Costly LNG imports

Petrobangla counting Tk 20b monthly loss

M Azizur Rahman | Published: June 15, 2019 10:01:17 | Updated: June 15, 2019 13:38:18

Petrobangla counts a monthly loss of Tk 20 billion for importing LNG (liquefied natural gas) from international market and selling the fuel at current prices in the local market.

"We're losing Tk 620-Tk 650 million daily for import of LNG, its regasification and supply to the national gas grid," said a senior official of the state entity.

If this rate of loss continues, Petrobangla's annual loss would be around Tk 240 billion-almost triple the Tk 90-billion budgetary allocation as agricultural subsidy for the outgoing fiscal year.

The amount would be around four times the annual subsidy requirement of the state-run Bangladesh Power Development Board worth around Tk 65 billion.

Petrobangla's loss varies with the movement in LNG prices in the international market, which is tagged with global oil prices, he told the FE.

Currently, the corporation has been regasifying around 554 million cubic feet per day (mmcfd) of LNG in total from two terminals as of June 10, 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, said a senior Petrobangla official.

According to Petrobangla officials, 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 35 billion to foot the LNG import bill.

Finance ministry provided the second chunk of the subsidy worth Tk 25 billion in May after providing the first chunk worth Tk 10 billion in March.

Petrobangla has been importing LNG for more than one year since April 24, 2018, when the first shipment reached Moheshkhali.

LNG is regasified at the FSRUs before it is added to the national grid.

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.


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