Bangladesh's new nuclear facilities, coal-fired plants and renewable energy may limit full-capacity utilisation of gas-fired power plants in the near term, according to a latest report.

The latest Global LNG Outlook 2024-2028 from the Institute for Energy Economics and Financial Analysis (IEEFA) also observed that Bangladesh might opt for gas-fired peaking plants instead of only base-load plants to accommodate more renewable energy.

The country may seek to limit the liquefied natural gas (LNG) demand growth by frontloading energy efficiency in industrial processes and captive generation, it stated.

The report presents the International Energy Economics Forecasting Association's (IEEFA) projection for worldwide LNG demand spanning from 2024 to 2028.

Despite plans to ramp up the country's LNG terminal capacity, fiscal challenges may limit a drastic LNG demand growth in the short-term, it said.

"Low spot market LNG prices resulted in a rebound in demand from Bangladesh by 17.9 per cent in 2023 after imports fell by 14.4 per cent in 2022, but sensitivity to volatile LNG prices, fiscal challenges, and competing energy resources in the power sector point to a moderate medium-term demand growth," Shafiqul Alam, Lead Analyst, Bangladesh Energy said.

Regarding the global LNG demand, lackluster demand growth combined with a massive wave of new export capacity is poised to send LNG markets into oversupply within two years.

The LNG demand in Japan, South Korea, and Europe-which together account for more than half of the world's LNG imports-is expected to fall through 2030.

In emerging Asia, LNG demand growth will face significant economic, political, financial, and logistical challenges that may not be fully resolved in an oversupplied market.

Global LNG supply capacity is set to reach 666.5 million metric tonnes per annum by the end of 2028-a 40 per cent increase in just five years-despite uncertain demand, the IEEFA report said.

However, such rapid LNG demand growth in emerging economies is not guaranteed, even in an oversupplied market. Countries in South and Southeast Asia, for example, will face distinct barriers to rising demand, including fiscal and credit challenges, extensive infrastructure delays, and contracting issues, among other obstacles.

The global LNG crisis following Russia's full-scale invasion of Ukraine in 2022 brought these issues to the fore, spurring many markets to reduce the role of LNG in their development plans and accelerate the development of alternative energy sources.

IEEFA expects Europe's gas and LNG demand to fall through 2030. Europe's natural gas demand has declined 20 per cent since 2021, due to fuel switching, increased nuclear and renewables generation, and energy efficiency measures.

The IEEFA also revealed that LNG imports to Japan and South Korea fell 8.0 per cent and 5.0 per cent respectively in 2023.

National energy and climate plans envision steep reductions in the role of LNG in both countries, turning instead to nuclear and renewable energy. Taiwan, on the other hand, aims to cut nuclear power, which may boost LNG demand.

China reclaimed its position as the world's largest LNG importer in 2023. However, domestic natural gas production and additional pipeline imports may limit LNG demand growth.

Unprecedented increases in renewables capacity are constraining the need for LNG in the power sector.

In South Asia, fiscal challenges along with the inherent volatility of LNG prices may constrain rapid near-term demand growth, and the role of LNG in power generation is likely to remain low.

In Southeast Asia, extensive development timelines, contract negotiations, and repeated project delays for LNG-related infrastructure may continue to inhibit demand while strengthening political incentives to pursue alternative energy sources.

Robust supply growth will likely lead to lower prices, encouraging an uptick in short-term buying, Sam Reynolds, Research Lead, LNG/Gas, Asia, said.

"Yet in South and Southeast Asia, ongoing fiscal challenges and lengthy delays for new gas and LNG infrastructure pose structural challenges to demand growth that a low-price environment does not fully resolve," Sam added.