Govt to ramp up LNG spot purchase for low prices

Petrobangla is set to purchase three more cargoes of liquefied natural gas this month as the government looks to ramp up gas imports taking advantage of the favourable prices in the global spot market.

The cabinet committee on government purchase yesterday approved the procurement of the three cargoes at the unit prices of $9.68, $9.89 and $9.50 respectively. The total cost would be about Tk 418 crore, Tk 428 crore and Tk 410 crore respectively.

The LNG cargoes, having 33.60 lakh MMBtu each, will be supplied by Singapore’s Vitol Asia, Switzerland’s TotalEnergies Gas and Power and Gunvor Singapore.

With the three cargoes, the government has approved a total of 15 LNG cargoes from the spot market this year.

Petrobangla Chairman Zanendra Nath Sarker recently told Reuters that they have plans to purchase 48 cargoes of LNG this year other than the long-term contracts, up from 23 cargoes last year.

Since February, the spot market rate has been less than $10 per MMBtu, the first time since the Ukraine war started in February 2022.

In the middle of 2022, the country had to spend up to $38 per unit, compelling the government to suspend LNG purchases from the spot market for seven months from July 2022.

In March, Petrobangla bought four cargoes — the highest at a time since the government started purchasing LNG from the spot market in 2020 — at the unit price of $9.24.

The LNG cargoes are bought at a time when the mercury is on the rise, leaving the government to contend with a shortage in power generation.

Yesterday, the Bangladesh Power Development Board had to conduct load shedding of around 1,800 megawatts in the evening while they were getting around 990 million cubic feet of gas against the demand of 2,316 mmcfd.

The government is aiming to produce more electricity from gas-fired power plants with LNG cargoes to avoid an acute power crisis in the summer.

Besides the spot market purchase, the government will import LNG under a two-year contract with Gunvor Singapore. In 2024 and 2025, the company will supply 24 cargoes of LNG.

The deal was approved in principle by the cabinet committee on economic affairs on March 27.

In 2026, the existing long-term contracts with Qatargas and Oman Trading International will increase the supply.