Bangladesh may strike its fourth long-term LNG import deal this week in a desperate move to ramp up import reliance in order to meet the future energy security.
The state-run Petrobangla has finalised talks with OQ Trading, formerly known as Oman Trading International (OTI), to ink a sales-and-purchase agreement (SPA), a senior Petrobangla official said on Saturday.
The SPA might be inked on Monday, he told the FE.
It will be Petrobangla's second SPA with OQ as the agency focuses mainly on the delivery of LNG cargoes, not merely on the volume, according to the official.
Presently, Petrobangla has three SPAs - one with Qatargas, another with OTI, now OQ, and the third and latest one with QatarEnergy.
With this ensuing deal, Bangladesh's total LNG volume from long-term suppliers will rise to around 5.0-million tonnes per annum (MTPA) in 2026 from existing 3.50 MTPA, said the official seeking anonymity.
Sources said Petrobangla struggles to make payments to global LNG suppliers - both long-term and spot sellers - against purchases due to a brewing currency crisis.
Overdue payments now climb to nearly $220 million.
The government's overdue payments to energy-providers and power-plant owners, both local and foreign, have ballooned over $2.76 billion by now, they added.
Last week, the local Summit Oil and Shipping Co Ltd won a contract to build the country's third floating, storage and regasification unit (FSRU) at Moheshkhali to regasify imported LNG.
According to Petrobangla sources, Bangladesh is set to start importing LNG from OQ under the proposed SPA from 2026 and continue for 15 years until 2040.
OQ will supply four LNG cargoes in 2026, 12 cargoes in 2027 and 16 cargoes from 2028 onwards until the SPA expires, said the official.
The total volume of LNG from OQ under the second SPA will be up to 1.50 MTPA, he added.
The official, however, did not say anything over the pricing, saying: "It's confidential."
Petrobangla chairman Zanendra Nath Sarker said years ago the then OTI offered to double its LNG supply to stand at 2.0 MTPA annually from existing 1.0 MTPA.
"We were trying to decrease the LNG price from existing contract. OQ then agreed to decrease it by 5-10 cents from the constant portion of the pricing formula, but we wanted further price cut."
The negotiations later faltered without any headway, added Mr Sarker, who was then in a key position in energy ministry and looked into LNG issues.
Under existing SPA with OQ, Petrobangla has been importing up to 1.5 MTPA for 10 years until 2029.
Bangladesh buys LNG at 11.9 per cent of the three-month average of Brent crude oil prices plus $0.40 cents per million British thermal unit (MMBtu), and the payments are to make within 25 days of delivery.
Petrobangla has the option to increase LNG import to 1.5 MTPA or lower it to 0.9 MTPA without having to pay any penalty.
The first SPA with OQ was inked on 06 May 2018 and the Omani supplier delivered first LNG cargo at the Moheshkhali FSRU on 31 January 2019, reads official data of Rupantarita Prakritik Gas Company Ltd (RPGCL).
The RPGCL, a wholly-owned subsidiary of Petrobangla, looks after LNG trade in Bangladesh.
According to the annual delivery programme (ADP), OQ will supply a total of 16 LNG cargoes in 2023.
Despite delayed payments to LNG suppliers, Bangladesh is now desperate to ensure LNG supplies to meet future demand in industries, power plants and other gas-guzzling clients, said sources.
The third long-term deal came five years after the second deal when it inked a SPA to import up to 1.80 MTPA from QatarEnergy for 15 years from 2026.
A senior RPGCL official said Bangladesh would purchase LNG from QatarEnergy at 13.20 per cent of three-month's average Brent crude price.
Unlike past SPAs, no extra amount apart from the Brent crude-linked price will be payable to QatarEnergy by Petrobangla under the new SPA, he added.
Petrobangla inked its first-ever SPA with Qatar's RasGas, later renamed Qatargas, on 25 September 2017 to buy up to 2.5 MTPA of lean LNG over 15 years.
In the first five years, QatarGas will supply annually around 1.8 MTPA, which will be increased up to 2.5 MTPA in next 10 years, according to the deal.
The purchase price has been set at 12.65 per cent of the three-month average price of Brent crude oil plus $0.50 constant/MMBtu, and the payments are to make within 15 days of delivery.
If Petrobangla has more demand during the first five years, it can increase the import volume annually to 2.5 MTPA.
In the next 10 years, Petrobangla has the option to reduce the amount by 10 per cent every year.
If Bangladesh takes less than the base amount of LNG, in any year, it will have to pay the price on a take-or-pay basis.
azizjst@yahoo.com
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