Bangladesh has reversed its decision to skirt the expensive spot LNG market following a surge in demand for natural gas in industries and power plants, and signs of energy shortages that are forcing its importers to procure gas at record high prices. The South Asian country’s response underscored the dilemma of some of Asia’s regional economies that have shifted part of their energy mix towards natural gas in recent years but are feeling the pinch of high prices for a fuel that has never really been truly competitive. State-owned Rupantarita Prakritik Gas Co. Ltd. (RPGCL), a fully owned subsidiary of Petrobangla, floated a tender to purchase one spot LNG cargo of around 138,000 cu m last week, for September delivery, and Bangladesh is considering two spot LNG cargoes. Petrobangla had halted spot LNG imports in the first week of August following instructions from the EMRD in view of rising spot prices that were trading around $15/MMBtu at the time. Bangladesh’s last spot LNG cargo for August was bought at $13.069/MMBtu, while term cargoes were at around $9.0/MMBtu.
Industrial output has been squeezed, gas-guzzling power plants have limited generation and household consumers are feeling the pinch of the natural gas supply crisis. Around 2,157 MW of electricity generation was hampered on Sept. 19 due to gas shortages. Bangladesh has long-term LNG supply deals with Qatar’s Qatargas and Oman’s Oman Trading International (OTI), and Petrobangla also started importing spot LNG from September 2020. The country expects to import around 64 LNG cargoes in 2021 from term suppliers, two cargoes or 3% lesser than the previous year, out of which 40 cargoes are expected from Qatargas and 24 from OTI. In comparison, it bought 43 LNG cargoes from Qatargas in 2019 and 40 in 2020, and 20 cargoes from OTI in 2019 and 26 in 2020. Initially, Petrobangla had plans to import 18 LNG cargoes from the spot market in 2021 against only one cargo in 2020 but actual volumes could be lower this year.