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Bangladesh will initiate importing LNG, or liquefied natural gas, from the spot market from next month to reap the benefits of low price of fossil fuel in the international market.
"Initially, we shall import one cargo carrying 138,000 cubic metres of lean LNG," managing director of state-run Rupantarita Prakritik Gas Company Ltd, or RPGCL, Md Kamruzzaman told the FE on Tuesday.
He said selected 14 global firms will be urged to supply one 138,000 cubic metres lean LNG cargo from the spot market in September.
"As this will be our first import of LNG from the spot market, we are careful with all relevant procedures and pricing," he added.
The government earlier constituted several committees to ensure smooth start of the LNG import from the spot market.
To look after LNG import issues, RPGCL, the state-run entity, had earlier signed the master sale and purchase agreements, or MSPAs, with 14 firms separately in an effort to take advantage of low prices of fuel in the spot market and meet the country's growing demand.
The firms with whom the MSPAs have been signed include Mitsui & Co Ltd, Marubeni Corporation, Osaka Gas Co Ltd, and Jera Co Inc. of Japan; Cheniere Marketing International LLP, Vitol Asia Pte Ltd, Trafigura Pte Ltd, and Diamond gas International Pte Ltd of Singapore; Excelerate Energy Ltd Partnership of USA, Woodside Petroleum Ltd of Australia, Eni S.p.A of Italy, AOT Trading AG of Switzerland, Petronas LNG Ltd of Malaysia, and the joint venture of Summit Corporation Ltd & Summit Oil & Shipping Co Ltd of Bangladesh.
Spot LNG prices have plunged to historic low this year on the back of lower demand due to milder-than-usual winter coupled with the Covid-19 outbreak and increased supply from the US and Australia.
Purchasing LNG from the spot market will help diversify LNG sourcing as well, Mr Kamruzzaman said.
Currently, Bangladesh has been importing lean LNG under long-term deals from Qatar's RasGas, which has recently merged with Qatargas and has been renamed Qatargas, and the Oman Trading International, or OTI, of Oman.
The country started regular imports of LNG on September 9, 2018.
Spot LNG providers will supply fuel to the country's LNG-receiving terminals as per instructions to be given from time to time, depending on the demand.
RPGCL would initially place proposals to these firms, specifying the quantity of spot LNG, for supplying to LNG terminals.
Imported spot LNG would require to be blended with locally produced natural gas, which is sulphur-free and sweet gas, before it is delivered to end-users.
As a result, imported LNG's sulphur content would be low.
Imported spot LNG should have a gross heating value ranging between 1,025 and 1,100 Btu per standard cubic feet.
Spot LNG should be supplied on a delivered ex-ship basis and vessel size should range between 125,000 and 220,000 cubic metres.
RPGCL will procure spot LNG based on market prices, terminal availability, increased re-gasification capacity and downstream demand.
Currently, two FSRUs, owned by US-based Excelerate Energy and local Summit Group, are re-gasifying around 600 million cubic feet per day, or mmcfd, of LNG.
The two FSRUs have the capacity to re-gasify around 500 mmcfd of LNG each.
Bangladesh imports around five to six cargoes from term suppliers Qatargas and OTI every month to meet mounting demand for natural gas.