Bangladesh eyes spot LNG imports in diversification drive

Bangladesh is eyeing importing LNG from the spot market by July in an effort take advantage of low prices and meet the country’s growing demand, according to a senior government official, a move that will see the South Asian country diversify its sourcing beyond term contracts.

Md Kamruzzaman, managing director of state-run Rupantarita Prakritik Gas Company Ltd, or RPGCL, said late last week that several committees had been constituted and they are now working to ensure smooth start of spot LNG imports.

RPGCL has already inked a master sale and purchase agreement, or MSPA, with 14 global suppliers separately to import LNG from the spot market, he said.

The RPGCL, a subsidiary of state-run Petrobangla, completed inking deals with the selected suppliers over the past one month, after selecting them following a competitive bidding.

The firms with whom the MPSAs have been signed include — Mitsui & Co Ltd, Marubeni Corporation, Osaka Gas Co Ltd, and Jera Co Inc. of Japan; Cheniere Marketing International LLP, Vitol Asia Pte Ltd, Trafigura Pte Ltd, and Diamond gas International Pte Ltd of Singapore; Excelerate Energy Ltd Partnership of USA, Woodside Petroleum Ltd of Australia, Eni S.p.A of Italy, AOT Trading AG of Switzerland, Petronas LNG Ltd of Malaysia, and the joint venture of Summit Corporation Ltd & Summit Oil & Shipping Co Ltd of Bangladesh.

RPGCL will procure spot LNG based on market prices, terminal availability, re-gasification capacity and downstream demand, the official said.

Spot LNG prices have plunged to historic lows this year on the back of lower demand due to milder than usual winter coupled with the COVID-19 outbreak and increased supply from US and Australia.

JKM, the benchmark for spot LNG prices in North Asia, was assessed at $3.513/MMBtu on Friday.

Although spot LNG prices are up by nearly 30% from the all-time low of 2.713/MMBtu on February 14, LNG prices are still languishing below historic levels and form an attractive proposition for buyers, market sources said.

Imported spot LNG should have a gross heating value ranging 1,025-1,100 Btu per standard cubic feet, while spot LNG should be supplied on a delivered ex-ship basis and the vessel size should range between 125,000 cu m and 220,000 cu m.

Bangladesh started regular LNG imports in late 2018 and currently imports LNG under long-term deals from Qatar’s RasGas, as well as Oman’s Oman Trading International.

The South Asian country’s overall natural gas output is hovering around 3.140 Bcf/d of which 602,000 Mcf/d is regasified LNG and the remaining comes from local production, according to data from Petrobangla.
Source: Platts