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Govt to appoint 30 cos to source spot LNG

FE Report | February 10, 2018 00:00:00

The government will sign LNG import deals with 30 global suppliers to source the 'expensive' fuel from spot market.

State-run Rupantarita Prakritik Gas Company Ltd (RPGCL) has already prepared a draft of master sales agreement (MSA) to purchase lean liquefied natural gas (LNG) from the suppliers, said RPGCL managing director Md Quamruzzaman.

The draft of the MSA would be sent to all the 30 LNG suppliers soon to facilitate the deals, he said. He, however, did not disclose the quantity of LNG to be imported from the spot market.

The RPGCL, a wholly-owned subsidiary of Petrobangla, earlier had selected the firms from US, UK, France, Qatar, Australia, Italy, Spain, Switzerland, Japan, Singapore, Hong Kong, Malaysia, Bermuda, Malaysia and their consortia to purchase LNG on spot basis, following a competitive tender.

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.

The firms would provide LNG to the country's LNG receiving terminals from the spot market after getting order from state-run Petrobangla time to time, based on demand, said the RPGCL official.

The RPGCL would initially make proposal to the firms specifying the quantity of spot LNG for supplying to the LNG terminals. It would seek to purchase LNG under the MSA with each of the firms, said the RPGCL official.

The spot LNG should have a gross heating value of 1,025-1,100 Btu per standard cubic feet (scf). The 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-users. The imported LNG's sulfur content could be low as a result.

The selected firms would have to supply LNG on a delivered ex-ship basis and the vessel size should range between 125,000 cu m and 220,000 cubic metre (cu m).

The RPGCL will procure spot LNG based on market prices, terminal availability, increased re-gasification capacity and downstream demand.

Bangladesh has decided to purchase LNG from diverse sources, which include both term and spot suppliers, located in different countries across the globe to ensure its availability during requirement.

The country's total LNG import quantity in pipeline under term deal has already reached to around 5.75 million tonne, including the sales and purchase agreement (SPA) with Qatar's RasGas to import 2.5 million tonne of LNG.

The country is expecting its first LNG cargo in April 2018.

Bangladesh will start receiving LNG in floating terminals and its first LNG import terminal, a 3.75 million tonnes per year FSRU (floating, storage, re-gasification unit) being developed by US-based Excelerate Energy, is expected to be commissioned in April and its second, also with a capacity of 3.75 million tonne per year, being developed by Summit Group, is expected to be commissioned by October.

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