Petrobangla to sign 15-yr contract with Oman for import of LNG

Petrobnagla is expected to sign a contract with Oman for importing liquefied natural gas (LNG) on a long-term basis on June 19.

"We are set to sign the second Sale and Purchase Agreement (SPA) with Oman on June 19 for importing liquefied natural gas (LNG) from 2026 for the next 15 years," a senior official of the Energy Division told the Daily Observer on Wednesday.

According to him, under the new agreement, Petrobangla would be able to import an additional 0.5 million to 1.5 million tonnes of LNG from Oman per year for the next 15 years.

Importing the additional LNG, however, would completely depend on the country's purchase capacity and gas affordability, both highly impacted now.

Zanendra Nath Sarker, Chairman at Petrobangla, told media that Oman agreed to supply 0.5mpta to 1.5mpta LNG to Bangladesh from 2026. "It could be like four cargoes in 2026 and then 12 and 16 cargoes in the following years," he said.
     
"We have already signed a deal with Qatar and will sign another with Oman, which will boost the gas supply. We will see the result after three years."

Presently, Bangladesh has two long-term LNG contracts -- with Qatar for 2.5mtpa of LNG and with Oman's OQ Trading for 1.5mtpa.

The country also has been importing LNG from the spot market since 2020.

Bangladesh spends around US$3 billion to $3.5 billion for importing around 4 million tonnes per annum (mtpa) to 4.5 mtpa of LNG. If the additional gas is imported under the new contracts, annual LNG import payment burden would cross $5 billion, say Petrobangla sources.

Last year, Bangladesh imported a total of around 4.43 million tonnes of LNG from Qatar, Oman and spot market. It was 5.08 million tonnes in 2021.

With the new contracts, the country's long-term import capacity is expected to reach 7.3 million per annum by 2026.

When asked what would be the rate in the new contract with Oman, the Petrobangla chairman declined to comment on this.

At present, the country has a gas demand for 3,500 million cubic feet (mmcf) per day while the supply is 3,000mmcf.

Of the total supply, 750mmcf to 800mmcf comes from LNG imports and the rest from local gas fields.
Petrobangla projected that the daily demand would reach 4,000mmcf by 2026 and contribution from LNG imports would cross 1,500mmcf.   
        
Experts say these one or two contracts would not be enough to solve the shortfall and these will make the problem even more acute.

Data shows the production and supply cost of domestic natural gas is around Tk1.50 per cubic metre while the cost goes up to Tk 33 per unit for LNG if it is imported at $9.15mmbtu from the global market.