Bangladesh escalates efforts to slash spot LNG imports as energy bills soar

With Asian LNG prices trading over $35/MMBtu, Bangladesh has imposed more austerity steps to curb consumption of natural gas and to reduce its reliance on the LNG spot market, in a bid to stem the sharp hike in its energy import bill amid the ongoing Russia-Ukraine war.

"We have not yet decided how many cargoes we will cut, but will surely slash the import of LNG from the spot market as much as possible," Petrobangla Chairman Md Nazmul Ahsan told S&P Global Commodity Insights June 20, adding that a decision will be made after assessing latest LNG consumption patterns.

Amid soaring LNG prices, Petrobangla's monthly losses from LNG imports have mounted to around Taka 25 billion ($268.87 million) in May from Taka 15 billion/month before the Russia-Ukraine war, the senior Petrobangla official said.

Bangladesh awarded its latest spot LNG tender for June 22-23 delivery at the Moheshkhali floating, storage and regasification unit at $24.75/MMBtu to Gunvor Singapore Pte Ltd. for a 138,000 cu m cargo.

The country has not yet purchased a single cargo from the spot market for July delivery.

Bangladesh's overall natural gas supply now hovers around 3.1 Bcf/d, with re-gasified LNG at around 800,000 Mcf/d, against a total demand of over 4.1 Bcf/d, according to Petrobangla.

The country imports five to six cargoes every month from two long-term LNG suppliers, Qatargas and Oman Trading International or OQ Trading, which currently cost around $14/MMBtu.

Steps to conserve energy

Bangladesh has announced all shops and and shopping malls will shut after 8 pm local time from June 20 as part of its latest austerity steps.

However the country's kitchen markets, transport services, emergency service providers and restaurants will stay open beyond that time, a senior official at the labor and employment ministry said.

Bangladesh in April imposed a daily four-hour gas rationing rule on industrial clients for about 10 days after Chevron shut six producing gas wells April 3 due to a technical fault, which was later rectified.

A six-hour gas rationing rule for compressed natural gas filling stations from 5-11 pm daily remains in place.

Bangladesh is not the only Asian country grappling with an acute energy crisis. Pakistan has taken similar measures to curtail commercial activity. Sri Lanka is also dealing with a dire fuel shortage, with the government there declaring June 17 a holiday for public offices and schools to curtail vehicular movement as part of its latest move.