Energy Demand and the Potential Role of Imported Liquefied Natural Gas (LNG) in Bangladesh

ABSTRACT: The rapid economic progress of Bangladesh is associated with a swiftly rising demand and energy consumption. Future economic growth will undoubtedly require a proportionate increase in energy availability within affordable prices. Bangladesh is inherently energy-scarce and heavily dependent on imported energy, primarily fossil fuels. Several approaches and strategies were attempted over time to mitigate the energy shortage. Some of them were reasonably successful, while others failed. In this study, we first examine the historical developments of the energy sector in Bangladesh since its independence and then use three approaches – triple exponential smoothing, vector autoregression, and the Cochrane-Orcutt AR(1) process to forecast the energy demand. Data for this study were taken from various sources, including British Petroleum, International Gas Union, International Energy Agency, Bangladesh Bureau of Statistics, World Bank, Petrobangla, and Energy Information Agency of the United States. As expected, each model predicts an exponential growth of energy demand in Bangladesh. We then explored the possibilities of mitigating such projected energy demand. Various studies show that Bangladesh has some potential for producing energy from renewable sources, i.e., solar, hydro, wind, wave, and others. However, such possibilities are limited, and many are still in their infancy. Although an increase in renewable energy is desirable from an environmental perspective, it alone will not meet Bangladesh's growing energy demand. At least in the short term, Bangladesh must rely on imported fossil energy. Among the fossil energy sources, LNG is by far the cleanest. With the development of technology, liquefaction, transportation, and regasification, LNG production, transportation, and use are becoming less expensive. Progressively more natural gas-producing countries are joining LNG production and export, contributing to the market's competitiveness. Though historically tied to the oil market, LNG markets are becoming more and more independent because of the increasing number of participants from both the demand and supply sides. Given that both its global price and negative impact on the environment are relatively lower than other fossil fuels, imported LNG should be the fuel of choice for Bangladesh. Government policies should focus on both importing LNG and expanding renewable energy resources.