Bangladesh is facing mounting pressure in its energy sector as declining domestic gas output and rising reliance on imported liquefied natural gas (LNG) strain foreign currency reserves and public finances.
Government data show that domestic gas production has steadily decreased in recent years, falling from more than 2,100 million cubic feet per day (mmcfd) in 2023 to below 1,900 mmcfd in 2025 — an average annual decline of about 150 mmcfd.
The shortfall has forced the country to depend more heavily on LNG imports to keep power plants and industries operational.
In 2025 alone, Bangladesh spent approximately $6.9 billion on LNG imports, significantly adding to the burden on its already fragile foreign exchange reserves.
Energy analysts attribute the surge in import costs to both volatile global LNG prices and structural weaknesses in domestic gas exploration.
The fiscal strain is compounded by fuel subsidies. In the 2025-26 fiscal year, the government allocated around Tk6,000 crore for energy subsidies.
Under conditions tied to a programme with the International Monetary Fund, Dhaka has committed to gradually phasing out fuel subsidies by 2030, a move that could lead to further tariff adjustments for consumers and industries.
The Energy and Mineral Resources Division secreatry Mohammad Saiful Islam presented the deteriorating energy outlook to Power Minister Iqbal Hasan Mahmud Tuku and the state minister for power and energy last Wednesday.
Infrastructure bottlenecks
Bangladesh currently imports LNG through two floating storage and regasification units (FSRUs), along with a land-based LNG terminal.
However, regasification and transmission constraints limit the volume of imported gas that can be fed into the national grid.
System losses, including technical losses and leakage, stand at nearly 6.38%, resulting in the wastage of an estimated 1,785 mmcfd annually. According to sector officials, the financial cost of these losses amounts to about Tk4,094 crore each year.
Energy experts warn that unless Bangladesh accelerates upstream exploration and expands regasification and pipeline capacity, LNG dependency will continue to grow, leaving the country increasingly exposed to global price shocks and exchange rate volatility.
Broader energy sector strains
The gas crisis is mirrored in the petroleum sector, where limited storage capacity, reliance on a single major refinery and outdated measurement systems pose additional vulnerabilities.
For the LNG-exporting partners, Bangladesh is emerging as an increasingly important South Asian buyer.
However, analysts caution that long-term supply security will depend on Dhaka’s ability to stabilise its macroeconomic position, reform subsidies and invest in modern energy infrastructure.
With global LNG markets remaining tight, Bangladesh’s situation highlights the risks faced by emerging economies heavily dependent on imported energy to sustain growth.
The country’s remaining domestic gas reserves were estimated at approximately 7.96 trillion cubic feet (tcf) as of June 2025.