LNG cargo uncertainty persists amid gas crisis

Uncertainty over LNG supplies is deepening as four cargoes scheduled to arrive in August have yet to reach Bangladesh, with no confirmed delivery dates.

The government has meanwhile invited emergency tenders for five additional LNG cargoes to maintain gas supplies. Bids were received for only two, while no offers were submitted for the remaining three.

Petrobangla oversees LNG imports under the approval of the Energy Division, while its subsidiary Rupantarita Prakritik Gas Company Ltd (RPGCL) handles the imports.

Nine LNG cargoes were expected in August due to operational problems at the terminals, compared with the usual 10. Three were procured through tenders, one under a long-term contract, one under a short-term agreement and four through direct procurement.

Two tendered cargoes have already supplied gas, while another is scheduled to arrive on August 20. Qatar has also supplied one cargo under a long-term agreement.

A cargo from Saudi Aramco, procured under a short-term government-to-government agreement, reached the Bay of Bengal but was not accepted by the terminal operator due to concerns over transfer risks.

Two of the four directly procured cargoes were to be supplied by Hong Kong-based Zhenyu Shipping. Officials said the company recently provided details of a vessel that is on the UK sanctions list. The government therefore decided not to receive the vessel, fearing possible complications in future international transactions.

The suppliers of the other cargoes have also yet to confirm delivery dates and may seek to defer supplies until September.

State Minister for Power, Energy and Mineral Resources Anindya Islam Amit said the suppliers selected through direct procurement had not completed the necessary documentation and formalities. The government has already invited fresh tenders to arrange replacement cargoes, he said.

Questions have also been raised over the direct procurement process as some suppliers offered prices significantly below the international market rate.

At the beginning of August, the government decided to purchase two cargoes each from UK-based Blackcube International, Oman-based Maxwell International SPC and Zhenyu Shipping.

According to RPGCL officials, the international LNG price has remained above $20 per unit for about a month and stood at around $22 on Monday. Blackcube offered LNG at $15.50 per unit, while Zhenyu offered $14.95.

Energy sector officials said such unusually low offers should have prompted closer scrutiny of the suppliers, cargo sources and vessels. They also warned that allowing delayed deliveries could benefit suppliers if market prices change.

The emergency tender sought three cargoes for August and two for the first week of September. Bids were received for cargoes scheduled for August 23-24 and September 4-5, with BP submitting the lowest bid at around $22 per unit. No bids were received for the other three cargoes.

Meanwhile, gas supplies have started falling again. Bangladesh has two floating LNG terminals in Maheshkhali, Cox’s Bazar. US-based Excelerate Energy’s terminal has a daily capacity of 600 million cubic feet, while Summit’s terminal can supply 500 million cubic feet.

Excelerate’s terminal was shut down following a fire on July 21. After 25 days of severe shortages, supplies improved when Summit’s terminal resumed full operations and Excelerate’s terminal partially resumed operations on Saturday.

However, supplies from Excelerate’s terminal have declined over the past two days due to the lack of new cargoes. If a new vessel does not arrive soon, supplies from the terminal could stop.

Total gas supply fell to 1.64 billion cubic feet per day on Friday before rising to 2.42 billion cubic feet on Saturday. It then declined to 2.40 billion cubic feet on Sunday and 2.28 billion cubic feet on Monday. LNG accounted for 660 million cubic feet of Monday’s supply.

Some factories in Narayanganj, Gazipur, Savar and Habiganj resumed production after gas pressure improved, although the situation remains uneven.

ACI Executive Director Kamrul Hasan said gas supplies had improved and production was largely normal. BKMEA President Mohammad Hatem said gas pressure in Narayanganj was satisfactory, while supplies had also improved in Narsingdi. Some areas of Gazipur, however, were still facing shortages.

Energy expert M Tamim said direct procurement was meant to ensure quick delivery and suppliers who failed to deliver should not be given extensions. “There is no point in direct procurement if suppliers cannot deliver during a crisis,” he said, calling for the security deposits of failed suppliers to be forfeited and the companies to be blacklisted.

SKS