High cost of LNG terribly impacting supply and industrial output

The shock of LNG high price and soaring demand obstructing energy supply to industries and power plants at an affordable rate. A big jump in LNG spot prices in the global market has come as a terrible shock to Bangladesh as around 25 percent of the country’s total gas supply relies on this type of energy amid growing domestic demand.
LNG price in the spot market has now skyrocketed to $29-$30 per MMBtu (Metric Million British Thermal Unit) from the $8-$9 per MMBtu which was quite affordable for the country. The government energy adviser on Thursday expressed anguish saying it is time to rethink the energy plan, reducing dependence on spot market LNG.
As it appears, the country has greatly restructured the energy use and supply over the past years making it LNG dependent, reducing reliance on gas supply. Domestic gas production has decreased and the government signed an agreement with Qatar and Dubai for supply of LNG. It has also acquired LNG carrying container ships and set up an LNG port at Matarbari in Kutubdia with a supply pipeline linked to the national grid. Now all of a sudden rethinking of the energy plan will mean big mismatch in everything. The wrong thing that happened is that the government heavily relied on buying LNG from the spot market instead of partly entering into a long term supply contract. Now with LNG prices three to four times higher, industry and power plants which would use LNG can’t stay competitive.
The government stopped imports from the spot market in the first week of August, but it has resumed procurements from the spot market again to meet the shortage of supply to textiles factories and other users. The gas crisis in Bangladesh has been acute with daily domestic production having dropped by 60-70mmcf within a year. The country’s daily gas supply now stands at 3,040mmcf against the demand for 4,194mmcf. Asian spot prices for LNG rose to their highest seasonal level earlier this month, as European buyers are trying to build stocks ahead of winter.
Nobody understands why the government opted entirely for the spot market without thinking about seasonal market uncertainty. Now the country will have to pay heavily for wrong policies.