FSRUs In South Asia: Fad Or Practical Solution?

With more than 1.7 billion people, the Indian sub-continent is a one of the most densely populated regions on Earth, and consists of countries with varying levels of economic success, infrastructure development, geopolitical stability and energy demand.

However, one common challenge that these countries face is massive power deficits, caused by several factors including a rapidly growing energy demand due to the increasing middle class population boom, urbanization, solid economic & GDP growth over the past few years and electricity price fluctuations.

Energy shortages in India, Pakistan and Bangladesh

For instance, severe energy shortages are common in Pakistan and the situation has been ongoing for several years. The country has an installed electricity capacity of 22,797 megawatts (MW), but production stands at a dismal 12,000 MW. As it stands, parts of the country already face electricity cuts for up to 20 hours a day. Unless the shortages are addressed, the deficits are expected to get worse as Pakistan’s electricity demand is estimated to hit 50,000 MW by 2030. The situation is equally grim over in neighbouring India. While its compound annual growth rate (CAGR) has grown by around 7-8 percent yearly, positioning the country as one of the rising stars in the world economy, the steep growth has been accompanied by an equally sharp increase in electricity consumption from almost every sector in the country, pushing its energy infrastructure to the limits.

As for Bangladesh, total installed power generation capacity stood at about 12.3 GW daily as of 10 April 2016 and it was producing around 8.3 GW. Only 60% of Bangladesh’s population of around 160 million has access to electricity, even while the country’s power demand is growing at a rate of 10 percent annually.

That said, it is not as if the region is devoid of energy resources. There is a huge diversity of resources in the region including oil, gas, coal, hydro power, wind, and solar energy. However, the governments of these countries are pushing for increased use of natural gas, partly due to the global commitment to reduce greenhouse gases.

This article takes a closer look at why the Indian sub-continent is currently a favourable destination for LNG imports and also  examines where FSRUs fit in the entire LNG value-chain in India, Bangladesh and Pakistan.

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