In 1971, when Bangladesh gained independence, only 3% of the population had access to electricity. By 2000, that figure had risen to 20%. Twenty years later, 92% of the population has access to electricity. But is the country’s energy situation really that “clear”?
The Institute for the Development of Fuel and Energy Technologies (IRTTEK) studies for Energy Magazine, the problems that the energy sector in Bangladesh may have in a few years and why the country refuses to buy cheap Russian oil.
By Mikhail Smyshlyaev
Moscow, Russia.- There are several factors that endanger the energy security of Bangladesh. Ironically, one of the factors is the rapid growth of the economy (6.9% per year). Power consumption in the country has increased by 4.5% per year since 2010. Incidentally, the electrification of the capital Dhaka began in 1901, just 19 years after New York and 13 years after London.
Thus, natural gas represents 57% of the country’s energy sources, biomass 17%, coal 13% and oil 12%, according to 2020 data. The share of wind, hydroelectric and Solar PV is quite small, although it is starting to grow, thanks to government incentives. Let’s look at each position in more detail.
As we have already said, natural gas is the main source of electricity generation in Bangladesh. There are 27 gas fields in the country, with 76% of all gas found in the Titas, Bibiyana, Habiganj, Kailashtila, Rashidpur, Bahrabad and Jalalabad fields.
The problem is that the country has not had any major gas discoveries in the last two decades, so the country is on track to exhaust its reserves, which could happen in the next 10 years at most. The math is pretty straightforward. Currently, the country has about 10 trillion cubic feet of gas left, while annual consumption is approaching 1 trillion cubic feet. Consumption, meanwhile, is on the rise.
The Bangladesh government is considering different options. For example, it has turned its eyes towards LNG and is even exploring the possibility of building its own LNG terminal.
Regarding oil, Bangladesh imports it through the Bangladesh Oil, Gas and Mineral Corporation, also known as Petrobangla. The company is the main regulator of oil and gas exploration and production. Thus, the main suppliers of crude oil are Saudi Arabia and the United Arab Emirates, and refining is carried out in the Chittagong Oriental Refinery, started up in 1968.
Bangladesh imports about 7 million tons of crude oil, imports of petroleum products have increased by 50% since 2010. The country also has its own reserves, but they are quite small. In 2012, for example, 153 million barrels of oil were discovered 280 km from the capital. According to Petrobangla, these reserves were enough to meet the country’s oil needs for a couple of years.
Ultimately, Bangladesh has an energy problem. And then, in the spring of 2022, an attractive Russian offer arrived at just the right time. Minister of State for Energy and Mineral Resources Nasrul Hamid said in May that the country had received a special offer from Russia.
Bangladesh has studied the offer with interest and has even asked India for advice on how to buy Russian oil and avoid sanctions. Neighboring Sri Lanka, for example, took advantage of a similar offer and bought $73 million worth of Russian oil to support and restart its only refinery. So Bangladeshi Foreign Minister AK Abdul Momen met with his Indian counterpart S. Jaishankar in Guwahati to, according to some sources, discuss the oil issue.
However, he was unable to accept Bangladesh’s offer. What was the reason? And the reasons turned out to be several.
А. K Abdul Momen said that Bangladesh would not buy oil from Russia for fear of sanctions. “We are a small country, there is more pressure on us”, he complained. But who knows, maybe Bangladesh will now buy Russian oil from India.
Another obstacle has been the oil contracts with Saudi Aramco and the United Arab Emirates. And then there is the technical justification. The fact is that the refinery in Bangladesh cannot use Russian oil, as Nasrul Hamid, the Minister of Energy and Mineral Resources, has stated.
Despite absolutely leading fossil fuels, the country also has solar, wind and hydroelectric energy. However, in 2020, it only accounted for 3% of Bangladesh’s energy mix.
The authorities did not begin to pay attention to this area until 2008, and in 2014 they created the Sustainable and Renewable Energy Development Authority (SREDA). To strengthen international cooperation, Bangladesh became one of the first members of the International Renewable Energy Agency (IRENA).
Due to the country’s geography, most renewable energy projects are based on photovoltaic solar technology. Thanks to the support of governments, many millions of people benefit from solar energy. Photovoltaic solar panels have been used to build mini-grids in remote areas of the country. New renewable energy plans were announced in 2021, but it is unlikely that green energy will be able to fully supply the country in the near future.
Otherwise, the country will face imminent economic decline, as the entire industrial infrastructure of Bangladesh is based on gas. The Bangladeshis have 10 years to find their vital gold mine.
Mikhail Smyshlyaev is a correspondent at the IRTTEK Institute