Bangladesh it is modifying its electricity mix in favor of coal while high gas prices complicate the expected growth of LNG in Asia.
For years, Bangladesh was considered one of the markets with the greatest potential for liquefied natural gas. The growth in its electricity demand, the reduction of its domestic gas reserves, and the construction of infrastructure to import LNG pointed toward a sustained expansion of consumption.
However, the recent evolution of its electricity system shows a different trend, in July, coal-fired generation reached 3.92 terawatt-hours, while gas-fired power plants produced 3.66 TWh, according to data from Ember cited by Reuters.
This marked the first time coal surpassed gas in the country’s monthly electricity generation during the summer. The shift is particularly significant because Bangladesh once derived over 90% of its electricity from gas.
The cost changes Bangladesh electricity mix
He fuel prices electricity is playing an increasingly important role in the country’s energy decisions, emerging economies need to expand their electricity supply to support industrial and urban growth. To do so, they require sources capable of guaranteeing a continuous supply at a cost that the electrical system can absorb.
In this context, LNG presents a significant difficulty, as it depends on international shipments, leaving buyers exposed to fluctuations in the global gas market.
Reuters reports that LNG prices in Asia rose from around $11 per million British thermal units to over $25/MMBtu following the US and Israeli attacks on Iran that began in late February 2026, according to LSEG data.
Meanwhile, imported coal maintains lower energy costs, Australian supplies are equivalent to about $6.50/MMBtu, while coal from Indonesia is close to $5/MMBtu, according to the same source.
This difference helps explain why Bangladesh has increased its use of coal despite having the infrastructure to import liquefied natural gas.
LNG in Asia faces price-sensitive buyers
The case of Bangladesh this is important because a large part of the projected future growth for the global LNG market depends on emerging Asia.
Countries like Bangladesh, Pakistan, Vietnam, and the Philippines have been identified for years as potential buyers of larger volumes of gas. This demand would be necessary to absorb some of the new export capacity being developed in the United States, Qatar, and other producers.
The problem is that these markets are highly sensitive to energy prices, when LNG becomes more expensive, power companies and governments may favor cheaper alternative fuels. In Bangladesh, this competition is currently benefiting coal.
Electricity demand does not guarantee increased gas consumption
The evolution of other major Asian markets also reinforces the uncertainty surrounding the growth of gas for electricity generation.
Pakistan and India have reduced the share of natural gas in their power generation mixes in recent years, according to the analysis cited by Reuters.
Japan also shows a reduction. The share of gas in its electricity mix fell from over 40% in 2020 to around 28% so far in 2026, based on Ember data included in the source.
In China, despite its weight within the global LNG trade, gas contributes around 3% of electricity generation during 2026.
These figures show that an increase in electricity demand does not necessarily translate into an equivalent increase in natural gas consumption.
Coal and renewables put pressure on the gas market
At the same time, gas faces competition from two fronts within Asia, on one hand, renewable energy continues to increase its presence in various electricity systems. On the other, coal-fired power plants maintain cost advantages and have infrastructure installed for decades. This combination reduces the available space for LNG within some electricity mixes.
Japan and South Korea also have more nuclear capacity under construction than new gas-fired power generation capacity, according to Global Energy Monitor, as reported by Reuters. This expansion could further limit the growth of gas in the electricity sector.
Bangladesh tests LNG market expectations
For exporters, the change observed in Bangladesh raises an important trade issue, the global industry is expanding its capacity to produce and export LNG under the expectation that emerging economies will increase their use of gas as their electricity consumption grows.
However, Bangladesh shows that this relationship can change when international prices rise and cheaper alternatives become available.
LNG will continue to be part of the energy supply for many Asian markets, but its expansion will increasingly depend on its competitiveness against coal and the speed at which renewables, nuclear power and other sources advance within the regional electricity mix.
In this scenario, Bangladesh becomes a benchmark for observing the extent to which emerging markets can sustain increased LNG demand when the fuel’s price enters into direct competition with other generation options. The evolution of its purchases and its electricity mix will therefore be a relevant indicator for measuring whether the growth expectations for gas in Asia can be maintained in the coming years.
Source: MarketScreener
Photo: Shutterstock
