The state-run Petrobangla has planned to import around one-fourth of the country's total LNG requirement from the spot LNG market to keep open the option of sourcing the fuel from diverse sources.
The remaining volume of liquefied natural gas (LNG) would be procured from long-term suppliers, a senior official of the state-run agency told the FE on Monday.
Petrobangla has already initiated deals with a total of 15 global suppliers to import LNG from the spot market.
The companies include Mitsui, ENI, Total, AOT Energy, Woodside Petroleum Ltd., Chevron Corp, Gunvor and local Summit Group, said the official.
Spot market is a market in which commodity is bought or sold for immediate delivery or delivery in the very near future.
Spot market for the LNG was developed recently with the gluts of LNG output alongside the growth of emerging markets for LNG.
Currently, Bangladesh has been importing LNG from two long-term suppliers -- Qatar's RasGas and Oman's Oman Trading International (OTI) -- to re-gasify LNG in the lone operational 3.75 million tonne per annum (Mtpa) FSRU owned by the US-based Excelerate Energy at Moheshkhali islanad in the Bay of Bengal.
The country's second FSRU is expected to come online by April 2019.
Early last year, the state-run Rupantarita Prakritik Gas Company Ltd. (RPGCL), a wholly owned subsidiary of Petrobangla, had selected 30 global firms and their consortia to purchase LNG on spot basis following a competitive tender.
Officials said the global firms would provide LNG to the country's LNG-receiving terminals from the spot market after getting order from Petrobangla from time to time, based on the demand.
The RPGCL would initially make proposal to the selected firms specifying the quantity of spot LNG for supplying to the LNG terminals.
It would also seek to purchase LNG from the selected firms under the deals.
The imported spot LNG should have a gross heating value ranging 1,025-1,100 Btu per standard cubic feet (scf).
This spot LNG would require to be blended with locally produced natural gas, which is sulfur-free and sweet gas, before it is delivered to the end-user. As a result, the sulfur content in the imported LNG could be low.
The selected firms would have to supply LNG on a delivered ex-ship basis and the vessel size should range between 125,000 cubic metres and 220,000 cubic metres.
The RPGCL will procure spot LNG based on market prices, terminal availability, increased re-gasification capacity and downstream demand.
Petrobangla has so far imported LNG through 15 regular cargoes and one commissioning cargo as of January 29, 2019.
Apart from Qatar's RasGas and Oman's OTI, Petrobangla also has a letter of intent (LOI) agreement with Indonesia's Petramina to import around 1.0 Mtpa annually for 10 years.
The country's natural gas production is hovering at around 2,750 million cubic feet per day (mmcfd) against the demand of nearly 4,000 mmcfd, according to Petrobangla.
LNG imports have helped bridged that gap.
Despite numerous logistical and commercial challenges, Bangladesh is set to become a key LNG importer in the coming years, supported by growing consumption, dwindling domestic reserves and a healthy pipeline of LNG import and gas distribution projects.
The country's LNG demand is expected to exceed 8.0 Mtpa by 2023.
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