The Financial Express

Thirty global firms to supply LNG to BD from spot mkts

Plan to start import of the energy by mid-2018

| Updated: November 30, 2017 20:20:53

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Bangladesh has selected 30 firms and their consortia from different countries across the globe to source LNG (liquefied natural gas) from spot markets to ensure availability of the energy.

The Rupantarita Prakritik Gas Company Ltd (RPGCL), a wholly-owned subsidiary of Petrobangla and authorised agency to make the LNG purchases, selected the firms to procure LNG from spot markets, in addition to import the same through long-term deals, its managing director Md Quamruzzaman told the FE.

State-run Petrobangla is planning to start buying LNG from the spot markets since mid-2018 as the country's first LNG import terminal is expected to complete by then.

Earlier, the government had decided to purchase spot LNG from different sources in many countries.

Spot market is a platform where commodity is traded for immediate delivery or for delivery in the very near future. The LNG spot market was developed recently with the gluts of LNG output alongside the growth of emerging markets for LNG.

The selected firms would supply the energy from the spot market after getting orders to be placed time to time based on the demand, said the RPGCL official.

Petrobangla would initially make proposal to the selected firms, specifying the quantity of spot LNG, said Mr Quamruzzaman, explaining the method of purchasing LNG from the selected firms.
Petrobangla would seek to purchase LNG from the selected firms under a master sales agreement (MSA) to be signed with each of the firms, he added.

The LNG to be imported from the spot market should have a gross heating value ranging 1,025-1,100 Btu per standard cubic feet (scf).

The LNG would require to be blended with locally produced natural gas, which is sulfur free and sweet gas, before it is delivered to the end-users. The sulfur content of the imported LNG could be low, as a result.

The selected firms would have to supply LNG on a delivered ex-ship basis and the vessel size should range between 125,000 cubic metre (cu m) and 220,000 cu m.

"We will procure spot LNG based on market prices, terminal availability, increased re-gasification capacity and downstream demand," said the RPGCL MD.

Of the selected firms, eight are Singapore-based, five are in Japan, two each in the USA, Spain, United Kingdom, and one each from Italy, Qatar, Australia, France, Switzerland, UAE, China, Bermuda, Hong Kong, Malaysia and Bangladesh.

The Singapore-based firms are Gazprom Marketing & Trading Singapore Pte Ltd, Diamond Gas International Pte Ltd, Chevron USA Inc (Singapore Branch), Trafigura Pte Ltd, Gunvor Singapore Pte, Vitol Asia Pte Ltd, GAIL Global Singapore Pte Ltd and Cheniere Marketing International LLP.
The Japanese firms are ITOCHU Corporation, Osaka Gas Co Ltd, Mitsui & Co Ltd, Jera Co Inc, and Marubeni Corporation.

Excelerate Energy Ltd Partnership and Exxon Mobil LNG Market Development Inc from the USA, Total Gas & Power Ltd and EDF Trading Ltd from the United Kingdom, BERRDROLA and GAS Natural Aprovisionamientos SDG SA (GNA) from Spain were also selected for the LNG supply.

Other firms are ENGIE of France, Eni S.p.A. of Italy, RasGas of Qatar, CNOOC (China National Offshore Oil Corporation) Gas and Power Trading & Marketing Ltd of China, Shell International Trading Middle East Limited (SITME) of UAE, Woodside Petroleum Ltd of Australia, Nobel Group Ltd of Hong Kong, Golar LNG Ltd of Bermuda, AOT Trading AC of Switzerland, Petronas LNG Ltd of Malaysia and Summit Corporation Ltd & Summit oil & Shipping Co Ltd of Bangladesh would also be able to supply spot LNG to Petrobangla.

The country's first LNG import terminal, a 3.75 million tonnes per year floating storage re-gasification unit (FSRU) being developed by US-based Excelerate Energy, is expected to be commissioned in April 2018; and its second, also with a capacity of 3.75 million tonnes per year, is being developed by Summit Group and is expected to be commissioned by end-2018.
Both the FSRUs will be located in
Moheshkhali Island, and ownership of the vessels will be transferred to Petrobangla after 15 years of operations.

Separately, Bangladesh has also planned to build three small FRSUs each having a capacity of up to 200 million cubic feet per day (mmcfd) in three separate locations by August, 2018.
Petrobangla is also planning to set up two onshore LNG terminals, each with a capacity of 7.5 million tonnes per year by 2025.

The government has adopted a policy to import LNG through both long-term contracts and spot deals to ensure competitive prices, said a senior official of the Ministry of Power, Energy and Mineral Resources.

The volume to be supplied under spot deals and long-term contracts has yet to be decided.

To facilitate long-term imports, Petrobangla signed the first-ever sales and purchase agreement (SPA) with Qatar's RasGas on September 25 to import 2.5 million tonnes per year of lean LNG for 15 years.

The purchase price has been set at around 12.65 per cent of the three-month average Brent crude prices plus 50 cents per unit (Mcf).

At current levels the LNG price would be around $6.50 per unit (1,000 cubic feet), he added, almost three times the weighted average price ($2.19 per Mcf) of natural gas price in Bangladesh.

Bangladesh is eyeing to sign more SPAs soon as the country is in negotiations with four other potential LNG suppliers. Necessary MOUs with the suppliers have already been signed in this regard.

Gunvor Singapore Pte Ltd was the latest to sign MOU with Bangladesh or Petrobangla on September 19 last, making the signing of such deals to five.

It inked MOU with Switzerland-based AOT Energy on June 13, Oman in early September and Indonesia on September 15.

The country is currently grappling with an acute natural gas shortage, with output of around 2,700 mmcfd against demand for over 3,300 mmcfd, according to Petrobangla.

Bangladesh started facing natural gas crisis from 2009 with the rapid industrialisation forcing Petrobangla to ration natural gas supplies to gas-guzzling industries, power plants, CNG (compressed natural gas) filling stations and households.

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