LNG Nexus: Assessing the Qatar-US-Bangladesh agreement for energy resilience

In a landmark development, QatarEnergy and US-based Excelerate Energy solidified a significant agreement on January 29, 2024, marking a critical juncture in the energy dynamics of Bangladesh. The accord entails the supply of 1 million metric tonnes per year (mtpa) of liquefied natural gas (LNG) to Bangladesh over 15 years, commencing from January 2026.

This strategic deal is part of QatarEnergy's broader engagement with global partners, aligning with its expansive North Field expansion project. Forecasts anticipate this ambitious project will elevate Qatar's LNG production from the current 77 mtpa to an impressive 126 mtpa by 2027. Qatar, already a formidable force in global LNG exports, further solidifies its position as the leading LNG supplier to Bangladesh through this agreement.

The earlier agreement, inked in June 2023 between QatarEnergy and Petrobangla, Bangladesh's state-owned energy company, laid the groundwork for the supply of 1.5 million tonnes of LNG annually for 15 years. This foresighted move established Qatar as the principal LNG provider to Bangladesh, enhancing energy security and fostering international collaboration.

Excelerate Gas Marketing Ltd Partnership, the US counterpart in this pivotal agreement, will deliver 0.85 million tonnes per annum (MTPA) of LNG to Bangladesh in 2026 and 2027. Subsequently, the supply is set to increase to 1 MTPA from 2028 to 2040. 

The pricing mechanism for this LNG is noteworthy, with a base cost of $0.30 per million British thermal units (MMBtu) plus 13.35% of the Brent price on the delivery date. This innovative pricing model ensures a dynamic and responsive approach to market fluctuations.

As part of Bangladesh's commitment to strengthening its energy infrastructure, Excelerate Energy Bangladesh has recently expanded its daily capacity for transforming liquid to gas from 500 million cubic feet (MMcfd) to 600 MMcfd. The government's nod to amend Petrobangla's contract allows the utilisation of this additional capacity, marking a proactive step towards optimising the benefits of the agreement. 

The Cabinet Committee on Economic Affairs, in 2023, approved the purchase of 15 lakh tonnes of crude oil from industry giants Saudi ARAMCO and Abu Dhabi's ADNOC. This transaction, conducted through the direct purchase method by the Bangladesh Petroleum Corporation (BPC), reflects a multifaceted approach to securing energy resources for the nation's sustained growth.

Previously, the Bangladesh Oil, Gas, and Mineral Corporation (Petrobangla) was poised to enter into a significant 15-year contract with Excelerate Gas Marketing Ltd Partnership. The approval by the Cabinet Committee on Public Purchase, received on October 25, 2023, underscores the government's commitment to adopting a structured and long-term approach to LNG procurement. 

Notably, this move represents a departure from the current practice of spot market procurement, demonstrating Bangladesh's strategic vision in securing a stable energy future. The government's perspective on natural gas as a transition fuel resonates with global sustainability goals. Recognising the longevity of natural gas in the energy mix, Bangladesh views LNG as a crucial component that will play a pivotal role in meeting its energy demands well into the future.

QatarEnergy Chief Executive Saad al-Kaabi expressed optimism about the new agreement, emphasising its role in fortifying the relationship with Excelerate while concurrently supporting Bangladesh's energy requirements. Al-Kaabi highlighted the significance of this collaboration in advancing Bangladesh's economic development. In a broader context, Saad al-Kaabi had earlier conveyed QatarEnergy's expectations to secure long-term LNG supply deals in Asia and Europe, signalling the company's strategic outlook on global energy partnerships.

Excelerate Energy's role in this agreement involves procuring 850,000 mtpa of LNG in 2026 and 2027, with an increment to 1 mtpa from 2028 to 2040. These LNG supplies will be transported to Bangladesh's floating storage and regasification units, reinforcing the nation's capacity to meet its growing energy demands. Daniel Bustos, Excelerate Energy's executive vice president and chief commercial officer, disclosed in September 2023 that the company was in advanced talks regarding long-term LNG supply agreements with Bangladesh. The fruition of these talks now marks a significant milestone in the energy landscape of the South Asian nation.

The implications of this will have far-reaching consequences, influencing various aspects and extending its impact across multiple domains.

With its far-reaching implications, the Qatar-US-Bangladesh LNG agreement lays the foundation for a strategic collaboration that extends well beyond conventional energy transactions. Beyond the immediate supply of liquefied natural gas (LNG), this agreement opens doors for the involvement of other major energy players, exemplified by the potential participation of ExxonMobil. 

Such influential actors in the exploration domain serve Bangladesh well, providing the nation with a distinct advantage. US-based energy players, renowned for their technical expertise and substantial financial capabilities, could further enrich the burgeoning relationship between the United States, Qatar, and Bangladesh. Potential involvement from other actors could play a pivotal role in augmenting Bangladesh's exploration and production sector, complementing the objectives set forth by the Qatar-US-Bangladesh LNG agreement. 

This collaborative framework has the potential to unlock new dimensions in Bangladesh's energy landscape, facilitating exploration activities and tapping into previously untapped reserves. The strategic collaboration signals a departure from traditional energy transactions, transcending mere contractual obligations to embody a shared commitment. This commitment extends beyond immediate gains, aligning with the broader goals of sustainable energy practices and fostering economic development.

The Qatar-US-Bangladesh LNG agreement, therefore, serves as more than a conduit for LNG supply; it is a testament to the cooperative spirit that underpins global efforts towards sustainable energy practices. The multifaceted implications of this groundbreaking agreement resonate across various dimensions – economic, geopolitical, and environmental. As Qatar expands its LNG production capabilities, Bangladesh stands to benefit not only from a reliable energy supply but also from enhanced economic opportunities and technological advancements.

In positioning Bangladesh on a path of energy resilience and global collaboration, this agreement catalyses transformative change. The collaboration creates an environment conducive to innovation, knowledge exchange, and the infusion of advanced technologies in Bangladesh's energy sector.

The comprehensive overview of the Qatar-US-Bangladesh LNG agreement presented here underscores its pivotal role in shaping the future of Bangladesh's energy landscape. Beyond the immediate horizon of LNG transactions, the agreement sets the stage for a sustained partnership that aligns with the evolving global energy paradigm. Bangladesh, with its newfound advantages in exploration and strategic collaborations, emerges as a key player on the international stage in pursuing sustainable energy solutions.

The Qatar-US-Bangladesh LNG agreement marks a significant milestone in securing a stable energy supply for Bangladesh and a transformative moment that positions the nation as a proactive participant in global energy collaborations. As the collaboration unfolds, the potential entry of major energy players adds complexity and opportunity, promising a future where Bangladesh stands resilient, sustainable, and at the forefront of global energy innovation.

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