Bangladesh to Import Omani LNG
Bangladesh’s cabinet committee on public purchase approved April 18 a final sales and purchase agreement (SPA) with Oman Trading International (OTI) for around 1.0mn metric tons/year of LNG for 10 years, cabinet division additional secretary Md Mostafizur Rahman told reporters after the meeting.
This will be Bangladesh's second binding SPA to import LNG after Qatar’s RasGas. State-run Petrobangla and OTI inked a memorandum of understanding (MOU) in early September, he said.
According to the draft SPA, OTI will supply at least 51mn Btu, or 1.0mn mt to Bangladesh of which half will be re-gasified in Excelerate's 3.75mn mt/yr floating storage and regasification unit (FSRU). It is scheduled to be moored at Moheshkhali island, near the port of Chittagong later this month.
The other half will be re-gasified in a similar 3.75mn mt/year capacity FSRU, which is being developed by the local Summit Group and expected to be commissioned in October. The purchase price has been set at around 11.90% of the three-month average Brent crude price (expressed in mn Btu, so $70.0/barrel is $8.3/mn Btu), plus 50 cents/mn Btu, he said. If Petrobangla takes less than the minimum annual amount of 0.9mn mt/yr it will have to pay the price on a take-or-pay basis, he added. Bangladesh will pay Oman within 25 days of the delivery.
The final SPA between Petrobangla and OTI will be inked once it has been approved by the relevant ministries and departments.
Bangladesh has planned to start commercial supply of re-gasified LNG from May 1, as the country is faced with declining natural gas reserves and mounting demand from the downstream power and fertiliser sectors.
The country is expected to receive its first LNG cargo from Qatar aboard the floating, storage and regasification unit Moheshkhali LNG on April 23, an official at the energy ministry said earlier. The FSRU has left Qatar and is on its way to Bangladesh, the managing director of state-owned Rupantarita Prakritik Gas Company, Md Quamruzzaman, said. The first LNG cargo could supply regasified LNG for around 15-20 days, he said.
Deliveries from Qatar are part of a sales and purchase agreement with RasGas for 2.5mn mt/year of LNG, priced at 12.5% of the three-month average of Brent plus an additional 0.5%.
Bangladesh is in negotiations with other suppliers and is planning to sign binding LNG SPAs for more than 3mn mt/year shortly. The country is in negotiations with four other suppliers for long-term deals and is also eyeing short-term and spot purchases. Bangladesh will need to find the equivalent of 30mn mt/year of LNG by 2041 as domestic gas reserves are depleting fast, according to a report submitted last August by Copenhagen-based research firm Ramboll, the Geological Survey of Denmark and EQMS Consulting.
Bangladesh's existing gas reserves of around 12 trillion ft³ will be completely depleted by 2038 if no new exploration and discovery takes place, said the report, which however also recommended rigorous exploration activities on and offshore. This could raise gas supply by 1.40bn ft³/d from 5 trillion ft³ of new reserves.
Bangladesh's current natural gas production is hovering around 2.70bn ft³/d while potential demand is close to 3.30bn ft³/d. This supply shortfall has to be met by LNG imports, the report said. The percentage of imports is forecast to increase to 40% of demand in 2023; 50% in 2028; and 70% in 2041.