The government plans to buy more than 1 million tonnes of liquefied natural gas (LNG) on the international spot market next year to meet the growing demand for energy in the country. State oil and gas company Petrobangla has shortlisted 17 companies for its spot tender process to capitalise on lower prices for the super-chilled fuel, a senior official said.
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 the gluts of LNG output alongside the growth of emerging markets for LNG.
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.
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.
The Petrobangla official said, out of 43 companies' expressions of interest (EOI), the Cabinet Committee had selected the 17 companies. Now we are moving ahead with plans to import LNG through the spot market to meet the demand. Traders who sign the sales and purchase agreements will then be able to participate in spot tenders Petrobangla will issue when cargoes are needed, said the officials.
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. Petrobangla already imports about 300-400 million cubic feet per day of LNG - equivalent to 3.5 million tonnes a year in total - through two long-term contracts with Oman and Qatar.
Alongside, Brunei's High Commissioner to Bangladesh Haji Haris Othman expressed interest to supply LNG during a courtesy call on state minister for Power, Energy and Mineral Resources Nasrul Hamid in the secretariat on Sunday. Bangladesh signed a memorandum of understanding with Brunei in presence of Prime Minister Sheikh Hasina on April 22 last.
Haji Haris Othman said Brunei wants to export LNG to Bangladesh. To this end, a MoU has already been signed. He urged the state minister to finilise the export process of LNG. Responding to Haris's proposal, Hamid said Bangladesh will require a huge quantity of natural gas for its consistent economic growth. Brunei LNG produces 6.71 million tonnes of LNG every year and it operates seven LNG carriers through the joint venture company, Brunei Shell Tankers.
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 countrys dire energy deficit.
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 mt/year 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. As per the government's vision, there will be 100 economic zones in the country, and so, the demand for gas will increase day by day.
