Spot LNG purchase resumes after seven months

Bangladesh has resumed the purchase of liquified natural gas from the international spot market after a pause of seven months as the government looks to ensure adequate supply for energy-starved industries to keep the economy running at a good speed.

Last week, state-owned Rupantarita Prakritik Gas Company Ltf(RPGCL) sought one LNG cargo for delivery in late February, reports Reuters.

While the tender has not been awarded, the lowest offer was made at $19.74 per Million British Thermal Units (MMBtu) by the European Total Energies among four participants who competed, it said.

Bangladesh last bought LNG from the spot market in June last year at $24.25 per MMBtu.

The offer from TotalEnergies was approved by the cabinet committee on purchase yesterday. The LNG cargo would have 33,600 MMBtu, according to meeting minutes.

From now onwards, Petrobangla, which is in charge of LNG imports, would be purchasing cargo regularly from the spot market, said one of its officials on the condition of anonymity.

The resumption of LNG purchase comes on the back of plummeting prices, which have dropped by a third from the record highs of $70.50 MMBtu in August 2022 since the start of the year on slower demand and high inventory levels in Europe and North Asia.

The development also means the industries, which have been running on a truncated production schedule for want of gas, can brace themselves for uninterrupted supply once again.

To enable the spot purchases, the government last month hiked the retail price of gas by 14.5 percent to 178.9 percent for industries, power plants and commercial establishments, who together account for 78 percent of gas use in Bangladesh.

"So, supplying uninterrupted gas to them is our first priority now," the Petrobangla official said.

If the LNG price stays at this level, the government will continue to purchase from the spot market, Nasrul Hamid, the state minister for power, energy and mineral resources, told The Daily Star earlier on January 18.

Bangladesh also imports LNG for about $11 MMBtu through a 10-year import deal with Oman and a 15-year import deal with Qatar, according to Petrobangla officials.

At present, the total gas supply to the national grid is 2,656 million cubic feet per day (mmcfd), which includes the 401 mmcfd supplied by Qatar and Oman, shows the daily supply report of Petrobangla.

Once the cargo from the spot market arrives, the supply would increase by another 100 mmcfd, according to Petrobangla officials.