Bangladesh Central Bank Sounds Alarm on Iranian LPG Imports: What You Need to Know!

Concerns are growing over the rising exports of rebranded Iranian liquefied petroleum gas (LPG) to Bangladesh. Following reports of this surge, the Central Bank of Bangladesh has issued a warning to domestic banks, urging them to remain vigilant regarding imports from countries facing global sanctions. This move is part of a broader effort to comply with Bangladesh Bank’s anti-money laundering and terrorist financing policy, as highlighted by a source from the Business Standard newspaper.

LPG, a blend of heavier gases such as propane, butane, and pentane rather than methane or natural gas, is a significant petroleum product for Iran. It ranks among the nation’s top non-oil exports, showcasing its importance in the global energy market. According to Iran’s customs statistics, during the first half of the Iranian fiscal year, which commenced on March 21, the country exported:

• $2.2 billion worth of LPG
• $1.7 billion of pure propane
• $1.1 billion of pure butane
• $1 billion of other heavy gases

Overall, petroleum gases constitute a substantial 24% of Iran’s non-oil exports. On average, Iran exports between 11 to 12 million tons of LPG annually, primarily to China, generating approximately $8 billion in revenue.

On January 18, a report from Lloyd’s List revealed that a very large crude carrier, suspected of transporting LPG originating from Iran to China, made an unusual U-turn in December. This occurred amidst fears that Chinese buyers were hesitant to risk violating U.S. sanctions. After anchoring for two weeks, the vessel ultimately discharged its cargo in Bangladesh.

In October 2024, The Business Standard reported that the LPG Operators Association of Bangladesh (LOAB) expressed its concerns about the increasing imports of Iranian LPG. The association noted that Iran has been offering Bangladeshi buyers prices ranging from $40 to $50 per ton below market rates, with monthly LPG exports to Bangladesh recently reaching an impressive 150,000 tons. This influx has allowed Iran to capture approximately a quarter of Bangladesh’s LPG market.

In a letter directed to port authorities and the central bank, LOAB highlighted various tankers suspected of carrying Iranian LPG within Bangladeshi waters. The letter warned that aside from the potential repercussions related to sanctions, Iran’s pricing strategy threatens to disrupt the competitive energy market in Bangladesh.

Mahammed Jamal Hosen, a representative from the Bangladesh LPG Distributors and Dealers Welfare Association, stated in the letter that “Many banks will face direct consequences of potential US sanctions, and in the long term, Bangladesh’s reputation as a destination for foreign direct investment will be at risk.”

The letter identified numerous companies that allegedly forged documents to misrepresent Iranian LPG shipments through intermediaries in the UAE, particularly in Dubai. These shipments were rebranded as LPG from Iraq’s Basra Gas Company before being routed to Bangladesh.

An example cited by The Business Standard involved two local LPG companies that imported over 10,000 tons of LPG on a vessel named G YMM in August 2024. The documentation submitted to customs and port authorities indicated that the liquid gas originated from Basrah Gas Company in Iraq. However, The Business Standard reported on September 6 that Andrew Wiper, the managing director of Basrah Gas, confirmed that the G YMM had never loaded LPG from his company.

This situation raises significant questions about the integrity of the supply chain and the potential ramifications for Bangladesh’s energy market. The involvement of Iranian LPG in the country not only poses risks related to international sanctions but also threatens the local market dynamics. As the situation develops, it remains crucial for stakeholders in Bangladesh to ensure compliance with international regulations while safeguarding the competitive landscape of the LPG market.