Originally posted in The Business Standard on 27 January 2023
Bangladesh is set to resume importing liquefied natural gas (LNG) from the spot market as it has sought a cargo for the first time in eight months, reports Bloomberg.
The state-run Rupantarita Prakritik Gas Company Limited, also a company of the Bangladesh Oil, Gas and Mineral Resources Corporation (Petrobangla), is seeking to purchase a cargo on delivered ex-ship (DES) basis for 21-22 February delivery. The term DES requires a seller to deliver goods to a buyer at an agreed port of arrival.
Petrobangla has initiated to resume importing spot LNG in order to boost gas supply in different sectors including RMG, ceramics, power and steel for meeting the summer energy demand.
When asked about the initiative, Zanendra Nath Sarker, chairman of Petrobangla, said, “A process to import spot LNG is going on. However, the decision has not yet been finalised.”
As of yesterday, the total supply of gas in the country was 2,642.6 million cubic feet per day (mmcfd), including 407 mmcfd from long-term LNG supply, against a demand of 3,500 mmcfd.
But the size of supply at the beginning of last year was around 3,100 mmcfd when the long-term LNG volume was also higher along with the spot source.
In the fiscal 2021-22, Petrobangla used to inject around 100 mmcf of gas per day in the supply system after importing LNG cargoes from the spot market.
However, it ceased importing gas in June last year due to price volatility in the source market caused by a surge in demand in European countries after Russia cut pipeline gas supply to the region.
The global energy crisis coupled with the local money crunch and dollar scarcity had forced Bangladesh to suspend spot LNG with an aim to reduce the forex bills.
Meanwhile, the government on 18 January hiked gas prices by a staggering 179%, with an eye on eliminating subsidies and cutting the fiscal deficit.
Validating the record ever hike, the Energy and Mineral Resources Division said the increase was necessitated by the increase in demand for gas during the irrigation season, Ramadan and the coming summer, which would have to be met by importing LNG at higher prices from the spot market.
Therefore, the government has decided to increase the price of gas used in power, industrial, captive power and commercial sectors.
In order to meet the gas demand of industry and power sectors next summer and Ramadan, however, the government has initiated resuming spot market LNG.
Sources at Petrobangla said it is going to import a minimum of 10 cargoes during the February-December period from the spot market.
From September 2020 to date, Petrobangla has imported 29 LNG cargoes from the sports market.