Is Bangladesh addressing its gas crisis or  simply deepening its fuel import? 

The government aims to ensure an uninterrupted gas supply to meet the country's existing and growing demand, which necessitates additional LNG imports. Consequently, LNG will be procured from Gunvor USA LLC on a G2G basis.

G2G agreements typically take place directly between governments, with no standard provision for entering a G2G contract with a private firm.

Bangladesh meets almost 30 percent of its gas demand through imported LNG, while domestic production continues to fall short of the total requirement of about 2,650 million cubic feet per day (mmcfd), according to the energy ministry.

The million-dollar issue is this disruption (Half was active as the Summit’s FSRU was in operation except two or three days) has halted Bangladesh’s total economy, industries to household all are quite…there was no gas at burner? Actually, what happened we might could not be able to know, but the cargo fire, rejection to take Aramco’s cargo or Aramco’s decision to supply LNG to Bangladesh with a faulty cargo are the grayest areas to discusses.

Virtually all commercial entities in the United States are privately owned, and Gunvor USA LLC is likewise a private corporation. This has raised questions regarding whether initiating a G2G LNG import deal with Gunvor USA LLC complies with legal standards.

Highlights

*    117 LNG cargoes approved from US-based Gunvor USA
*    Supply period runs from 2026 to 2038
*    14 cargoes in 2026�"28 priced at JKM + $0.0875/MMBtu
*    10 cargoes annually to be supplied from 2029 to 2038
*    Bangladesh plans to import around $15b of US LNG over 15 years
*    Committee also approved six additional LNG cargoes from Hong Kong, UK and Oman
*    China National Energy Engineering & Construction Co Ltd (CNEE), at a time when the country reels from gas crunch following the tripping of one of two FSRUs on the Bay of Bengal island.
*    Officials said the CCEA gave its policy approval to process a fast-track proposal submitted by the Chinese firm to install a new FSRU at Kutubjom in Maheshkhali in Cox's Bazar.

The Cabinet Committee on Government Purchase on 12 August, 2026 approved the revised proposal to import 117 LNG cargoes from USA based company Gunvor between 2026 and 2038 under a long-term government-to-government (G2G) agreement, following an approval came at a meeting chaired by Finance Minister Amir Khosru Mahmud Chowdhury.

Petrobangla data show that domestic gas production dropped 22.1 percent over five years to 19.60 bcm in fiscal 2024-25. Over the same period, LNG imports increased from 6.12 bcm to 7.98 bcm.

When the governments did not take any urgent decision like installing FSRU to connect discovered gas in Bhola to the national grid or any initiative to tap Tengratila and Kamta gas well, since the NIKO case is over. Or exploration of 24 offshore gas blocks at a snail pace than the questions are definitely valid.

Official estimates show that daily gas demand is around 3,800 million cubic feet per day (MMCFD), while supply has fallen to about 2,700 MMCFD, creating a shortfall of nearly 1,100 MMCFD.

However, the agreement is part of Bangladesh's planned long-term LNG purchases from the US under the energy and trade cooperation provisions of a trade agreement signed during the interim government. The government plans to import around $15 billion worth of US LNG over 15 years through long-term contracts.

Under the revised terms, Gunvor will supply 14 cargoes at Japan-Korea Marker (JKM) plus $0.0875 per MMBtu, with the JKM serving as the benchmark for LNG prices in Asia. Of them five cargoes are to be supplied in 2026, six in 2027 and three in 2028.

The revised premium �" extra paid for fast delivery or supply security �" marks a sharp reduction from the JKM plus $0.875 per MMBtu quoted in the proposal that the committee returned on 7 August.

It has been said that Petrobangla subsequently renegotiated with Gunvor and managed to secure the lower premium, according to officials. The reduction will significantly lower the premium payable by Bangladesh for the 14 cargoes.

