Home ›› 26 Jul 2021 ›› Front
Mohammad Shazzad Hossen
To meet the growing demand for gas in industries and power plants in the country, Petrobangla has decided to buy 64 cargos of liquefied natural gas (LNG) from spot market this year.
Of the 64 LNG cargoes, Qatar-based LNG giant Qatargas will provide 40 LNG cargos while Oman Trading International (OTI) will provide the rest.
Talking to The Business Post, Petrobangla officials said the decision comes as only one LNG cargo was imported from spot market in 2020
Bangladesh had stroked deal with 18 LNG suppliers to provide LNG from spot market in 2018 as demand of gas in power plant and industrial consumption has been on the rise.
According to Petrobangla, the demand for gas in power plants will soar by 1,764 million Cubic Feet per Day (mmcfd) in 2021 to 1,980 mmcfd by 2025, and industrial consumption will rise to 750 mmcfd in 2021 to 1,000 mmcfd by 2025.
Meanwhile, gas consumption at fertilizer factories will rise to 300 mmcfd by 2021 to 350 mmcfd by 2025.
Petrobangla Deputy General Manager (LNG) Md Shah Alam told The Business Post that, “We have taken the decision to buy 64 cargos of LNG from spot market by 2021 to meet the growing demand of gas in the country. Discussions are going on with the providers regarding the price.”
We are importing LNG from Qatargas and Oman Trading International under long term agreement which, however, is not enough to feed the rapidly-growing sector, he added.
Currently, Petrobangla is importing the LNG under the long-term deals from two suppliers -- Qatar’s QatarGas and Oman’s Oman Trading International (OTI) as both were selected through negotiations.
Bangladesh inked long-term deal with Qatargas to provide at least 2.5 million tons of LNG per year for 15-years and 10 years long term agreement with Oman’s Oman Trading International (OTI) to provide 1.0 million tonnes of LNG per year.
However, energy experts have expressed fears that excessive import of LNG from the spot market will put country at risk as it is highly volatile and expensive.
“The government should focus on long-term deal instead of importing LNG from spot market. Spot market LNG price fluctuates too quickly, which will add burden on our exchequer as LNG is being provided in a subsidized price to keep industries running,” Energy expert Prof Ijaz Hossain said while talking with The Business Post
“Petrobangla should emphasize more on exploring new gas well in the country as well as off-shore drilling to meet the growing demand,” he added.
According to a report released on January 2021, the Institute for Energy Economic and Financial Analysis mentioned that “lower investment and reduced drilling activity will lead to price spikes and volatility at a higher level than experienced in the last three years. Gas customers globally can expect an unpredictable time ahead with substantially higher prices being a distinct possibility”.
The report also said, “Emerging markets such as Vietnam, Pakistan and Bangladesh, amongst others, that are looking at Liquefied Natural Gas (LNG) to provide a source of power, will be faced with more volatile and also higher prices. This will inhibit each country’s ability to fully utilise their existing LNG powered electricity generation plants.”
The extreme volatility of spot prices combined with the increasing volatility of contract prices will see many projects become unbankable, the report concluded.
Bangladesh entered into LNG import era in 2018 with the supply of 3,000 million cubic feet of LNG to the national grid though a floating storage and regasification unit (FSRU) built by US-based Excelerate Energy in Moheshkhali island in the Bay of Bengal.
