Gunvor, TotalEnergies ask Petrobangla to clear delayed spot LNG cargo payments

France's TotalEnergies and Gunvor Singapore issued notices to Bangladesh's national oil company Petrobangla earlier in July to clear about $113 million in outstanding payments for spot LNG cargoes or forfeit monetary guarantees with the state bank, according to senior Petrobangla officials and documents seen by S&P Global Commodity Insights.

The warnings prompted Petrobangla to ask the Ministry of Power, Energy and Mineral Resources to intervene and ensure that the state banks disburse dollars to avoid overdue interest on the outstanding amounts, the officials said.

While Petrobangla had sufficient money in the company's bank account, final invoices for three cargoes could not be paid on time by the bank due to a dollar shortage, they added.

Petrobangla owed TotalEnergies around $84.5 million for two LNG cargoes, out of which one payment was due in end-June and a second in early July, while it owed Gunvor about $28.5 million that was due in early July 11, the documents showed.

TotalEnergies' two unpaid spot LNG cargoes were delivered to Moheshkhali floating storage and regasification unit in the May 16-17 and May 25-26 delivery windows at a price of $13.33/MMBtu and $13.28/MMBtu respectively, and Gunvor's unpaid spot LNG cargo was delivered in the June 8-9 window at about $12.47/MMBtu to Moheshkhali FSRU, the officials said.

They said, according to a master sales agreements signed with the spot LNG suppliers, Petrobangla is obligated to make payments within 15 days of delivery.

TotalEnergies and Gunvor Singapore sought full clearance of pending invoices within three working days in the week ended July 14, otherwise they would be forced to adjust the dues from guarantees under the standby letter of credit, or SBLC, kept by Petrobangla with state-run Agrani Bank Ltd. against LNG trading with the suppliers, the officials said.

Additionally, unpaid amounts would incur interest at the prevailing LIBOR rate plus/minus 5% that will be compounded quarterly, and which is now called secured overnight financing rate, or SOFR, the officials added.

Besides deducting dues from the bank guarantee, Gunvor Singapore also warned that if Petrobangla doesn't pay in the three-day window, it would not participate in Bangladesh's spot LNG tenders and suspend the confirmation notice for supplying two LNG cargoes for July and August deliveries under a recent tender, the documents showed.

The two LNG cargoes were awarded to Gunvor Singapore for July 12-13 delivery and August 22-23 delivery at a price of $12.98/MMBtu and $13.85/MMBtu respectively at Moheshkhali FSRU, according to previous tender results.

Emergency payments

Following the notices, Petrobangla held an emergency meeting with ministry officials leading to a partial payment being released to Gunvor to maintain spot LNG supply, along with assurances that other payments would be cleared soon, the officials said.

Petrobangla's chairman was not available for comment on the matter. Gunvor declined to comment and TotalEnergies did not immediately respond to queries. The officials did not specify whether any partial or full payments were issued to TotalEnergies.

However, both Gunvor and TotalEnergies did not bid in recent spot tenders issued by Petrobangla. Excelerate Energy and Vitol Asia were the lone bidders in Petrobangla's tender for two spot LNG cargoes to be delivered over Aug. 7-8 and Aug. 25-26.

The official said so far Gunvor had delivered its scheduled July 12-13 delivery spot cargo to Moheshkhali, and the trader was scheduled to deliver another spot cargo over Aug. 22-23.

In its communication with ministry officials Petrobangla had stated that if the unpaid amounts were not cleared and adjusted against the SBLC guarantee, the issue "will be known inside and outside the country" which will result in financial losses, suppliers will lose interest in tenders, energy supply will be disrupted, and banks will be unwilling to issue SBLCs in favor of Petrobangla.

Meanwhile, Petrobangla's payments to other spot and term suppliers have also been delayed, the officials said.

In early June, S&P Global reported payment delays by Petrobangla to its two long-term LNG suppliers Qatargas and OQ Trading and some spot LNG suppliers. In May, refined product suppliers had warned they would stop supplies after state-run Bangladesh Petroleum struggled to clear pending dues amid a sharp currency devaluation.