Low prices through the end of this decade may make liquefied natural gas (LNG) temporarily more attractive, but they could obscure the long-term risks for developing economies like Bangladesh, according to the latest briefing by the Global Energy Monitor (GEM).
In the immediate term, however, the fallout from the recent US–Israel war on Iran has highlighted the “fragile assumption” that LNG imports will remain affordable and reliably delivered to Asia, it said.
The conflict threatens shipments through the Strait of Hormuz. A significant portion of global LNG trade flows through the narrow channel.
“The pricing implications are savage,” the report said, adding that futures for the Japan Korea Marker (JKM), a spot LNG benchmark, jumped about 40 percent in early March after the war broke out.
Because most LNG shipped from Qatar through the strait goes to Asian buyers, the region is particularly exposed, it said, adding that one-fifth of the world’s LNG passes through the strait, and more than 80 percent of that volume goes to Asian buyers.
Qatar’s massive Ras Laffan Industrial City LNG complex was shut down on March 2 following a drone attack, while shipping activity through the strait stalled.
It remains uncertain how long LNG production and shipments from Qatar will be disrupted, but the crisis underscores how favourable market conditions for LNG buyers are neither predictable nor guaranteed, the report added.
Following Russia’s invasion of Ukraine in 2022, the JKM spot price surged to as high as $70 per million British thermal units (MMBtu). Bangladesh endured rolling blackouts after it was periodically shut out of the LNG market when suppliers diverted cargoes to higher-paying European markets.
Spot prices have since stabilised -- at least prior to the Middle East conflict -- with the JKM hovering around $11 per MMBtu as of January. Even at these levels, however, strong demand growth has yet to materialise in South Asia.
According to the GEM briefing titled “Southern Asia’s Gas Plans May Be Overblown,” a massive wave of new LNG export capacity led by the United States and Qatar is expected to come online over the latter half of this decade.
“Global LNG export capacity is conservatively set to grow 56 percent by 2031, counting projects that are already under construction or have reached final investment decisions,” the report said.
Even so, GEM cautioned that the apparent opportunity could prove misleading for developing importers.
“Even if LNG prices fall in the next few years, buyers and sellers in Southern Asia should be careful because the apparent opportunity may be an illusion and not sustainable in the long run,” the briefing noted.
The International Energy Agency also projects that LNG demand in Bangladesh could grow by about 60 percent by 2030.
Bangladesh has proposed 11.3 million tonnes per annum (mtpa) of new LNG import capacity, enough to roughly double the country’s existing capacity of 8.3 mtpa. Industry plans to build additional LNG import terminals would therefore significantly expand the country’s ability to import the fuel.
“Bangladesh is one of the eight most populous countries in the world with gas infrastructure plans that could shape their energy mixes for decades to come,” it said.
The report warned that failure to expand supporting infrastructure could bottleneck LNG development, as pipeline connectivity remains a major constraint.
Bangladesh has plans to build 2,695 kilometres of gas pipelines to link LNG import facilities with gas-consuming sectors such as power plants, industries and city gas networks. Yet only about 8 percent of those pipelines are currently under construction, according to data from GEM’s online database Asia Gas Tracker.
Dependence on LNG is increasing as the country’s domestic gas production from mature fields has declined by 9.3 percent between 2014 and 2024, the report said.
In 2025, the government imported 109 LNG cargoes and has stood out in the region for its growing commitment to long-term LNG contracts. Three additional contracts are scheduled to begin in 2026.
Despite the anticipated supply growth, the report said LNG may still struggle to compete with other energy sources. “LNG that is relatively cheap during a period of oversupply may still not be competitive with alternatives.”
It also warned that the expected period of oversupply could be short-lived.
Quoting the Oxford Institute for Energy Studies, the report noted that global LNG markets are expected to rebalance in the early 2030s. QatarEnergy has also argued that a potential LNG-fuelled artificial intelligence boom could tighten the market sooner, possibly ending the oversupply period by 2030.
Petrobangla, the state-owned oil and gas exploration company, has warned that fluctuating LNG prices could further strain the country’s finances, the report added.
According to Petrobangla, the cost of LNG is nearly 20 times higher than domestically produced gas. Rising fuel costs have already forced some factories to cut production, slowing economic growth.
The report suggests that if Bangladesh were to channel similar levels of investment into solar power and energy storage, it could potentially achieve its energy ambitions more quickly and at lower cost.
With renewable energy accounting for less than 2 percent of electricity generation, Bangladesh ranks among the bottom 10 percent of countries globally in terms of renewable energy share, the report said.
“Growing deployment of renewable power, energy storage and other clean technologies can provide a buffer against fluctuating gas markets and serve as a reliable, affordable alternative,” it added.
