First shipment due by February 20

Bangladesh has procured a liquefied natural gas (LNG) shipment from the spot market after an eight-month suspension, which is due to arrive by February 20.

General Manager at Rupantarita Prakritik Gas Company Limited (RPGCL), one of the 13 companies under Petrobangla, Md Shah Alam told The Business Post on Wednesday they ordered the shipment from TotalEnergies this week, which will reach the country within February 15-20.

Mentioning that per MMBtu LNG cost was $20-22, he said, “We want to bring one to two shipments every month. Two more shipments may come in March. However, everything depends on dollar supply.”

But after the Cabinet Committee on Government Purchase meeting on Wednesday, Additional Cabinet Secretary Syed Mahmud Khan said per unit LNG price will be $19-19.78.

He said the government again approved the proposal to procure LNG after a long time, adding 33,600MMBtu will be procured. “The gas crisis is expected to ease this month.”

Mahmud also said the proposal to procure soybean oil for Trading Corporation of Bangladesh has been approved as well and per litre cost will be Tk 182.

Bangladesh has been procuring 56 LNG shipments every year under long-term contracts from Qatar and Oman since 2018. Besides, it has been procuring 15-16 shipments from the spot market every year since 2020.

In July last year, the government suspended LNG procurement from the spot market due to volatile prices caused by the Russia-Ukraine war and foreign exchange reserve shortages.

Shortly after that, LNG supply from long-term contracts decreased, creating a big gas crisis in the country. As a result, power plants and manufacturing industries faced a severe production crisis.

Traders repeatedly demanded the resumption of LNG imports from the spot market, but the government did not agree to lift the suspension.

Petrobangla officials said the government started importing LNG again as prices in the global market dropped by 70 per cent.

Bloomberg reported on Wednesday while Asian LNG spot prices are still double their 10-year average through 2020, the recent declines will bring welcome relief to the Bangladesh government.

Bangladesh is also in a better position to procure fuel from the international market after securing $4.7 billion in loans from the International Monetary Fund this week. The nation’s foreign exchange reserves dwindled after the surge in commodity prices last year due to the Russia-Ukraine war.

According to Petrobangla, the demand for gas in the country is around 3,800 MMcf/d. However, 2,500 MMcf/d is supplied, including 400 MMcf/d in the form of LNG procured from Qatar and Oman.

Petrobangla said an LNG carrier contains 3,000MMBtu gas. If 100MMBtu per day is supplied to the national grid, a ship can bring in gas that can be supplied for 30 days.

Officials at the power, energy and mineral resources ministry said the government wants to ensure uninterrupted energy and power supply during the upcoming summer and the irrigation season.

Due to energy shortages, most gas-fired power plants sat idle last year, causing the country to face frequent power cuts.