Govt in talks with Aramco to sign MoU

The interim government is currently in talks with Saudi oil giant Aramco to ink a memorandum of understanding (MoU) to ensure cooperation in the energy sector.

State-run Petrobangla has already prepared a draft of the MoU, which is currently being vetted by the Ministry of Law, Justice and Parliamentary Affairs.

"We are eyeing to ink the MoU with Aramco to ensure cooperation in the energy sector, especially for importing liquefied natural gas (LNG), refined petroleum products, etc," Petrobangla Chairman Md Rezanur Rahman told The Financial Express on Wednesday.

He said Aramco had shown interest in supplying LNG to Bangladesh as part of its expanding global export operations.

Aramco, through its trading arm Aramco Trading Company, has already been shortlisted as a potential LNG supplier to Bangladesh from the spot market.

So far, it has delivered a couple of spot LNG cargoes through a competitive bidding process.

Bangladesh recently signed its first-ever short-term LNG supply agreement with OQ Trading, under which the country would import 17 LNG cargoes between August 2025 and December 2026.

This includes five cargoes in 2025 and 12 in 2026, averaging one per month.

The OQ Trading deal marks Bangladesh's debut in procuring LNG under a pricing formula linked to the Platts-assessed Japan Korea Marker (JKM) - the benchmark index for LNG deliveries to northeast Asia.

Under this SPA, Bangladesh will pay a premium of 15 cents per million British thermal units (MMBtu) over the JKM price.

At present, Bangladesh imports LNG from QatarEnergy LNG (formerly Qatargas) and OQ Trading under long-term contracts indexed to Brent crude prices.

While these contracts ensure base supply, they lack flexibility in pricing and volume.

Rupantarita Prakritik Gas Company Ltd (RPGCL), the state entity responsible for LNG procurement, typically purchases three to four spot cargoes each month, depending on market conditions.

This number rises during high-demand periods.

Earlier this year, Bangladesh planned to import six additional spot cargoes between late May and August to meet the rising industrial demand.

However, tenders floated by RPGCL attracted limited interest or bids with steep price premiums due to long offer validity periods and perceived payment risks.

Market insiders say suppliers often impose premiums ranging from 50 to 70 cents per MMBtu over JKM - and even up to $1.50 per MMBtu in volatile times - to hedge against price fluctuations during the bid validity window.

According to Petrobangla estimates, Bangladesh plans to import around 52 spot LNG cargoes in 2025 - the highest in a single year.

azizjst@yahoo.com