Under the long-term deal, Gunvor will also supply 103 cargoes �" three cargoes in 2028 and 10 cargoes annually from 2029 to 2038 �" for which the approved price has been set at 121b per cent of the Henry Hub price plus $5.20 per MMBtu. Henry Hub is the benchmark for natural gas pricing in North America.

According to the US Energy Information Administration (EIA), the Henry Hub price today was $2.81/MMBtu. Under the 121% Henry Hub + $5.20 pricing formula, the price would be $3.40 + $5.20 = $8.60/MMBtu.

Under the new arrangement, if Bangladesh imports LNG at JKM + $0.0875, the price would be $21.28/MMBtu as the Platts Japan/Korea Marker (JKM) spot traded today at $21.19 per MMBtu.

“The LNG imports are being carried out pursuant to the trade agreement signed with the United States during the interim government's tenure, strictly adhering to the Public Procurement Rules (PPR). Had it infringed upon the PPR, we would not have proceeded with it,” the Minister for Power, Energy and Mineral Resources Iqbal Hassan Mahmood said energy minister added.

At present, the global market price of LNG stands between US$21.5 and $22 per MMBtu. Calculated at $21 per MMBtu, the cost of a single cargo comes to over $70 million�"equivalent to nearly TK9.17 billion. LNG prices routinely rise year on year.

Even under current rate estimations, the total cost for 78 cargoes reaches Tk714.95 billion (assuming an exchange rate of Tk124 per US Dollar).

Former BPPA CEO (then Director General) Faruque Hossain remarked to the media “It remains unclear how a G2G arrangement can be executed between the Government of Bangladesh and a private US company like Gunvor USA LLC. If the US government designated or nominated Gunvor, that would be one matter. Whether that occurred in this instance, I do not know. If not, the structure of this G2G arrangement will be unviable and could invite future scrutiny.”

Bangladesh is going to have a third floating storage and regasification unit (FSRU)

Bangladesh is going to have a third floating storage and regasification unit (FSRU) to be built by a Chinese company alongside the Bay island Maheshkhali as the government gives the go-ahead amid gas-supply disruptions.

In August, the Cabinet Committee on Economic Affairs (CCEA) approved the proposal placed on behalf of China National Energy Engineering & Construction Co Ltd (CNEE), at a time when the country reels from gas crunch following the tripping of one of two FSRUs on the Bay of Bengal island.

Officials said the CCEA gave its policy approval to process a fast-track proposal submitted by the Chinese firm to install a new FSRU at Kutubjom in Maheshkhali in Cox's Bazar.

The virtual meeting, chaired by Finance Minister Amir Khosru Mahmud Chowdhury, approved three separate proposals, including the Kutubjom floating terminal (FSRU), under a G2G (government-to-government) arrangement.

"The major policy approval marks the initial formal step toward developing another liquefied natural gas (LNG)-import facility. The energy-infrastructure project will be processed under a government-to-government framework," said one official. Following an acute natural-gas shortage, the government has taken the decision on an urgent basis to foster the LNG regasification through import from overseas market.

Bangladesh currently relies heavily on imported liquefied natural gas to compensate for a steady decline in domestic gas production against rising demand.

Meanwhile, shutdown of the Maheshkhali offshore LNG terminal of Excelerate Energy, USA, after the fire on July 21 halved imported gas-regasification capacity.

Corporate finance solutions Bangladesh began importing LNG in 2018 through its first floating terminal at Maheshkhali to offset declining domestic gas production.

Only Hope!

On September 3 the government announced a series of short-, medium- and long-term measures to tackle the country’s ongoing gas crisis, including increasing costly spot-market LNG imports, accelerating a programme to drill and work over 150 wells, and exploring gas imports from Myanmar and Malaysia.

Industry insiders welcomed the Primer delivery at the Parliament, they termed it as good news that a special parliamentary committee has been formed to address the energy crisis by offering recommendations on the legal, institutional, and operational issues arising from it.