Govt to buy Tk 624cr LNG from Singapore firm
The government yesterday approved two proposals to buy a total of 67.2 lakh MMBTU liquified natural gas from spot market for Tk 623.64 crore to meet the growing demand for the super-chilled fuel.
Vitol Asia Pte Ltd of Singapore will supply the fuel. The cabinet committee on purchase approved the proposals to buy the LNG from the spot market in a meeting, presided over by Finance Minister AHM Mustafa Kamal.
In a spot market, financial instruments, such as commodities, currencies and securities, are traded for immediate delivery.
"We are buying LNG from the spot market alongside purchasing the fuel through a long-term contract," Kamal told reporters.
Under one of the proposals, Petrobangla, a corporation of the energy and mineral resources division, will buy 33,60,000 MMBTUs (million British thermal units) of LNG for about Tk 310.98 crore. Each MMBTU will cost $9.3123.
The second proposal will see Petrobangla buy 33,60,000 MMBTU LNG for about Tk 312.65 crore. The fuel is priced at $9.3611 per MMBTU.
In September last year, the government moved to the spot market for the first time to purchase the fuel at a cheaper rate. At the time, Vitol Asia won the work order to deliver 3,490,200 MMBTUs for Tk 132.93 crore.
In January, Asian spot LNG prices rose to unprecedented levels due to cargo shortages, transportation bottlenecks, supply outages, and record winter temperatures boosting end-user demand, according to price agency S&P Global Platts.
The S&P Global Platts JKM for February was assessed at a record high of $32.494 per MMBTU on January 12. This is the highest for the LNG benchmark for Asian spot LNG since it was launched in early 2009.
The Japan-Korea-Marker (JKM) is used as a reference point for spot deals in Asia.
LNG price has come down in recent weeks, and a further drop is expected at the end of this month, according to an official of Rupantarita Prakritik Gas Company Ltd.
Bangladesh also buys LNG from Qatar and Oman under a government-to-government agreements.
In 2017, Bangladesh signed a 15-year contract with RasGas of Qatar, which would supply 2.5 million tonnes of LNG every year. The fuel is supplied at 12.65 per cent of the three-month average price of Brent oil plus $0.5 constant per MMBTU.
The government has a 10-year LNG import deal with Oman Trading International. The LNG will be priced at 11.9 per cent of the three-month average price of Brent crude oil plus a constant price of 40 cents per MMBTU.
Bangladesh added LNG to its energy system in 2018 as part of the government's efforts to eliminate gas shortages and power outages and unlock the economy's potential.
Excelerate Energy of the US began supplying re-gasified LNG from its terminal in Moheshkhali in August 2017. It has a regasification capacity of 500 million cubic feet of gas per day.
In May 2019, Summit LNG Terminal Co Ltd, the country's second LNG terminal, began supplying re-gasified LNG. The unit has a capacity of supplying 500 million cubic feet of re-gasified LNG.