Bangladesh’s annual consumption of liquefied petroleum gas (LPG) has surpassed 1.5 million tons, driven by declining local gas production and the government’s halt on new residential pipeline connections. The use of LPG is also increasing in factories due to inconsistent gas supplies. At the current pace, demand is projected to reach 2.5 million tons by 2030 — a 60 percent, or 1 million ton, rise within the next five years.

By 2041, annual demand is expected to climb to 5 million tons. Experts say LPG could serve as an easier alternative for transitioning industries away from natural gas. However, expanding the sector and making LPG more accessible to consumers will require a clear policy framework.

These findings were highlighted at an LPG Policy Conclave held on October 11 at the Pan Pacific Sonargaon Hotel in Dhaka. The keynote paper was presented by Professor M Tamim, Vice Chancellor of Independent University, Bangladesh. The event, titled “LPG in Bangladesh: Economy, Environment and Safety,” was organized by Bonik Barta.

In his presentation, Professor Tamim noted that 65 percent of Bangladesh’s primary energy is now imported. The country relies entirely on imports for oil and coal, and a large portion of gas is also imported. Meanwhile, local gas production continues to decline by at least 150 million cubic feet each year. Despite various government initiatives to increase domestic production, the outlook is not promising. He noted that if the supply of LPG can be expanded at affordable prices, it could become a strong alternative to natural gas.

LPG consumption in FY 2018–19 was 700,000 tons, rising to 850,000 tons the following fiscal year and 1 million tons in FY 2020–21. Demand has continued to grow, reaching nearly 1.44 million tons in FY 2023–24. According to the keynote paper, 98 percent of Bangladesh’s annual LPG demand is met by private companies, while only 2 percent is supplied by the government. Although 58 companies have received licenses, only 27 are currently operating as LPG distributors.

Despite rising consumption, large-scale industrial use remains limited. The paper suggested that with stronger government support, investment, and infrastructure, LPG could see significant growth beyond households. Currently, 80 percent of LPG is used in households, 12 percent in industrial and commercial enterprises, and only 8 percent in the autogas sector.

The keynote paper also presented an overview of Bangladesh’s domestic gas production. It showed that the country currently extracts around 1,700 million cubic feet of gas per day, of which 1,050 million cubic feet come from the U.S.-operated Bibiyana gas field. However, reserves at Bibiyana are steadily declining, raising concerns that a major supply crisis could emerge once the field is depleted.

Data from Petrobangla on gas demand and supply indicate that by FY 2029–30, Bangladesh will require around 5,000 million cubic feet of gas per day. At present, demand stands at roughly 4,000 million cubic feet, while supply ranges between 2,500 and 2,700 million cubic feet. Within the next few years, the gap between supply and demand is projected to widen to 1,500–1,600 million cubic feet per day.

Currently, 59 percent of the country’s gas is used for power generation, including 18 percent in captive power plants. Another 11 percent is consumed by households, 18 percent by industries, 6 percent in fertilizer production, and 5 percent in CNG. Experts noted that LPG could play a significant role in meeting part of this growing demand. Yet, LPG still accounts for only about 2 percent of Bangladesh’s total energy consumption.

Professor M Tamim said, “LPG is the only fuel that has developed and sustained itself without any subsidies. Its use continues to grow. If the country wants to transition industries away from natural gas, then LPG could serve as a simple and effective alternative. But to expand this sector and make it accessible to the public, strong policy support is crucial. The private sector alone cannot sustain it; significant public sector participation is also needed.”

Bangladesh Energy Regulatory Commission (BERC) Chairman Jalal Ahmed shared similar observations during the conclave. “Bangladesh currently imports around 1.2 million tons of LPG annually. By 2030, that figure could reach 2.5 million tons,” he said. “Rising import demand is putting pressure on energy security and foreign currency reserves. Therefore, new investments, infrastructure development, and cost-efficient transport facilities in the LPG sector have become essential. If the sector can be developed in line with demand, it will strengthen the country’s energy security while boosting investment and job creation.”