Energy security Bangladesh’s top strategic priority

The nature of global conflict has fundamentally changed. Military power remains important, but geopolitical competition is increasingly fought through energy, technology, trade and critical supply chains.

Recent events-from the Russia-Ukraine war and the Red Sea shipping crisis to escalating tensions in the Middle East and repeated threats to the Strait of Hormuz-demonstrate that energy security has become a defining element of economic resilience and national security.

For Bangladesh, whose economic growth increasingly depends on imported energy, this is no longer a sectoral concern. It is a strategic imperative.

Bangladesh has achieved impressive economic progress over the past two decades, driven by industrialisation, urbanisation, digitalisation and expanding infrastructure.

Yet this transformation has also exposed a structural vulnerability. Energy demand has risen steadily while domestic resources have failed to keep pace.

Production from the country’s ageing natural gas fields continues to decline, forcing growing reliance on imported liquefied natural gas (LNG), petroleum products and coal.

As a result, Bangladesh is becoming increasingly exposed to international price volatility and geopolitical disruption.

Few maritime routes illustrate this vulnerability more clearly than the Strait of Hormuz. According to the US Energy Information Administration (EIA), approximately 20 million barrels of crude oil and petroleum products pass through the strait every day, representing around one-fifth of global oil consumption.

The route also carries roughly one-fifth of global LNG trade, making it indispensable for exporters such as Qatar, the United Arab Emirates and Oman. Most of these energy shipments are destined for Asian markets, including Bangladesh.

Any disruption-whether caused by military conflict, sanctions or attacks on commercial shipping-would immediately tighten global supply, raise prices and intensify competition for alternative sources.

The implications extend well beyond the energy sector. Rising fuel prices increase import bills, place additional pressure on foreign exchange reserves and feed domestic inflation. Higher electricity generation costs reduce industrial competitiveness, while transport and logistics become more expensive.

Ultimately, households bear the burden through higher living costs. In an economy where energy imports are expanding faster than domestic production, external shocks can quickly become macroeconomic risks.

Recent experience underlines the point. Europe’s energy crisis following Russia’s invasion of Ukraine demonstrated how rapidly geopolitical events can reshape global energy markets.

The Middle East presents similar risks. Even the perception of instability around the Strait of Hormuz is often enough to trigger sharp increases in oil prices. Geography offers little protection in an interconnected energy market.

A crisis thousands of kilometres away can directly affect electricity tariffs, industrial production and inflation in Dhaka.

The challenge is compounded by the accelerating global energy transition. Renewable electricity is no longer simply an environmental objective; it is becoming an economic advantage.

The International Energy Agency projects that renewable sources will account for more than 90 per cent of the growth in global electricity generation between 2025 and 2030, with renewables and nuclear together supplying around half of the world’s electricity by the end of the decade. Falling costs for solar generation, wind power and battery storage are steadily improving the competitiveness of clean energy.

Bangladesh, however, remains heavily dependent on fossil fuels. Gas continues to dominate electricity generation, followed by coal and furnace oil, while renewable energy contributes only a modest share.

This dependence creates a dual challenge: vulnerability to external supply shocks today and the risk of falling behind the global energy transition tomorrow. Countries that fail to modernise their energy systems may find themselves facing higher production costs, reduced investment and weaker export competitiveness.

Addressing these risks requires a comprehensive strategic response rather than incremental policy adjustments.

The first priority should be accelerating domestic gas exploration. Expanding exploration in both onshore areas and offshore blocks in the Bay of Bengal using advanced technologies offers the most credible long-term means of reducing import dependence. The launch of bidding under the Petrobangla Bangladesh Offshore Model Production Sharing Contract (PSC) 2026 is a welcome development, but successful implementation will depend on regulatory certainty, timely decision-making and investor confidence.

Secondly, Bangladesh needs a more diversified energy portfolio. Dependence on a limited number of fuels or suppliers inevitably increases strategic risk. A balanced mix of domestic gas, LNG imports from multiple sources, renewable energy, nuclear power and regional electricity trade would provide greater resilience against future disruptions.

Thirdly, renewable energy should move from the margins to the centre of national energy policy. Bangladesh possesses substantial potential for rooftop solar, floating solar installations, coastal wind projects and waste-to-energy generation. Unlocking these opportunities will require predictable regulation, competitive financing and stronger incentives for private investment. Clean energy should be viewed not merely as a climate commitment but as a long-term economic investment.

Equally important is strengthening energy resilience through strategic reserves and domestic refining capacity. Bangladesh consumes around seven million tonnes of petroleum products annually but refines only a fraction of that demand, leaving the country heavily dependent on imported refined fuel. Expanding refining capacity and establishing strategic reserves of oil and LNG sufficient to withstand prolonged international disruptions would significantly enhance national resilience.

Energy security must also become a whole-of-government responsibility. Decisions on energy can no longer be separated from economic policy, foreign affairs, maritime security, climate adaptation or industrial development. Bangladesh would benefit from adopting a comprehensive National Energy Security Strategy that integrates supply diversification, infrastructure resilience, technological innovation, cybersecurity, emergency preparedness and long-term decarbonisation.

Regional cooperation offers another important opportunity. Greater access to hydropower from Nepal and Bhutan, expanded cross-border electricity trade with India and deeper regional grid integration could improve both energy security and affordability. Partnerships with Japan, the European Union, the Gulf states and other development partners can further support investment, technology transfer and financing for clean energy infrastructure.

Bangladesh’s next phase of economic development will depend not only on maintaining growth but on protecting that growth from external shocks. In an increasingly uncertain geopolitical environment, energy security is no longer simply about keeping the lights on. It has become a prerequisite for economic stability, industrial competitiveness and national resilience. Countries that treat energy as a strategic asset will be better positioned to navigate future crises. Bangladesh should ensure it is among them.

(The writer is Assistant
Professor at University of Dhaka).