The Financial Express

14 firms to supply LNG from spot market

M AZIZUR RAHMAN | Published: March 28, 2020 09:31:18 | Updated: March 29, 2020 19:16:08

Picture used for illustrative purpose only Picture used for illustrative purpose only

Fourteen global firms will supply liquefied natural gas (LNG) to Bangladesh from the international spot market, as the government entered into final deals with them to import the fuel.

The state-run Rupantarita Prakritik Gas Company Ltd. (RPGCL) has signed the master sale and purchase agreement, or MSPA, with them separately in efforts to take advantage of low prices of the fuel in the spot market and meet the country's growing demand.

Spot LNG prices have plunged to historic lows 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.

JKM, the benchmark for spot LNG prices in North Asia, was assessed at US$ 3.513 per million British Thermal Unit, or MMBtu, on Friday, according to market sources.

Although spot LNG prices are up by nearly 30 per cent from the all-time low of $ 2.713 per MMBtu on February 14, LNG prices are still languishing below historic levels and forms an attractive proposition for buyers, they said.

Purchasing LNG from the spot market will help diversify the LNG sourcing as well, RPGCL managing director Md Kamruzzaman told the FE.

Several committees have been constituted and they are now working to ensure smooth start of LNG import from the spot market, he said.

The firms with whom the MPSAs 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.

Currently, Bangladesh has been importing lean LNG under long-term deals from Qatar's RasGas, which has recently merged with Qatargas and is renamed Qatargas, and the Oman Trading International, or OTI, of Oman.

The country started regular imports of LNG on September 9, 2018.

The spot LNG providers will supply the fuel to the country's LNG-receiving terminals as per instructions to be given from time to time, depending on the demand.

The RPGCL would initially place proposals to these firms, specifying the quantity of spot LNG, for supplying to the LNG terminals.

The imported spot LNG would require to be blended with locally produced natural gas, which is sulfur-free and sweet gas, before it is delivered to end-users.

As a result, the imported LNG's sulfur content would be low.

The 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 the vessel size should range between 125,000 and 220,000 cubic metres.

The 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.

Both the FSRUs have the capacity to re-gasify around 500 mmcfd of LNG each.


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