LITTLETON, (Colorado): Bangladesh should be one of the global LNG industry’s success stories, but instead it is a warning sign. Few countries better fit the profile of a future liquefied natural gas growth market.
Electricity demand is rising, domestic gas reserves are falling, and policymakers have invested heavily in LNG import infrastructure to bridge the gap. For years, those trends helped make Bangladesh a veritable poster child among LNG bulls who argued that rapidly growing Asian economies would underpin LNG demand growth for decades. Instead, Bangladesh has crossed a milestone that should give LNG investors pause.
Coal-fired electricity generation overtook gas-fired generation for the first time this summer, data from Ember shows, marking a dramatic shift for a country where gas previously accounted for over 90percent of electricity supplies. Coal-fired electricity output was 3.92 terawatt hours (TWh) in July, compared to 3.66 TWh of generation from gas-fired plants.
That flip is significant because it has implications for gas use trends across the broader developing world.
COAL COMPETITION
The LNG industry’s growth story rests on a relatively small group of markets.
Demand in Europe is expected to flatten or decline over time as renewables expand. Japan and South Korea remain major gas importers but both have more new nuclear power generation capacity under construction than gas-fired capacity, according to Global Energy Monitor (GEM), which should limit gas-fired growth.
China remains important, but its energy strategy is also mainly focused on developing domestic clean energy supplies and limiting fossil fuel import reliance.
That leaves emerging Asia, where countries such as Bangladesh, Pakistan, Vietnam and the Philippines have long been viewed as the next generation of LNG buyers. Those countries are expected to account for much of the growth needed to absorb the massive wave of LNG export capacity being built in the United States, Qatar and elsewhere.
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