Govt to buy Tk 624cr LNG from Singapore firm

The  government yesterday approved two proposals to buy a total of 67.2 lakh  MMBTU liquified natural gas from spot market for Tk 623.64 crore to  meet the growing demand for the super-chilled fuel.

Vitol Asia Pte Ltd of Singapore will supply the fuel. The  cabinet committee on purchase approved the proposals to buy the LNG  from the spot market in a meeting, presided over by Finance Minister AHM  Mustafa Kamal.

In a spot market, financial instruments, such as commodities, currencies and securities, are traded for immediate delivery.

"We are buying LNG from the spot market alongside purchasing the fuel through a long-term contract," Kamal told reporters.

Under  one of the proposals, Petrobangla, a corporation of the energy and  mineral resources division, will buy 33,60,000 MMBTUs (million British  thermal units) of LNG for about Tk 310.98 crore. Each MMBTU will cost  $9.3123.

The second proposal will see Petrobangla buy 33,60,000  MMBTU LNG for about Tk 312.65 crore. The fuel is priced at $9.3611 per  MMBTU.

In September last year, the government moved to the spot  market for the first time to purchase the fuel at a cheaper rate. At the  time, Vitol Asia won the work order to deliver 3,490,200 MMBTUs for Tk  132.93 crore.

In January, Asian spot LNG prices rose to  unprecedented levels due to cargo shortages, transportation bottlenecks,  supply outages, and record winter temperatures boosting end-user  demand, according to price agency S&P Global Platts.

The  S&P Global Platts JKM for February was assessed at a record high of  $32.494 per MMBTU on January 12. This is the highest for the LNG  benchmark for Asian spot LNG since it was launched in early 2009.

The Japan-Korea-Marker (JKM) is used as a reference point for spot deals in Asia.

LNG price has come down in recent weeks, and a further drop is expected at the end of this month, according to an official of Rupantarita Prakritik Gas Company Ltd.

Bangladesh also buys LNG from Qatar and Oman under a government-to-government agreements.

In  2017, Bangladesh signed a 15-year contract with RasGas of Qatar, which  would supply 2.5 million tonnes of LNG every year. The fuel is supplied  at 12.65 per cent of the three-month average price of Brent oil plus  $0.5 constant per MMBTU.

The government has a 10-year LNG import  deal with Oman Trading International. The LNG will be priced at 11.9 per  cent of the three-month average price of Brent crude oil plus a  constant price of 40 cents per MMBTU.

Bangladesh added LNG to its  energy system in 2018 as part of the government's efforts to eliminate  gas shortages and power outages and unlock the economy's potential.

Excelerate  Energy of the US began supplying re-gasified LNG from its terminal in  Moheshkhali in August 2017. It has a regasification capacity of 500  million cubic feet of gas per day.

In May 2019, Summit LNG  Terminal Co Ltd, the country's second LNG terminal, began supplying  re-gasified LNG. The unit has a capacity of supplying 500 million cubic  feet of re-gasified LNG.