Staff Correspondent

Fresh uncertainty has emerged over four LNG cargoes purchased through the direct procurement method to ensure a quick supply of gas. The cargoes were scheduled to arrive in Bangladesh in August, but none had arrived by August 17. Their arrival dates also remain uncertain, raising concerns that the country’s gas supply crisis may not ease fully in the near term.

Against this backdrop, Petrobangla has moved to procure five additional LNG cargoes on an urgent basis. While bids have been received for two of the cargoes, no companies submitted offers for the remaining three.

According to Petrobangla and Rupantarita Prakritik Gas Company Ltd (RPGCL), Bangladesh normally imports around 10 LNG cargoes a month. Due to terminal-related problems, nine cargoes were scheduled for August. Of these, three were to be procured through tenders, two under long- and short-term contracts, and four through direct procurement.

Two of the three tendered cargoes have already supplied gas, while another is scheduled to arrive on August 20. Bangladesh has also received one cargo from Qatar under a long-term contract.

However, a cargo under a short-term agreement with Saudi Aramco was not accepted because of concerns over the risk involved in transferring it to the terminal.

Of the four cargoes purchased through direct procurement, two were to be supplied by Hong Kong-based Zhenyu Shipping. Bangladesh has objected to accepting one of the vessels proposed by the company because it is reportedly on the United Kingdom’s sanctions list.

Officials fear accepting the vessel could create complications in future transactions involving international shipping companies and vessels.

The delivery schedules for the other cargoes also remain uncertain. The suppliers may seek permission to extend the delivery period into September, according to officials familiar with the matter.

State Minister for Power, Energy and Mineral Resources Anindya Islam Amit said several companies awarded contracts through the direct procurement process had failed to complete the necessary documentation and formalities.

“As their cargoes have not arrived, we have taken steps to bring in new LNG through tenders as an alternative,” he said.

Questions over unusually low prices

At the beginning of August, Bangladesh decided to purchase LNG through direct procurement from UK-based Black Cube International, Oman-based Maxwell International SPC and Hong Kong-based Zhenyu Shipping.

The international LNG price has remained above $20 per million British thermal units (MMBtu) over the past month, standing at around $22 on August 17.

In contrast, Black Cube offered LNG at $15.50 per MMBtu, while Zhenyu quoted $14.95.

Officials in the LNG sector said such unusually low offers compared with the market price warranted more thorough scrutiny of the suppliers, the source of the cargoes and the vessels being used.

They also noted that if suppliers fail to deliver within the agreed timeframe, there are provisions in the contracts allowing Bangladesh to forfeit security deposits.

Emergency tenders also fail to secure all cargoes

After uncertainty emerged over the directly procured cargoes, Petrobangla invited emergency tenders to purchase five LNG cargoes for delivery in late August and early September.

Bids were received for two cargoes scheduled for delivery on August 23-24 and September 4-5. In both cases, BP was the lowest bidder, quoting around $22 per MMBtu.

No company submitted bids for the remaining three cargoes. Fresh tenders may be invited for those supplies.

Bangladesh generally imports LNG through both long-term contracts and the spot market. The country has long-term agreements with Qatar and Oman. Supplies from these sources have also faced disruptions amid the ongoing conflict in the Middle East.

The government also has a short-term agreement with Saudi Aramco.

Gas supply declining again

Bangladesh has two floating LNG terminals in Maheshkhali, Cox’s Bazar. Excelerate Energy’s terminal has a daily capacity of 600 million cubic feet, while Summit’s terminal can supply 500 million cubic feet a day.

Excelerate’s terminal was shut down following a fire incident on July 21. Gas supply improved somewhat after Summit’s terminal resumed full-capacity operations and Excelerate’s facility partially resumed operations.

However, with no new cargoes arriving, gas supply from Excelerate’s terminal has started declining again.

Total gas supply in Bangladesh fell to 1.64 billion cubic feet last Friday before rising to 2.42 billion cubic feet on Saturday. Supply stood at 2.40 billion cubic feet on Sunday and declined to 2.28 billion cubic feet on Monday.

LNG accounted for around 660 million cubic feet of Monday’s supply.

Improved gas pressure has allowed production to begin returning to normal at several industrial facilities in Narayanganj, Gazipur, Savar and Habiganj. However, some areas of Gazipur and several factories in Savar are still facing gas shortages.

Energy experts said the primary purpose of direct procurement is to ensure rapid supply during periods of shortage. If suppliers fail to deliver scheduled cargoes, the authorities should take action under the relevant contracts and quickly secure alternative LNG supplies to prevent the crisis from worsening.