The government has reversed its decision to discard import of expensive LNG from spot market within a month following a surge in demand for the fuel in industries and power plants.
The Energy and Mineral Resources Division (EMRD) under the Ministry of Power, Energy and Mineral Resources (MPEMR) had already instructed the state-run Petrobangla to take necessary action to resume the import of LNG or liquefied natural gas from open market this month, a senior energy official told the FE Sunday.
The Petrobangla had stopped importing LNG from spot market in the first week of August following an instruction from the EMRD in view of price rises on the open market.
The EMRD had decided not to import the expensive gas from spot market because of the price volatility on the international market after importing over a dozen cargoes until August.
The state-owned Rupantarita Prakritik Gas Company Ltd (RPGCL), a fully owned subsidiary of Petrobangla, also had stopped floating tender subsequently, thus ceasing open LNG import.
Before the temporary pause in procurement from spot market, Switzerland's AOT Trading AG had supplied the last spot LNG cargo to Bangladesh for August supply at US$13.069 per million British thermal unit (MMBTU) -- around 50-percent higher than the then LNG prices under term deals of around US$8.5-US$9.0 per MMBTU.
Asian spot prices of LNG were, however, hovering around their highest seasonal level on record as European buyers competed with the East for limited world supply.
The average LNG price for October deliveries into Northeast Asia was estimated at about $20.10 per MMBTU, industry-insiders said.
Sources said LNG re-gasification through FSRUs (floating, storage, re-gasification units) dropped 29.41 per cent to around 600 million cubic feet per day (mmcfd) from around 850 mmcfd following the halt.
"The short supply of LNG coupled with depletion of natural gas output from local gas fields resulted in an acute natural gas crisis across the country, especially in industries, power plants and households over the past one and a half months," says a firsthand account of the crunch.
Meanwhile, CNG pumps in the country remain closed from 6pm to 10 pm daily from Sunday by government order, in order to make do with the limited supply of the gas that is far outstripped by a burgeoning demand.
Natural gas crisis across the country over the past one month was due to lower supply of LNG, managing director of Titas Gas Transmission and Distribution Company Ltd (TGTDCL) Ali Iqbal Md Nurullah told the FE Sunday.
Gas consumption above the approved load by some industries also aggravated gas crisis, he said.
"Industrial output at our factories is being hampered badly due to lower-than-expected gas supply coupled with lower gas pressure," President of Bangladesh Textile Mills Association (BTMA) Mohammad Ali Khokon told the FE Sunday.
He, however, refuted the TGTDCL allegation of taking gas delivery more than the approved load.
"If there is lack of natural gas with lower-than-required pressure, how an industrial unit can take natural gas above the approved load," he wondered.
Currently, the country imports LNG under long-term deals from two state-run global suppliers -- Qatar's Qatargas and Oman's Oman Trading International (OTI).
Petrobangla inked LNG sales and purchase agreements (SPAs) with them following G2G negotiations.
Petrobangla started regular import of LNG in September 9, 2018 -- in the wake of natural gas crunch, which is attributed to a prolonged slow pace in exploration of the hydrocarbons in the country's potential fields.
The RPGCL had floated tenders since August 2020 to purchase LNG from the spot market under the then government plan to meet around one-fourth of the total country demand for LNG from open market.
State-run Petrobangla had started importing LNG from spot market in September 2020.
The state corporation has been importing a total of 64 LNG cargoes in 2021 from term suppliers, two cargoes or 3.0 percent shorter from the previous year's tally.
As per the plan, the state entity imports 40 cargoes from Qatargas and 24 from OTI in 2021.
It bought in 43 cargoes from Qatargas in 2019 and 40 in 2020, while 20 cargoes from OTI in 2019 and 26 in 2020.
Initially, Petrobangla had plans to import 18 LNG cargoes from spot market in 2021 against only one cargo in 2020.
But, after the halt in import over the past one and a half months, the spot imports might be little less than the initial plan, said sources.