BD inks first short-term LNG deal with Oman's OQ Trading

The government has signed its first-ever short-term liquefied natural gas (LNG) supply deal with OQ Trading International of Oman, aiming to boost the country's gas supply and reduce dependence on the volatile spot market.

The new sales and purchase agreement (SPA), signed on Tuesday, will allow Bangladesh to import one LNG cargo per month from August 2025 through December 2026, totalling 17 cargoes. This marks the first time Bangladesh is entering a short-term LNG deal with any global supplier.

Petrobangla Secretary Md Amzad Hossain signed the agreement on behalf of the state-run energy corporation. Officials of OQ Trading and its local partner, Rupantarita Prakritik Gas Company Ltd (RPGCL), were also present during the signing. Petrobangla Chairman Md Rezanur Rahman confirmed the details following the signing.

Under the deal, Bangladesh will import five LNG cargoes in 2025 and 12 in 2026. These imports will help ensure more stable gas supply across the country during periods of high demand.

For the first time, Bangladesh will buy LNG at prices linked to the Platts-assessed Japan Korea Marker (JKM), the benchmark index for LNG deliveries to Northeast Asia. The pricing under this short-term SPA will include a premium of 15 cents per million British thermal units (MMBtu) above the JKM rate.

Mr Rahman said the government initially tried to buy LNG under terms similar to its existing long-term contracts -- based on Brent crude oil prices -- but did not find any suitable offers. Some suppliers demanded up to 17 per cent of the average Brent price over three months, plus an additional fixed amount, which was deemed too expensive.

Currently, Bangladesh imports LNG from QatarEnergy LNG (formerly Qatargas) and OQ Trading International under long-term contracts, both tied to Brent prices. This new short-term deal, however, provides an alternative pricing mechanism.

According to Petrobangla officials, the new agreement would reduce the country's dependence on the spot market, where prices are more unpredictable and usually come with higher premiums. The deal also helps bridge the gap before more long-term contracts start delivering gas in larger volumes.

Rupantarita Prakritik Gas Company, which handles LNG imports for Bangladesh, currently buys three to four spot cargoes a month on average. This number usually increases during the summer and the month of Ramadan when gas demand is higher, especially in industrial sectors.

Earlier this year, Bangladesh planned to bring in six additional LNG cargoes between late May and August to support increased industrial consumption. However, tenders issued by Rupantarita Prakritik Gas Company often receive offers with high price premiums due to long validity periods and concerns over payment delays.

Market insiders say suppliers usually add premiums -- sometimes 50 to 70 cents per MMBtu over the JKM -- to cover the risk of price changes during the validity period. In more volatile periods, these premiums can go up to $1.50 per MMBtu.

The newly signed strip contract with OQ Trading protects both parties. It ensures a fixed premium above JKM for Bangladesh, while shielding the supplier from the risks of extended tender periods and fixed pricing in spot trades.

Bangladesh plans to import around 52 spot cargoes in 2025, the highest in a single year, according to Petrobangla.

In addition to this short-term SPA, Bangladesh has two long-term LNG deals with OQ Trading. The first, signed in May 2018, runs through 2029 and allows imports of up to 1.5 million tonnes per year. The second, signed in June 2023, covers a 10-year period starting in 2026.

Under this deal, Bangladesh will import 250,000 tonnes of LNG in 2026, 1 million tonnes in both 2027 and 2028, and 1.5 million tonnes annually from 2029 to 2035.

Bangladesh received its first LNG cargo from OQ Trading on January 31, 2019. As of June 2025, the country has imported 124 cargoes from the company, totalling around 7.74 million tonnes. Rupantarita Prakritik Gas Company, a fully owned subsidiary of Petrobangla, manages all LNG trading and procurement activities in the country.

azizjst@yahoo.com