in other sectors. Our country is heavily dependent on the agriculture industry not only in economic
terms but also for survival as we get most of our food from there and therefore in terms of
allocative efficiency, most would value investing in this sector. As for the power sector, in the past
3-4 years there has been a surplus in the energy and therefore it would be safe to invest into the
fertilizer sector, as most people do have access to electricity/power these days.
Is it justifiable to supply gas to the industrial sector and cut the supply in the residential sector?
Absolutely! The residential sector should switch to using LPG as this stops unfair usage of gas that is
supplied to the buildings by some specific people which then causes others to not have enough gas
to use for their daily use. Introducing the idea of cylinders is most beneficial for all the households as
well as the economy. On the other hand, if the power plants are improved, the industrial sector could
become even more efficient and provide a greater output for the country.