Bangladesh’s spot LNG purchases spike on power demand

: Natural gas
24/11/14

Spot LNG imports into Bangladesh have spiked just three months into the interim government of Muhammad Yunus. The interest upsurge is the largest seen so far, and is made more compelling particularly with spot prices well above $13/mn Btu, which has sidelined even key importers such as India and China.

The rise in LNG imports comes on the back of Bangladesh's power market struggling to meet electricity supply owing to unpaid power bills under the previous prime minister Sheikh Hasina's government earlier this year.

Bangladesh's power generation currently has stabilised after experiencing a sharp downturn in August when the former prime minister resigned. Maximum power generation so far this month stands at an average of 12.5GW, up by 6pc on the year (see graph).

Bangladesh's Rupantarita Prakritik Gas (RPGCL), operating under state-owned oil and gas firm Petrobangla, is the sole LNG importer in the country. The super-chilled fuel helps to meet over 50pc of the country's electricity requirement.

RPGCL floated tenders for 23 LNG cargoes since September this year including multiple reissuances, compared with just eight cargoes floated over the same period last year. RPGCL floated tenders for a total of 27 cargoes in 2023, Argus data show. These tenders were mostly awarded to four suppliers — Singapore-based Vitol Asia, Gunvor Singapore, TotalEnergies and Excelerate Energy, despite having a list of 23 companies across the globe to import LNG from.

Out of the 23 LNG tenders since September this year, only nine were awarded to these four firms except for one to Japan's Jera. Other tenders were withdrawn or reissued, possibly owing to insufficient offers, Argus data indicate.

The firm recently invited expressions of interest (EOI) from sellers that wish to supply delivered LNG to Bangladesh to widen its pool of participants from which it may buy spot LNG.

The move could be linked to new public procurement regulations imposed by the interim government that require RPGCL to receive a minimum of three offers before it is able to award its tenders.

New vs old rules

The Public Procurement Rules, 2008 (PPR-2008), were set out to ensure transparency, efficiency and fair competition in the procurement of goods, works or services using public funds.

This deviates from RPGCL's previous practice of following a special power and energy law that had no mandatory provision on minimum participation in tenders, a company official told Argus last month.

The previous government had enacted the Speedy Power and Energy Supply (Special) Act 2010 to operate without tendering, which was mainly an impunity act based on a provision that prevented the act to be challenged in court.

The enactment of raising the EOI for the new seller list by the interim government is likely to stop any monopoly or preference for a particular LNG supplier in the country.

While some of the RPGCL tenders have gone unawarded in recent months owing to insufficient offers, a few of the recent tenders were heard to be awarded despite attracting just two offers, in an attempt to implement the PPR-2008 rules, according to sources with knowledge of the matter.

While it is still uncertain if RPGCL would be able to garner interest from more LNG sellers across the globe at a time when it is getting back on its feet to establish strong and transparent governance, it remains to be seen if more portfolio players would want to show their willingness to support a country that is likely to be hungry for gas for decades to come as their domestic production remains weak.

Gas output

Bangladesh's gas production including LNG stands at 2,868mn ft³/d (29.5bn m³/yr) as of 13 November, data from Petrobangla show. There was no figure available for the same period last year for comparison.

Gas output in the country has been weak since the Covid pandemic, with output falling to up to 2,306mn ft³/d, lower by 5pc on the year, Petrobangla data show. The production volumes also include LNG supply, which could meet 54pc of the gas demand of the country in 2023 (see table).

The interim government is heard to be addressing the most pressing issues in the country, particularly relating to the oil and gas exploration industry. Petrobangla has invited bids under Bangladesh Offshore Bidding Round 2024, offering a total of 24 blocks that include nine shallow-sea blocks and 15 deep-sea blocks with both oil and gas reserves. It has extended the deadline for bid submission to 9 December 2024, from 9 September 2024 previously.

By Rituparna Ghosh, Rou Urn Lee and Naomi Ong

Bangladesh natural gas					(mn ft³/d)
Natural gas	2018	2019	2020	2021	2023
Demand	3,852	3,996	4,163	4,214	4,274
Production(domestic+imported LNG)	2,712	2,669	2,722	2,414	2,306
Shortfall	1,140	1,327	1,441	1,800	1,968
— Bangladesh energy and mineral resource division

Bangladesh power generation MW

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24/11/13

Cop: Argentina pulls delegation from Baku

Montevideo, 13 November (Argus) — Argentina's government today withdrew its delegation from the UN Cop 29 climate summit in Baku, Azerbaijan. The country's foreign affairs ministry confirmed to Argus that the delegation had been told to leave the event, which began on 11 November and will run through 22 November. No reason was given for the decision, but it fits the general policies of President Javier Milei, who has expressed skepticism about climate change. Milei eliminated the country's environment ministry shortly after taking office in December 2023. He is also pursuing investment to monetize oil and gas reserves, with a focus on the Vaca Muerta unconventional formation. Vaca Muerta has an estimated 308 trillion cf of natural gas and 16bn bl of oil, according to the US Energy Information Administration. In October, the government created the Argentina LNG division with a plan to involve private companies and the state-owned YPF to produce and export up to 30mn metric tonnes (t)/yr of LNG by 2030. It wants to export 1mn bl of crude. The plans are closely linked to a new investment framework, known as RIGI, that will provide incentives for large-scale investments. The administration is also pushing hard for investment in critical minerals, including copper and lithium. Argentina has the world's second-largest lithium resources, estimated at 22mn t by the US Geological Survey. It has copper potential that the RIGI would help tap. The government has not specified if pulling out of Cop 29 means Argentina will withdraw from the Paris Agreement, which Argentina ratified in 2016. The country's nationally determined contribution calls for net emissions not to exceed 359mn t of CO2 by 2030. This represents a 21pc reduction of emissions from the maximum reached in 2007. By Lucien Chauvin Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

No sign of peak in CO2 from fossil fuels: Report

24/11/13

No sign of peak in CO2 from fossil fuels: Report

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Trump’s win yields mixed picture for LNG market

24/11/13

Trump’s win yields mixed picture for LNG market

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US inflation rises in October to 2.6pc

24/11/13

US inflation rises in October to 2.6pc

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Cop: Developing nations eye sub-targets in finance goal

24/11/13

Cop: Developing nations eye sub-targets in finance goal

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