Industrial LPG offers relief to energy-starved factories

Amid spiked diesel prices, electricity cuts and low grid gas pressure faced by mills and factories, liquefied petroleum gas (LPG) is the best solution for energy-starved industries. For heating and other industrial applications, LPG is also a cleaner and more efficient alternative to burning furnace oil, according to Tanzeem Chowdhury, chief executive officer (CEO) of Omera Petroleum Ltd, one of the country's largest LPG players.

LPG is being embraced by industries as the most affordable clean energy solution due to inconsistent gas pressure in grid lines and high cost of diesel. To cater to this growing demand, his company has already launched a specialised service, "Omera Priority", offering LPG energy solutions to industries.

"Industries were not interested in LPG before the Russia-Ukraine war though it is a cleaner fuel. Following supply chain disruptions and soaring costs of traditional fuels in the international market, industries have taken up Omera LPG for their heating needs. Now industrial demand is taking up larger portions of our total volume as we are now supplying LPG to garments, ceramic, metal, and food industries. Some gigantic factories such as steel mills have taken up Omera LPG for their furnaces – hinting at further growth of the LPG segment," he said in an interview with The Business Standard.

"Earlier, only small and medium ventures without access to gas grid used to approach Omera for LPG solutions. Factories connected to the national gas grid never asked for LPG as they had access to heavily subsidised natural gas. However, the recent energy situation has prompted manufacturers and heavy industries to explore industrial LPG."

"Of course, LPG is the best alternative in terms of cost, environmental footprint and availability right now. Omera supplies LPG for boilers, furnaces, industrial dryers and more. Soon, we will introduce LPG for captive power generation," said Tanzeem Chowdhury.

"Natural gas supply from the national grid costs a factory less than $4 per MMBtu [Metric Million British Thermal Unit], whereas LNG import cost for Bangladesh soared to over $40 per MMBtu. The differences result in heavy gas subsidies. However, industries still do not get adequate gas pressure from the pipelines."

"Following the recent upward adjustment of diesel price at Tk114 per litre, burning diesel costs industries $33 per MMBtu. On the other hand, factories currently using LPG pay less than $22 per MMBtu, which once dropped below $10 per MMBtu-mark during the Covid lockdowns and had peaked at around $30 a couple of months ago."

Compared to coal and furnace oil, Tanzeem Chowdhury said LPG is the most competitive and clean fuel right now and will remain so in the coming days. He said Omera is maximising its efforts in the business of specialised bulk LPG solutions. "We have customised LPG mix and technology that yields calorific value near to what comes from natural gas.''

"Our JV [joint venture] partners in Omera Gas One is Saisan Co Ltd of Japan. They bring in LPG operating experience of over 70 years to Bangladesh. The Omera Gas One team has set up large scale LPG reticulation infrastructure and supply for housing projects, government projects and townships. Thanks to Omera's legacy in the energy industry and joint venture with Japanese Saisan Co Ltd, the company is gearing up to take on LPG projects of mammoth proportions," said the CEO.

Europe was traditionally using Russian gas for winter heating. As Russia has stopped gas supply ahead of this coming winter, Europe is placing advance orders for LNG at high prices to the Middle East. Europe is also booking most LNG floating storage regasification units in the market. This will cause global LNG prices to remain high for a long time, according to the Omera CEO. In addition to LNG, if Europe heavily opts for LPG, LPG price may also increase in the winter. Still, LPG will be a cheaper and cleaner solution for industries in Bangladesh.

Omera, which pioneered bulk LPG solutions in Bangladesh, has four satellite plants to provide the whole country with uninterrupted supply of bulk LPG. Tanzeem Chowdhury is confident that the cost edges alongside the acquired specialisation will help Omera offer a good price and services to its industrial clients.

"We are working a lot, from every single aspect, to best serve our industrial LPG users," he said.

Even though LPG history dates back several decades, Bangladesh seriously embraced LPG as a cooking gas in the early 2010s and since then the annual market has grown nearly tenfold to over 13 lakh tonnes, which is predicted to reach 30 lakh tonnes by the end of 2030.

What if global LPG price soars beyond his estimate? In his response, Tanzeem Chowdhury said, "There is a price correlation between LPG, crude oil and LNG. In most cases, fuel commodities follow somewhat a linear relationship. If LPG prices go up, so does LNG and diesel. If the government introduces a small portion of its LNG subsidy to LPG users, industries would enjoy some relief and stay afloat." 

"LPG Autogas is also gaining popularity in the country as a cleaner and cheaper automotive fuel for cars and SUVs [sport utility vehicles]. Petrol and octane cost above Tk130 per litre whereas automotive LPG [Autogas] is only Tk65 this month. Both octane and LPG have similar energy content and deliver the same driving experience. LPG Autogas is the best fuel for transportation now, Omera Autogas & Omera Gas One has the strongest auto gas network where fuel quality gets the top priority. Our group company, MJL Bangladesh Limited, has a state-of-the-art LPG testing lab facility for ensuring the best quality. Omera is also exporting LPG to the north eastern states of India," he added.