Petrobangla faces Tk 240b annual loss for LNG

State-owned Petrobangla have to count TK 240 billion annual loss for importing LNG (liquefied natural gas).

A senior official of the organisation said, “Currently we are losing around Tk 620-Tk 650 million daily for importing LNG from international market and selling it at current subsidised prices in local market. That means, Petrobangla's annual loss would be around Tk 240 billion.”

 Petrobangla's loss varies with the change of LNG prices in the international market, which is tagged with global oil prices, he said.

Currently, the corporation has been regasifying around 569 million cubic feet per day (mmcfd) of LNG in total from two terminals, according to Petrobangla.

US-based Excelerate Energy owns one terminal and local Summit Group another at Moheshkhali Island in the Bay of Bengal.

“Both the floating, storage, regasification units (FSRUs) have the capacity to regasify around 1,000 mmcfd of LNG,” the Petrobangla official said, adding the loss might increase further with the increased volume of the clean energy fuel.

The government has so far provided subsidy to the tune of Tk 3500 crore to foot the LNG import bill.

Finance ministry provided the second chunk of the subsidy worth Tk 2500 crore in May after releasing the first chunk of Tk 1000 crore in March.

Bangladesh imports LNG from RasGas of Qatar and Oman Trading International (OTI) of Oman under term deals.

Due to volatile global oil market, LNG import prices for Petrobangla have ranged from around $8.5 per metric million British thermal unit (MMBtu) to $10 per MMBtu.

Petrobangla has sales and purchase agreements (SPAs) with RasGas to import 2.5 million tonnes per year (Mtpa) of lean LNG over 15 years.

It has an SPA with the Omani company to import around 1.0 Mtpa of the same for 10 years.

The SPAs are under 'delivered ex-ship' arrangement, meaning that LNG prices include transportation cost for delivery at an agreed terminal.

LNG from RasGas has been priced at around 12.65 per cent of the three-month average of Brent crude benchmark prices plus 50 cents per MMBtu.

On the other hand, gas from Oman Trading has been set at around 11.9 per cent of the three-month average of Brent crude prices plus 40 cents per MMBtu.

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 ever-increasing gas demand, the government decided to import LNG in 2010 to meet the country’s 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.

On the other hand, the government has decided to constructed land-based Liquefied Natural Gas (LNG) terminal with a capacity of 1,000 million cubic feet per day in Maheshkhali. An expression of interest (EoI) for construction of LNG regasification terminal will be invited this month, which is expected to be completed by 2023, said a government senior official.

Bangladesh has also signed a deal with Oman to buy LNG. Besides, the government has decided to buy from another 26 companies on the basis of spot market pricing. Bangladesh’s LNG imports are expected to hit 10 million mt/year by 2023.