The findings align with a growing recognition that climate change is intensifying weather patterns, making energy infrastructure increasingly vulnerable. Stronger storms, higher wind speeds, and rougher seas are likely to become more frequent, posing long-term challenges.
Bangladesh suffered significant economic losses of approximately $622 million due to Cyclone Remal, with the storm exposing vulnerabilities in the country’s energy infrastructure, particularly its reliance on floating liquefied natural gas (LNG) import terminals. The findings, revealed in a report by the US-based Institute for Energy Economics and Financial Analysis (IEEFA), underscore the challenges faced by nations dependent on such offshore facilities.
The cyclone, which struck in May 2024, caused extensive damage, including the prolonged shutdown of the Summit LNG terminal, one of Bangladesh’s two floating, storage, and regasification units (FSRUs). The Summit LNG Terminal Company, partly owned by Japan’s JERA (16.5 per cent) and Mitsubishi (25 per cent), demanded $22 million in contractual payments while the terminal was offline. This amount is in addition to the $600 million in broader economic losses attributed to the storm.
Prolonged Shutdown and Its Impact
The Summit LNG terminal experienced nearly six months of downtime, significantly disrupting Bangladesh’s LNG import capabilities. Initially taken offline for routine maintenance from January to March, the terminal sustained structural damage during the cyclone. It was transported to Singapore for extensive repairs before returning in July. However, adverse oceanic conditions delayed its reconnection, postponing its operations until September.
The disruption underscores the susceptibility of floating LNG terminals to weather-related challenges, which can have far-reaching consequences for energy security. “Bangladesh’s experience highlights how severe weather can create prolonged disruptions, raising risks for other nations pursuing offshore LNG projects,” the IEEFA report noted.
Growing LNG Markets Face Challenges
South and Southeast Asia are projected to drive LNG demand growth over the next two decades. To meet this demand, the LNG industry has promoted floating terminals as cost-effective and faster alternatives to onshore facilities. However, the IEEFA report warns of significant downsides to these floating solutions.
“While floating terminals have lower upfront costs, their higher operating expenses can surpass the costs of onshore facilities within seven years,” said Sam Reynolds, the report’s co-author and LNG Research Lead for IEEFA Asia. “Additionally, their vulnerability to inclement weather, exacerbated by climate change, poses critical risks.”
The report also highlighted operational challenges for floating LNG terminals, which can struggle to function during moderate breezes and rough seas. Such conditions often force these vessels to temporarily relocate, further impacting their reliability.
Regional Implications for LNG Projects
The vulnerabilities exposed by Cyclone Remal mirror broader regional issues. Several floating LNG projects in South and Southeast Asia have faced delays or cancellations. Recent examples include halted projects in Bangladesh and the Philippines, alongside persistent delays in Vietnam.
“It is telling that none of Asia’s largest LNG importers, such as Japan, China, South Korea, Taiwan, India, or Thailand, rely on floating LNG terminals,” said Christopher Doleman, co-author of the IEEFA report. “These nations have likely recognized the operational and security risks of such technology.”
Climate Change and Energy Security
The findings align with a growing recognition that climate change is intensifying weather patterns, making energy infrastructure increasingly vulnerable. Stronger storms, higher wind speeds, and rougher seas are likely to become more frequent, posing long-term challenges for offshore LNG projects.
“Stronger and more harmful weather events increasingly threaten the reliability of offshore LNG projects and the energy security of importing countries,” Reynolds said. The report suggests that reliance on floating terminals may ultimately undermine the LNG industry’s efforts to expand in fast-growing Asian markets.
Future Outlook
As climate-driven risks escalate, the IEEFA recommends re-evaluating the role of floating LNG terminals in energy strategies. For Bangladesh and other nations considering similar projects, the choice between floating and onshore facilities may increasingly hinge on balancing cost efficiency with long-term reliability and resilience.
The experiences of Cyclone Remal serve as a stark reminder of the high stakes involved in energy infrastructure planning, particularly in regions prone to severe weather. The report concludes with a call for greater scrutiny of offshore LNG terminals as countries navigate the twin challenges of energy security and climate adaptation.
