The government plans to import increased LNG (liquefied natural gas) cargoes from spot market next year amid dollar crunch as long-term suppliers are averse to augmenting shipments.

“We’ve planned to import 24 LNG cargoes from spot market from January to December 2024 compared to the current year’s 23,” a senior Petrobangla official said on Tuesday.

“If the spot LNG prices become more favourable, we may purchase more spot LNG cargoes in 2024,” he told the FE.

Bangladesh is now regasifying LNG through the floating storage and regasification unit (FSRU) of Summit Group, as the US Excelerate Energy’s FSRU is under repair.

According to the official, the Energy and Mineral Resources Division has already approved the Petrobangla proposal to import 13 LNG cargoes in the first half of the 2024 calendar year.

On the other hand, 11 cargoes have been planned for importation from July to December 2024, he said.

If the global price slops, Bangladesh might bump LNG imports up from spot market in 2024 to utilise capacity expansion of Excelerate’s FSRU – Excellence.

Bangladesh imported 24 spot LNG cargoes in 2022 too.

On the other hand, two long-term LNG suppliers – Qatargas and OQ Trading International (OTI) – will supply a total of 56 LNG cargoes in 2024.

The suppliers also provided the same number of cargoes in 2023 and 2022, the official said, adding that they supplied 64 cargoes in 2021.

Of the total long-term cargoes in the new year, Qatargas will supply 40 and OTI 16.

The duo are bound to supply minimum quantity under their sales and purchase agreements (SPAs) with Petrobangla, according to a senior official of the Rupantarita Prakritik Gas Company Ltd (RPGCL).

The RPGCL, a wholly-owned subsidiary of Petrobangla, deals with LNG imports from global suppliers.

The regular size of an LNG cargo is 138,000 cubic metres.

Bangladesh was struggling to make regular payments to suppliers due to dollar crunch and the overdue payments to them were now an estimated $250 million, said the Petrobangla official.

Petrobangla data shows the country’s LNG demand is mounting to feed increasing industries and power plants as domestic natural gas supplies are on the wane.

Under long-term deals with Qatargas and OTI, the purchase prices for Bangladesh currently range up to $11 per million British thermal unit (MMBtu), according to the December 26 pricing.

Petrobangla started regular LNG import on 09 September 2018. It inked the first-ever SPA with Qatar’s RasGas to buy 2.5-million tonnes per year (Mtpa) of lean LNG over 15 years.

In the initial five years of the deal-making, RasGas will supply annually around 1.8 million tonnes of LNG, which will increase up to 2.5 Mtpa in next 10 years.

The purchase price has been set at 12.65 per cent of the three-month average price of Brent crude oil plus $0.50 constant per MMBtu.

If Petrobangla has more demand in the first five years, it can increase the import volume annually to 2.5 Mtpa.

During the next 10 years, the government’s petroleum agency has the option to reduce the amount by 10 per cent every year.

If Bangladesh takes less than the base amount of LNG, in any year, it will have to pay the price on a take-or-pay basis.

It has a similar SPA with Oman’s OTI to import annually around 1.0 Mtpa LNG for 15 years.

Petrobangla has been purchasing LNG at 11.9 per cent of the three-month average of Brent crude oil price plus $0.40 cents per MMBtu.

The payments are to make within 25 days of delivery.

The petroleum agency has the option of increasing LNG imports to 1.5 Mtpa or lowering it to 0.9 Mtpa without having to pay penalties.

Bangladesh will need to import 30-Mtpa LNG to meet the growing local demand by 2041 as domestic gas reserves are depleting fast, according to a global report.

The report has been prepared by the Copenhagen-based research firm Ramboll in association with Geological Survey of Denmark and EQMS Consulting Limited.

“The country’s existing gas reserves will run out by 2038 if no new exploration and discovery take place,” says the report.

By 2041, Petrobangla predicts, the demand for natural gas will be around 8.0 billion cubic feet per day (Bcfd).

The country’s overall gas output now hovers around 2.57 Bcfd, of which 0.50 Bcfd is regasified LNG and the remaining 2.02 Bcfd of gas comes from local gas fields, according to Petrobangla data as of December 25.
Source: The Financial Express