LNG supply: Local cos can now tie up with int’l spot market suppliers thru joint ventures

Local companies now have the opportunity to collaborate with prospective international spot suppliers through joint ventures to ensure a steady supply of liquefied natural gas (LNG) to Petrobangla.

This opportunity arises from changes in the tender process by Rupantarita Prakritik Gas Company Limited (RPGCL), a subsidiary of Bangladesh Oil, Gas & Mineral Corporation (Petrobangla). 

"We have brought this change to create business opportunities for local firms," Md Rafiqul Islam, managing director of the RPGCL, told UNB.

He said last time, 43 international LNG suppliers submitted their expression of interest (EOI) and from there 22 were shortlisted.

Sources, however, said while 22 international companies were shortlisted by RPGCL, only 3 to 4 companies, allegedly with business ties to the previous Awami League regime, were given opportunities to rotate in supplying LNG from the international spot market to Petrobangla.

"We hope this time many more international LNG suppliers will show interest in supplying LNG from the spot market," Md Rafiqul added.

As part of the move to make a fresh short list, 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 1 December, 12:30pm.

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

During the last regime, 17 companies were initially shortlisted based on the Quick Enhancement of Electricity and Energy Supply (Special Provision) Act 2010. Later, 5 more companies were added to the list.

Petrobangla has been importing LNG from these companies on the international spot market. However, it has been observed that the same few companies repeatedly secure the contracts, effectively dominating the business.

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

There are also allegations that some of these companies had business interests with former ministers, state ministers of the fallen Awami League government, and local business groups.

The interim government recently suspended the Quick Enhancement of Electricity and Energy Supply (Special Provision) Act 2010, opting instead to procure LNG under the Public Procurement Rule (PPR) 2008.

It also decided to scrap the previous list to bring transparency in LNG import as the government has to spend more than a billion dollars for it. Petrobangla's fresh list comes in line with this decision.

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

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

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

Bangladesh has been experiencing a huge gas crisis as it produces 3,100 million cubic feet per day (mmcfd) of gas against a demand of 4,000mmcfd.

Of the total production, approximately 1,100mmcfd is imported, with 150-200mmcfd sourced from the spot market and the rest from long-term agreements with Qatar and Oman.

To meet local demand, Petrobangla has planned to import 115 LNG cargoes annually through a mix of short- and long-term contracts.