Energy security gets strategic boost
The government has unveiled a comprehensive strategy to strengthen Bangladesh’s long-term energy security, centred on the creation of strategic fuel reserves, expanded storage capacity, increased domestic oil and gas exploration and greater diversification of energy imports to reduce exposure to global supply shocks.
According to the budget document for FY2026-27, the initiatives are aimed at protecting the country’s fuel supply from geopolitical disruptions and international market volatility while ensuring affordable energy prices and balanced regional distribution.
To support the strategy, the government will establish Strategic Energy Reserves and related storage infrastructure to ensure uninterrupted fuel supplies during emergencies and periods of global market instability.
The document said measures were also being taken to develop cost-effective and sustainable infrastructure to help keep energy prices affordable.
As part of efforts to enhance gas supply security, the government is reviewing the establishment of an additional LNG terminal at Moheshkhali alongside the two existing floating LNG terminals.
The process of land acquisition and consultant appointment for a land-based LNG terminal at Matarbari in Moheshkhali is also in its final stage.
An action plan is being prepared to connect gas from the Bhola region to the national gas grid, while the installation of prepaid gas meters is being accelerated to reduce wastage, eliminate illegal connections and minimise system losses.
To lessen dependence on imported fuel, the government is pursuing a policy of energy source diversification by expanding import cooperation beyond the Middle East to potential suppliers in Asia, Africa and Europe.
It also plans to attract fresh investment through greater private sector participation, investment-friendly policies and expanded Public-Private Partnership (PPP) initiatives.
The budget document said steps had been taken to maximise the utilisation of the country’s existing 601.5 kilometres of fuel transportation pipelines.
To strengthen downstream infrastructure, the government has adopted a phased plan to establish a new crude oil refinery with an annual refining capacity of 5 million metric tonnes in Chattogram or another coastal industrial zone.
As part of the programme, the Second Eastern Refinery Limited (ERL-2), with a capacity of around 3 million metric tonnes annually, is being developed.
A Smart Fuel Distribution Monitoring System has already been introduced in 2,722 fuel tank lorries to improve oversight of fuel transportation, while measures are under way to operationalise the Single Point Mooring (SPM) facility for petroleum unloading.
The government has also set production targets of 600,000 metric tonnes of coal and 1.4 million metric tonnes of stone for FY2026-27.
New projects are being undertaken to develop the second phase of the Barapukuria coal mine and the Dighipara Coal Field, alongside the economic evaluation of valuable minerals, including zircon and monazite, found in the sands of the Jamuna and Meghna rivers.
The budget document attributed the sector’s current challenges to years of policy shortcomings, institutional irregularities, mismanagement and excessive dependence on imported LNG and petroleum products.
It noted that insufficient emphasis had been placed on onshore and offshore gas exploration and on expanding domestic refining and storage capacity.
It also highlighted that recent geopolitical tensions in the Middle East had driven up international spot prices of petroleum products, particularly diesel, and LNG.
Despite these pressures, the government said it had maintained gas prices, made only limited adjustments to fuel prices and continued providing substantial subsidies to cushion consumers.
To strengthen domestic energy production, the government is prioritising oil and gas exploration both onshore and offshore.
Through the Bangladesh Petroleum Exploration and Production Company Limited (BAPEX), plans have been adopted to conduct 270 kilometres of geological surveys, 700 line-kilometres of two-dimensional (2D) seismic surveys and 700 square kilometres of three-dimensional (3D) seismic surveys between FY2025-26 and FY2027-28.
BAPEX also plans to drill 69 wells and undertake workover operations on 31 wells using its own drilling rigs.
The government has also announced a new offshore bidding round after revising the Model Production Sharing Contract (PSC) to encourage international investment while safeguarding national interests.
Under the initiative, nine shallow-water blocks and 15 deep-water blocks have been opened for international oil companies under production-sharing agreements.
In addition, two new exploration rigs will be procured for BAPEX to strengthen national exploration capacity, while greater emphasis will be placed on offshore gas exploration, unconventional hydrocarbons and critical minerals as part of efforts to reinforce Bangladesh’s long-term energy security.
