Qatargas and Oman Trading International, the two contracted long-term LNG suppliers to Bangladesh, will reduce LNG deliveries to the South Asian country in 2022 to the minimum contractual level under existing term agreements, according to a senior official at state-run Petrobangla official.
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Register NowThe reduction in volumes could cause supply shortages next year if local gas output does not increase or the government does not find alternative sources on time, which will be tricky if the spot market environment remains tight and prices stay high.
While Petrobangla had requested Qatargas and Oman Trading International, now known as OQ, for more volumes for 2022, the suppliers have committed to provide a total of 54 LNG cargoes in 2022, which is 15.62%, or 10 cargoes fewer than the 64 cargoes that will be delivered in 2021, the official told S&P Global Platts.
Out of this, Qatargas is likely to supply 36 LNG cargoes in 2022, from 40 cargoes in 2021, and Oman will supply 18 LNG cargoes in 2022, from 24 LNG cargoes in the current calendar year, the official said.
OQ and Qatargas did not immediately respond to queries.
The LNG deliveries for 2022 are around the minimum quantity the two suppliers are bound to supply to Bangladesh under their sales and purchase agreements with Petrobangla.
While there are no contractual violations, the flexibility to adjust volumes outside contracts may have disappeared due to high prices and tight supplies, a senior official at state-owned Rupantarita Prakritik Gas Company Ltd, or RPGCL said. RPGCL, a wholly owned subsidiary of Petrobangla, deals with LNG imports from global suppliers.
Bangladesh does not have any plan to import spot LNG in 2022 although it imported a total of 16 spot LNG cargoes in 2021. It has, however, initiated a move to sign more long-term deals to ensure stable supply.
Petrobangla has started talks with local Summit Group to import LNG under long-term deals, and plans to start negotiations with UAE's Emirates National Oil Company, or ENOC, soon, a senior energy ministry official said.
Both companies, alongside half a dozen more, had earlier proposed to supply LNG under long-term deals. US-based Excelerate Energy and Switzerland's AOT Energy AG have also shown interest in signing long-term deals with Petrobangla.
OQ had offered last year to double its LNG supply to Petrobangla to 2.0 million mt/year from its existing 1.0 million mt/year under similar terms, but Petrobangla has not responded to the proposal yet, while Qatargas is yet to place any proposal to expand its contracts, the official said.