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Analysis: Gas scarcity pushing Bangladesh LPG consumption to 1 mil mt in 2018


Import LPG duty waivers, high gasoline costs key drivers

Unconstrained LPG demand estimated at 2 mil mt/year

LNG imports capped on infrastructure constraints

Dhaka — Bangladesh's LPG consumption is expected to reach 1 million mt in 2018, up 53% year on year on increased demand from the household, commercial and transport sectors, as the country's efforts to boost natural gas supplies meet numerous challenges.

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Favorable government policies, including duty waivers on imports of LPG and its appliances, have been key drivers of consumption and investment in the LPG sector, Akramuzzaman, deputy secretary with the Ministry of Power, Energy and Mineral Resources, told S&P Global Platts Thursday.

The use of LPG as a transport fuel, commonly known as autogas, has seen particularly strong growth because of CNG scarcity and LPG competitiveness against 92 RON and 95 RON gasoline, added Saidul Islam, director and CEO at privately owned LPG distributor Laugfs Gas Bangladesh.

Bangladesh LPG consumption

Autogas prices are at around Taka 50/liter (60 cents/liter) across 50 autogas filling stations operational across the country, compared with Taka 86/liter for 92 RON gasoline and Taka 89/liter for 95 RON gasoline, he added.

Bangladesh consumed around 650,000 mt of LPG in 2017, versus 400,000 mt in 2016, and 250,000 mt in 2015, Islam said. The country's LPG requirements are largely met by imports, including 60% of cylinder and 95% of bulk demand.

Bangladesh's unconstrained LPG demand is estimated at around 2 million mt/year, with half of it currently being met by kerosene and wood due to poor LPG and natural gas availability.

Bangladesh's current natural gas production is hovering around 2.75 Bcf/d against demand of 4 Bcf/d, according to state-owned Petrobangla. While LNG imports are aimed at closing that gap, technical issues and infrastructure delays are limiting LNG's penetration in the market.


The market is also becoming more diversified: 14 LPG suppliers are currently operational in Bangladesh, a twofold increase over two years, and another six are looking to enter the market in 2019, Akramuzzaman said.

Meanwhile, LPG suppliers are expanding their individual storage capacities.

Omera Petroleum, which accounts for nearly a third of Bangladesh's LPG market, is expecting to expand its storage capacity to 10,000 mt by June 2019, up from 8,000 mt currently and 5,000 mt when their LPG business started in 2015, said CEO Shamsul Haque Ahmed.

Elsewhere, Laugfs Gas is raising its LPG storage capacity to 5,000 mt by 2019, from 3,200 mt currently.

Laugfs Gas, which currently owns three pressurized ships of around 1,800 mt to 3,000 mt, namely the Gas Challenger, Gas Success and Gas Courage, is now in talks to secure some 20 vessels for charter, Islam told Platts earlier this year.

In Bangladesh, Laugfs Gas is selling about 5,000 mt/month of LPG. Its sales were close to 64,000 mt in 2017, and the company expects to boost sales to 80,000 mt in the next fiscal year that runs from April to March.


Over the past few years, Bangladesh has waived the 15% value added tax and 5% custom duty on LPG-cylinder imports in order to increase domestic consumption, according to Fazlur Rahman, general manager with LP Gas, a wholly owned subsidiary of state-owned Bangladesh Petroleum Corporation.

Currently, LPG companies are paying only 2% in LPG import taxes.

The VAT waiver alone has resulted in a cost reduction of Taka 250 in consumer prices of 12 kg LPG cylinders, said Laugfs Gas' Islam.


Bangladesh's long-awaited entry into the LNG markets has not come without challenges, and future imports have recently been revised down on infrastructure constraints.

Bangladesh LNG imports

Earlier this year, technical issues, rough seas and pipeline construction delays kept Bangladesh's first ever LNG cargo to be stranded off the south coast of Chittagong for more than three months, highlighting the difficulties of opening new LNG demand centers in emerging Asian markets.

Infrastructure constraints and revised demand projections have forced Bangladesh to cancel three small-scale LNG import projects recently.

Earlier this month, Bangladesh terminated talks with Indian utility Reliance Power to build a new floating storage and regasification unit at Kutubdia Island near Chittagong, Platts previously reported.

The government's move to address illegal pipeline connections, especially in households and commercial units, have also capped gas consumption and increase LPG usage.

According to state-owned Titas Gas Transmission and Distribution Company, Bangladesh removed 1,223 km of illegal gas distribution lines between 2015 and 2017 and disconnected gas connections to nearly 750,000 burners.

-- Abache Abreu,

-- Azizur Rahman,

-- Edited by Irene Tang,