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Middle East conflict and gas shortages hit B’desh power and industry

Published : Sunday, 13 September, 2026 at 10:47 AM

Observer Special Report

Collected Photo

Bangladesh is facing severe financial and operational pressure on its energy sector as acute gas shortages drive up fuel import costs and reliance on diesel.

Due to reduced natural gas supplies, industrial plants and power stations have significantly increased their consumption of diesel and furnace oil. According to official data from the Bangladesh Petroleum Corporation (BPC), diesel sales surged by 22 per cent in August compared to the same period last year. Total sales reached 3,60,000 tonnes, averaging 12,000 tons daily.

This demand spike is expected to rise further as the upcoming ‘Boro’ rice cultivation season approaches, where diesel-powered pumps account for the majority of agricultural irrigation.

Global conflicts strain LNG imports

The gas crisis stems from severe disruptions in Liquefied Natural Gas (LNG) deliveries. Bangladesh has eight LNG import agreements across four countries, covering a total of 103 planned cargoes for this year. However, only 21 cargoes arrived in the first nine months.

Petrobangla officials confirmed that 47 scheduled long-term cargoes through November were cancelled because suppliers could not dispatch shipments amid ongoing Middle East conflicts and maritime security threats.

Bangladesh relies heavily on Qatar, which supplied around 70 per cent of its total LNG imports last year.

To bridge the deficit, Petrobangla has been forced to buy expensive spot-market LNG at over 28 US dollars per unit. Consequently, Petrobangla reported an additional loss of nearly Tk 20,600 crore between March and September, losing roughly Tk 500 crore per month.

Industrial operations hit

The shortage has severely affected industrial manufacturing and power generation. Commercial oil marketing companies - Padma Oil, Meghna Petroleum, and Jamuna Oil - reported increases in diesel sales to industrial clients of 29 per cent, 21 per cent, and 33 per cent respectively in August. BPC sources noted that half of all factories required higher diesel volumes compared to last year.

The pharmaceutical sector faces critical production delays. At the Square Pharmaceuticals plant in Kaliakair, Gazipur, daily diesel usage in boilers jumped from 500 litres to 10,000 litres, while generator consumption rose from 10,000 to 50,000 litres. Despite a fivefold demand increase, the factory receives only 60 to 70 per cent of its required supply, threatening a 35 to 40 per cent reduction in life-saving medicine production.

Irrigation demand to pressure reserves

The energy market faces further pressure with the onset of the ‘Boro’ irrigation season between November and December. During peak agricultural months, monthly diesel consumption routinely rises from 3.5 lakh tons to between 4 lakh and 4.5 lakh tons. Combining agricultural demand with industrial substitution could severely strain fuel reserves.

Concurrently, global crude prices have surpassed 100 US dollars per barrel due to shipping disruptions along critical maritime routes, including the Strait of Hormuz and the Bab al-Mandeb strait.

Government maintains supply stability

Despite global market disruptions, Energy Ministry officials assured that domestic supply remains stable through October. Energy Department Joint Secretary Monir Hossain Chowdhury stated that diesel supplies are secured under six-month advance contracts, primarily sourced from Malaysia, Singapore, and China rather than Middle Eastern routes directly affected by Hormuz transit risks.

BPC Chairman Dr Md Shafiqul Islam noted that fuel imports are secured through December, with planning underway to secure supply lines through June 2027.

However, officials acknowledged that rising international prices remain the primary concern. BPC reported a total loss of Tk 18,699.31 crore between March and June due to selling imported fuel at lower domestic rates, prompting a formal subsidy request to the government.

To mitigate ongoing vulnerabilities, the government is diversifying LNG procurement, including a contract with US-based Gunvor USA LLC for 117 cargoes through 2038, alongside short-term agreements with Malaysia and the expansion of import infrastructure in Moheshkhali.

-SA