Global energy supply dearth upsets Bangladesh's switch to LNG purchase from spot market as the government opted for a pause until December after three cargoes costing record-high prices.
Officials say the state-run Petrobangla has so far confirmed the purchase of liquefied natural gas or LNG cargoes from spot market for this month and the latest cargo is expected to reach FSRU (floating storage, re-gasification unit) on October 26.
Higher price of spot LNG on the international market and lesser demand for natural gas during the winter months of November and December might have prompted the government to halt the purchase of LNG during November-December period, a senior energy ministry official told the FE Monday.
Petrobangla had not imported LNG during five months from last October to February as it did not get suitable price quotes.
State-owned Rupantarita Prakritik Gas Company Ltd (RPGCL), a fully owned subsidiary of Petrobangla that looks after LNG trading, invited tenders repeatedly from select suppliers and got price quotes several times that ranged up to around US$ 8.0 per million British thermal unit (MMBTU).
But the prices were deemed 'high' and so the government did not purchase the fuel from spot market after September last year.
The government, however, reinitiated purchase of spot LNG from March 2021 and continued purchasing until early August before a halt for a brief period until late September 2021 following an instruction
from the Energy and Mineral Resources Division (EMRD) under the Ministry of Power, Energy and Mineral Resources (MPEMR).
Seeing the mounting demand for natural gas in industries and power plants the government started purchasing LNG from spot market in September at US$28 per MMBTU from Vitol Asia Pte Ltd.
Petrobangla also bought two LNG cargoes at record-high rates of $35.89 per MMBTU and $36.95 per MMBTU from Vitol and Gunvor for early and late October delivery.
The prices are over threefold the price the government purchases LNG at from long-term suppliers averaging around US$10.50 per MMBTU.
The country's overall LNG re-gasification as on October 10, 2021 was around 683 million cubic feet per day (mmcfd).
Sources said natural gas crisis, which prevailed across the country over the past one month, eased with the increased supply of natural gas.
LNG re-gasification through FSRUs had dropped 29.41 per cent to around 600 mmcfd from around 850 mmcfd following the halt in spot LNG purchases.
Petrobangla started regular import of LNG on September 9, 2018 -- in the wake of natural gas crunch, which is attributed to a prolonged slow pace in exploration of the hydrocarbons in the country's potential fields.
The RPGCL had floated tenders since August 2020 to purchase LNG from the spot market under the then government plan to meet around one-fourth of the total country demand for LNG from open market.
Petrobangla had started importing LNG from spot market in September 2020.
The state corporation has been importing a total of 64 LNG cargoes in 2021 from term suppliers, two cargoes or 3.0 percent shorter from the previous year's tally.
As per the plan, the state entity imports 40 cargoes from Qatargas and 24 from OTI in 2021.
It bought in 43 cargoes from Qatargas in 2019 and 40 in 2020, while 20 cargoes from OTI in 2019 and 26 in 2020.
Initially, Petrobangla had plans to import 18 LNG cargoes from spot market in 2021 against only one cargo in 2020.
"But, after the halt in import over the past one and a half months, the spot imports might be little less than the initial plan," said one of the sources.
Qatar's Qatargas and Oman's Oman Trading International (OTI) are the two long- term suppliers of LNG to Bangladesh.
Meanwhile, reports say, global economic recovery from the disruptions by the coronavirus pandemic is being hit by three crises: supply squeezes, high energy costs and inflation fueled by short supplies of products.