The government is going to purchase liquefied natural gas (LNG) at reasonable price on the international spot market to meet the country’s growing gas demand. To this end, the energy division will form two standing committees, an official said. According to the Energy Division, recently a meeting had been held in the ministry to import LNG. The decision was made in the meeting.
Spot market is a public market in which financial instruments or commodities are traded for immediate delivery. Spot market for the LNG was developed over the past several years with gluts of LNG output alongside the growth of emerging markets for LNG. Sources said, Rupantarita Prakritik Gas Company Limited (RPGL) will float tender for import of LNG. The newly formed standing committee will accept tender and select suitable companies, then recommend them to the government.
“It was proposed in the meeting that a committee may be formed with 3 members including two deputy general managers of RPGCL. The committee will receive the proposal. The second standing committee may be formed with 8 members to evaluate the tender price and then recommended it to the government. It also suggested keeping at least two representatives from Petrobangla and other members may come from the energy ministry, RPGCL, and BUET.
RPGCL General Manager (LNG) Mohammad Rafiqul Islam told Bangladesh Post, “We are working to purchase LNG from spot market. After completing all procedures, I hope the LNG import will be started this month. Our target is to purchase at least one shipment before the monsoon.”
In reply to a question, he said, “We must try to purchase the LNG when the international market price is lower.” The country currently has two floating storage and regasification units (FSRUs) with a total regasification capacity of 1 billion cubic feet per day - equal to about 7.5 million tonnes a year. The LNG is being imported through two long-term contracts with Oman and Qatar. However, the LNG price decreases sometimes and the country’s LNG demand decreases sometimes a year. In this case, the government will have to pay the same price according to the contract. If the government purchases LNG from the spot market, these types of problems will be solved.
RPGCL sources said, in 2017 expression of interest (EOI) was invited for purchases of LNG from the spot market. A total of 43 companies showed keen interest. Out of these, the Cabinet Committee selected 17 companies. Traders who sign the sales and purchase agreements will then be able to participate in spot tenders. Petrobangla will say when cargoes are needed, said the officials.
Initially, Petrobangla signed master sales and purchase agreements (MSPA) with 8 companies last December. Asian spot LNG prices are currently seasonally at their lowest in years due to new supply entering the market from the United States, and as demand growth slows in major economies. Petrobangla will buy eight cargoes of 140,000 tonnes each, or a total of about 1.1 million tonnes, in 2020. As demand grows, in 2021, it will reach 2 million tonnes of LNG from spot markets, an official said.
Energy Division sources said, gas demand in power generation and industrial units including fertilizer production, is increasing gradually. On the other hand, the gas reserves in the country's own fields are gradually depleting. Against the backdrop of an ever-increasing gas demand, the government decided to import LNG in 2010 to meet the country’s dire energy deficit, and finally the LNG import was started from 2018.
After the start of LNG import, the government decided to reopen gas connections of the compressed industrial factories. As a result, the applications for gas connection to gas distribution companies are increasing. Bangladesh has also signed a deal with Oman to buy LNG. Bangladesh's LNG imports are expected to hit 10 million mtyear by 2023.
Over half a dozen local and international companies have been expressing interest to set up LNG-based power plants in the country having combined capacity to generate 13,083MW electricity under unsolicited deals, the official confirmed. On the other hand, gas-rich Brunei has shown interest to supply liquefied natural gas (LNG) to Bangladesh amid the country's mounting natural gas demand. Besides, the government has decided to construct land-based Liquefied Natural Gas (LNG) terminal with a capacity of 1,000 million cubic feet per day in Maheshkhali, which is expected to be completed by 2023.