BD to pay more $24 per MMBtu for LNG in Sept

Bangladesh has agreed to pay over $24 per million British thermal units (MMBtu) for two LNG cargoes scheduled for September delivery, as the nation grapples with a severe energy crisis triggered by the US-Israel conflict with Iran.

These prices represent more than double the $10-$12 per MMBtu that Bangladesh typically paid for spot LNG before the war began in late February.

“The combination of geopolitical tensions, supply chain disruptions, and domestic infrastructure challenges has created a perfect storm for Bangladesh's energy sector, forcing the government to pay premium prices while struggling to secure adequate supplies to keep the nation's lights on and factories running,” energy expert and former energy adviser Dr M Tamim said.

With the conflict showing no  signs of abating, he warns that Bangladesh's energy crisis may continue to deepen, potentially hampering the country's economic growth and industrial production in the coming months, he added.

Each LNG cargo contains approximately 33.6 lakh MMBtu of gas, meaning the two latest shipments will each cost roughly Tk 1,000 crore at the approved prices. By comparison, a similar cargo at pre-war spot-market rates would have cost around Tk 410-490 crore, representing a staggering increase of over 100 per cent.

The trend of rising prices has been consistent throughout August, with the government approving a cargo from Aramco Trading Singapore at $21.55 per MMBtu earlier this month, while two cargoes approved last week from BP Singapore were priced at $21.878 and $21.778 per MMBtu. Another cargo approved on August 19 from Aramco Trading was priced at $23.93 per MMBtu.

The Cabinet Committee on Government Purchase approved one cargo from Posco International Corporation at $24.625 per MMBtu for delivery on September 13-14 and another from TotalEnergies Gas & Power Ltd, UK, at $24.25 per MMBtu for September 23-24.

The skyrocketing prices are rapidly inflating Bangladesh's LNG import bill at a time when the country has become increasingly dependent on spot-market purchases to compensate for disruptions to its long-term supply agreements.

According to data from Kpler, Bangladesh has purchased 35 spot LNG cargoes since March, as Qatar - its largest long-term supplier - cut scheduled deliveries following the outbreak of the war. The conflict and subsequent disruptions to shipping through the Strait of Hormuz have severely affected supplies for Bangladesh.

The Gulf nation typically ships a significant share of its LNG through the Strait of Hormuz, through which roughly one-fifth of global LNG trade passes. In March, Iranian missile strikes on Ras Laffan Industrial City, home to Qatar's largest LNG export facility, caused significant damage and affected its production, according to international media reports.

Securing cargoes has become increasingly difficult for Bangladesh, which needs roughly 10 LNG cargoes monthly to maintain its imported gas supply. The government struggled to secure cargoes for the final week of August even after repeatedly floating tenders.

The procurement difficulties intensified following a July 21 fire and subsequent technical problems at Excelerate Energy's FSRU at Moheshkhali. The terminal, one of the country's two LNG import facilities, went offline, cutting roughly 450 mmcfd from the national gas supply. The two FSRUs have a combined regasification capacity of about 1,100 mmcfd.

Although Excelerate resumed partial operations on August 6, the terminal suffered another disruption and ran out of LNG on August 19. It started supplying again on August 22, but the damage had already been done.

Due to the shortage in LNG supply, overall national supply is far below the usual level, at 2,315 mmcfd compared with 2,650 mmcfd, resulting in a severe crisis across all sectors, including power generation and industrial production.

Bangladesh meets nearly 30 per cent of its gas demand through imported LNG, while domestic production continues to fall short of the country's total requirement of about 2,650 mmcfd, according to Petrobangla.