Focus: Conversion from gas to oil in South Asia; The biggest price tag in recent history

Highlights

HSFO is getting cheaper than LNG, prices will last until March 2022

For Bangladesh, Pakistan 4-5 LNG load converter size

A slight shift is expected in other major Asian energy markets due to the lack of fuel-efficient power generation capacity

This version of Spotlight was first published on August 8 by S&P Global Platts Analytics.

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The price tag is strong, consistent for all winter

With the recent increase in LNG prices in the area, HSFO has decided to increase the number of LNGs in the country. When we saw similar growth in January 2021, this sign was short-lived. However, this sign is strong and consistent from September to March 2022 and covers the entire winter well.

Most transfers must be in Bangladesh, Pakistan

We expect countries in South Asia to take advantage of this situation and convert some volumes from imported LNG to oil for power generation. Both Bangladesh and Pakistan have imported LNG and have a lot of unused fuel. Four to five LNGs per month. The first switch will start in September and we expect to have full potential by the end of the year. The rate of change also depends on the high-energy demand, so we are currently looking at the situation for both countries, which are partially locked due to Covid-19.

As mentioned in our recent link, in addition to the large capacity in Japan, we expect to switch to other major energy markets in Asia. South Korea has a capacity of only about 2 GW, and very little capacity in China and India.

In the midst of a new wave of COVID-19 cases, Bangladesh's energy demand has been partially shut down

Bangladesh

Bangladesh has a power generation capacity of 7.5 GW, and is currently using about 2.5 GW. Gas production is around 6 GW. For July, LNG imports were 20 million km per day, long-term LNG contracts were 17 million km, so the area was only 3 million km. We think the space will be converted to oil, which is only about 0.6 GW.

The Bangladeshi government has said in the past few years that it wants to divert power from gas to gas, but is now considering renewing lease contracts for several power plants, which are running out of time, and want to keep its options open.

Gas-fired power plant around 6 GW stable, about 1 GW higher than last year

There is still no sign of a recent oil change in Bangladesh, but it could happen from September

Pakistan

Pakistan has about 7.5 GW of power generation capacity, and we believe it is currently using 1.5 GW (data delayed two months). Gas generation should be around 6.5 GW. For July, LNG imports 34 million km and long-term LNG contracts were 30 million km. So, again, there is a small area of ‚Äč‚Äčabout 4 million cubic meters, which is equal to about 0.8 GW.

However, Pakistan has purchased some space, so demand for the space could be as high as 10 million square kilometers. After recent purchases, string articles were posted in the local press, which put the heat on the government as LNG bought the site at high prices.

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