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Bangladesh cancels Nov LNG tender, likely to cancel Dec on high prices offered


Nov offers from Vitol, AOT rejected

Prices offered too close to long-term contract price

  • Author
  • Azizur Rehman
  • Editor
  • Jonathan Dart
  • Commodity
  • Natural Gas Oil Shipping

Dhaka — Bangladesh has cancelled a tender to import LNG from the spot market in November because of too high spot prices, and a December tender is also likely to be cancelled for the same reason, a senior Petrobangla official told S&P Global Platts Oct. 23.

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Price quotes submitted by two bidders, Vitol Asia and Switzerland-based AOT Trading, to supply the November LNG cargo were too high, and almost the same as long-term contract prices with Qatargas and Oman Trading International, he said.

The South Asian country may also cancel the early December tender for a similar cargo as the sole bidder, Vitol Asia's, offer was also too high at the close of the bid submission deadline on Oct. 22, the official said.

He said the spot LNG price for early December delivery offered by Vitol was higher than long-term contracts with Qatargas and OTI.

State-run Rupantarita Prakritik Gas Company Ltd, the state-run entity that oversees LNG imports, had invited 14 pre-selected global LNG suppliers to quote for both tenders. It still plans to invite bids for a late December cargo.

Bangladesh initiated LNG imports from the spot market in late September to take advantage of low prices and meet growing domestic demand as well as to diversify LNG sourcing beyond term contracts, RPGCL managing director Mohammad Kamruzzaman said previously.

Vitol Asia delivered the first and the only spot LNG cargo so far on September 25. The re-gasified LNG was fed into the national gas grid and Bangladesh expected to save around Taka 300 million ($3.52 million) by diversifying into the spot market.

Vitol had offered the best bid at $3.8321/MMBtu for the first LNG cargo out of a total of four bids.

The 14 suppliers allowed to bid for Bangladesh's spot tenders are: Mitsui, Marubeni, Osaka Gas, Jera, Cheniere Marketing International, Vitol Asia, Trafigura, Diamond Gas International, Excelerate Energy, Woodside Petroleum, Eni, AOT Trading, Petronas, and the joint venture of Summit Corp and Summit Oil & Shipping of Bangladesh.

Currently, the country's LNG import price under long-term contracts with Qatargas and Oman Trading International, ranges around $5.50-$6.00/MMBtu, an RPGCL official said.

Bangladesh has a 15-year contract with Qatargas to import around 2.5 million mt/year of LNG, at a 12.65% slope of the three-month average Brent price plus a 50-cent constant. Its contract with OTI is for 10 years at an 11.9% Brent slope plus 40 cents.

It has two operational floating, storage regasification units with a capacity of around 500 MMcf/day equivalent in LNG.

Excelerate Energy started supplying its FSRU in August 2018, while Summit started supplies in April 2019. State-run Petrobangla was operating the FSRUs at about half their capacity before pipelines were expanded to increase their capacity.