The US now dominates Bangladesh’s energy sector

The presence of US companies in Bangladesh’s energy sector is nothing new. However, their involvement appears to have gained a new dimension in recent times. From exploring and producing gas underground to searching for oil and gas beneath the seabed, importing liquefied natural gas (LNG), operating floating terminals and securing long-term energy supplies, US companies are becoming involved in almost every major segment of the country’s energy sector.

The US multinational company Chevron has played a significant role in Bangladesh’s domestic gas production for nearly three decades. The company supplies more than half of the country’s total natural gas from three fields in the northeastern region: Bibiyana, Jalalabad and Moulvibazar. These three fields also account for approximately 82% of the country’s total condensate production. Chevron also operates the Muchai Compressor Station in Bahubal upazila of Habiganj.

US companies are now showing interest not only in existing gas fields but also in new onshore and offshore exploration in Bangladesh. Chevron has proposed exploring oil and gas across approximately 6,600 square kilometers covering a block in Sunamganj, Sherpur and Mymensingh and another block in Habiganj. Although the company has submitted similar proposals several times in the past, discussions at the government to government (G2G) level have recently gained momentum.

On September 13, a high-level delegation led by Javier La Rosa, president of Chevron’s Base Assets and Emerging Countries, met with Prime Minister Tarique Rahman. During the meeting, Chevron expressed interest in drilling more wells and increasing its investment in Bangladesh. The government welcomed the proposed investment to meet the country’s growing energy demand and strengthen energy security.

Alongside Chevron, another US energy giant, ExxonMobil, has expressed interest in deepwater and shallow-water blocks in the Bay of Bengal. This year, a new bidding round was launched for 26 offshore blocks to attract foreign investment. As a result, US companies’ interest in energy exploration in Bangladesh is no longer limited to onshore areas.

US companies also have a strong presence in the infrastructure needed to make imported gas available for domestic consumption. One of the two floating LNG terminals in Maheshkhali, Cox’s Bazar, is owned by the local Summit Group. However, both terminals are operated by US company Excelerate Energy. Since Bangladesh began importing LNG in 2018, the company has effectively become one of the key players controlling the country’s LNG import infrastructure.

Excelerate is now expanding its role in direct LNG supply. Under a 15-year agreement signed during the Awami League government, the company began supplying LNG to Bangladesh in January this year. It sources LNG from QatarEnergy and delivers it to Bangladesh.

Bangladesh has also signed a long-term agreement with another US energy supplier, Gunvor. A specialized vessel that recently anchored at Summit’s floating terminal in Maheshkhali carried the first shipment under the agreement. Under the 12-year deal, 117 LNG carriers are expected to arrive in Bangladesh. On August 12, the Cabinet Committee on Government Purchase approved the major procurement proposal.

Beyond these agreements, Bangladesh signed a nonbinding agreement with US company Argent LNG on January 24 last year. Under the agreement, the company is expected to supply 5 million tons of LNG annually. However, experts have raised questions about its transparency because the company, established in 2023, has no prior experience in the LNG business and the agreement was signed without a tender.

Alongside LNG, Bangladesh is also interested in importing liquefied petroleum gas (LPG) from the United States under long-term agreements and developing the necessary infrastructure. Efforts are underway to secure financing for the initiative from the US International Development Finance Corporation. The Energy and Mineral Resources Division has invited 10 leading US companies to submit expressions of interest in supplying LPG. The government has also sought assistance from the US government to encourage these companies to participate.

Overall, US business interest in Bangladesh’s energy sector is now more visible than ever. Recently, a 47-member US business delegation visited Dhaka. Among them, 25 companies explored investment opportunities in energy, information technology and other sectors. During the same period, a delegation from the 50-member US-Bangladesh Business Council also met with officials at the Prime Minister’s Office. The delegation was urged to increase US investment in energy and other sectors.

The growing interest is driven not only by business opportunities but also by trade considerations between the two countries. In February, a few days before the interim government left office, Bangladesh and the United States signed a reciprocal trade agreement. As part of the agreement, which aims to reduce the trade imbalance between the two countries, Bangladesh is required to import approximately $15 billion worth of LNG and other energy products from the United States over the next 15 years. Consequently, stakeholders believe the growing interest of US energy companies in Bangladesh is also linked to efforts to manage the trade deficit and tariff policy pressures.

However, US companies’ interest in Bangladesh’s energy sector is not entirely new. Its roots go back much further. In the 1990s, US companies such as Scimitar, Occidental and Unocal sought to export gas from Bangladesh to India through pipelines. At the time, then US President Bill Clinton even visited Bangladesh to lobby for the initiative.

The situation is different today. Domestic gas production is declining while demand is rising rapidly. As a result, dependence on imports is increasing along with the pressure of purchasing expensive LNG. Disruptions to LNG supplies from Qatar due to conflicts in the Middle East have also prompted the government to diversify its import sources.

In this situation, energy experts have advised the government to prioritize Bangladesh’s national interests while welcoming foreign investment. M Q I Chowdhury, a former member of the Bangladesh Energy Regulatory Commission responsible for gas, said foreign companies should be given opportunities if they want to operate in Bangladesh. However, state-owned exploration company BAPEX must also be strengthened, and all contracts must be awarded through competitive processes.

He said greater emphasis should be placed on reworking old gas wells and conducting new exploration around existing fields. Although foreign companies are prepared to invest, Bangladesh must assess which company gives greater priority to the country’s interests when negotiating contracts.

The biggest question surrounding energy security remains underground: how much of Bangladesh’s own natural gas reserves can be utilized and how much additional gas can be discovered?

A longstanding lack of interest in domestic gas exploration has led to declining production. In contrast, dependence on imports is increasing. Thus, while investment by foreign companies is opening up new opportunities for Bangladesh, excessive dependence on imports is creating new risks.

Meanwhile, the government has taken steps to build two additional LNG terminals. One of them will be constructed by a Chinese company. However, a US company has also expressed interest in the project. During a meeting with the commerce minister in Dhaka on September 7, US Ambassador Brent T. Christensen expressed interest in investing in the floating terminal project. He had also discussed expanding energy cooperation with senior officials from Chevron and Excelerate Energy in May.

However, M Q I Chowdhury believes Bangladesh cannot ensure its energy security by relying on imports. Although Bangabandhu Sheikh Mujibur Rahman and Ziaur Rahman disagreed on many issues, they agreed on this one. Both worked to strengthen energy security. Khaleda Zia also took various initiatives. However, no one learned from their efforts afterward. As a result, Bangladesh now spends enormous amounts of money importing expensive LNG. Despite this expenditure, supplies continue to face disruptions caused by wars, technical faults and adverse weather conditions.

Overall, the presence of US companies in Bangladesh’s energy sector is no longer limited to wells in gas fields. From underground domestic gas reserves and potential oil and gas resources in the Bay of Bengal to seaports and floating LNG terminals, US companies are becoming involved at almost every critical stage of the country’s energy supply system.

The question is how much this increased foreign investment will strengthen Bangladesh’s long-term energy security. Alternatively, will Bangladesh become even more dependent on imports while falling behind in domestic gas exploration? Ultimately, the answer will depend on contractual terms, the nature of the investments and government policies for developing the country’s own energy resources.