Bangladesh to buy five more LNG cargoes

The government yesterday approved the purchase of five liquefied natural gas (LNG) cargoes, including three from the spot market, to help meet the country’s energy demand as supplies under long-term contracts face uncertainty amid the conflict in the Middle East.

The Cabinet Committee on Government Purchase (CCGP) approved the proposals at a meeting yesterday following recommendations from the Energy and Mineral Resources Division.

Among the approved proposals was the purchase of two LNG cargoes from SOCAR Trading SA of Switzerland under a direct procurement method for 2026. Under the agreement, the LNG will be purchased at a price linked to the Japan-Korea Marker (JKM) benchmark, with a premium of $0.25 per million British thermal units (MMBtu).

The committee also approved the purchase of three LNG cargoes from the spot market. The cargoes are scheduled for delivery during three separate windows: June 26-27, June 30-July 1 and July 6-7.

According to the approvals, BP Singapore Pte Ltd will supply one cargo, while TotalEnergies Gas & Power Ltd of the UK will supply the remaining two.

With the latest approvals, Bangladesh’s total spot-market LNG purchases have reached 26 since the outbreak of the US-Israel war on Iran on February 28

The three spot cargoes will cost more than Tk 2,372 crore.

With the latest approvals, Bangladesh’s total spot-market LNG purchases have reached 26 since the outbreak of the US-Israel war on Iran on February 28. The conflict and disruptions to shipping through the Strait of Hormuz have affected supplies for Bangladesh, which imports LNG from Qatar under a long-term contract.

Bangladesh meets nearly 30 percent of its gas demand through imported LNG, while domestic production continues to fall short of the country’s total requirement of about 2,650 mmcfd (million cubic feet per day), according to Energy Ministry data.

Roughly one-fifth of global LNG trade passes through the Strait of Hormuz, which lies between Oman and Iran and connects the Persian Gulf with the Gulf of Oman and the Arabian Sea. Qatar ships a significant share of its LNG through the route.

Iranian missile strikes on Ras Laffan Industrial City, home to Qatar’s largest LNG export facility, caused significant damage in March, according to international media reports.

“We have fallen into big trouble after the strikes on Qatar’s facility. Disruptions in the Strait of Hormuz have dealt another blow to us,” said a senior official of state-run Rupantarita Prakritik Gas Company Ltd (RPGCL), which procures LNG on behalf of the Energy Ministry.

Before the war, Bangladesh was able to purchase LNG at $8-$9 per MMBtu from long-term suppliers and at $10-$11 per MMBtu from the spot market. Prices have risen since the conflict disrupted supplies.

The average cost of LNG under long-term contracts has now risen to around $15 per MMBtu, while spot-market prices have increased to $17-$18 per MMBtu, the official said.

Bangladesh has purchased most of its spot cargoes from suppliers in the US, Australia, Angola and Nigeria. Suppliers have delivered 17 to 18 cargoes under those contracts so far, according to the official.