LNG supply: Local firms can tie up with int’l spot market suppliers

Local companies now have the opportunity to collaborate with prospective international spot suppliers through joint ventures to ensure a steady supply of LNG to Petrobangla, fostering greater energy security and market participation.

This change has been made this time in the tender floated by the Rupantarita Prakritik Gas Company Limited (RPGCL), the procuring agency and a subsidiary of the state procuring entity Bangladesh Oil, Gas and Mineral Corporation (Petrobangla).

“We have brought this change to create a business opportunity for the local firms,” Engr Md Rafiqul Islam, managing director of the RPGCL, told UNB.

Last time, he said, 43 international LNG suppliers submitted their Expression of Interest (EoI) and finally 22 companies got the chance to get into the short list of suppliers.

Sources, however, said, though 22 international companies were named in the RPGCL short list, only 3 to 4 companies, who allegedly shared business interests with the ousted Awami League regime, got the chance by rotation to supply LNG from international spot markets to the Petrobangla.

“We hope this time many more international LNG suppliers will show interest to supply LNG from the spot market,” he added.

As part of the move to make a fresh short list of international spot market LNG supply companies, the RPGCL floated an open tender on 10 November seeking EoI from aspirant suppliers. As per the tender notice, the aspirant LNG suppliers have to submit the EoIs by 12:30pm on 1 December 2024.

Bangladesh has been importing liquefied natural gas (LNG) from the international spot market since 2019 to meet its growing gas demands.

During the last regime of Awami League, initially, 17 companies were listed on the basis of the Speedy Increase of Power and Energy Supply Act 2010 and then 5 more companies were added to the list.

Through these companies, Petrobangla has been importing the LNG from the international spot market. But every time, it was seen that time and again a select group of companies were getting contracts and dominating the business.

These companies include Vitol Asia of Singapore, TotalEnergies of Switzerland, Excelerate Energy of the USA, and Gunvor Singapore.

Of these, there are allegations that some shared business interests with former ministers and state ministers of the fallen Awami League government and also some local business groups.

After the fall of the Awami League government, when the interim government assumed office, it decided to suspend the Speedy Increase of Power and Energy Supply Act 2010 and instead import the LNG from the spot market under the Public Procurement Rule 2008.

It also decided to scrap the list of the companies soon to bring transparency in the bulk import of LNG as the government has to spend more than a billion dollars to import the LNG.

As part of the procurement policy overhaul, finally the Petrobangla has moved to prepare a fresh list of the interested companies through an open and transparent process.

"We have decided once the new list of the companies is prepared, we will cancel the previous list of the 23 companies", said Zanendra Nath Sarker, the Petrobangla chairman.

Energy industry insiders said that the new move will encourage more reputed international companies to supply LNG to Bangladesh from the international spot market.

"This will also facilitate getting LNG at a much lower rate which will ultimately reduce the energy cost of the government", said an energy expert wishing anonymity.

Bangladesh has been experiencing a huge gas crisis as it produces 3,100 MMCFD of natural gas per day against a demand of about 4,000 MMCFD.

Of the total production of 3,100 MMCFD, some 1,100 MMCFD gas is being imported from abroad of which 150-200 MMCFD gas is imported from the spot market while remaining is imported from Qatar and Oman under long term contract.

Petrobangla planned to import a total of 115 cargoes of LNG on a short and long term basis to meet the local gas demand.