Petrobangla loosens rules to attract spot LNG suppliers

Petrobangla has sharply eased the entry requirements for new spot liquefied natural gas (LNG) suppliers as Bangladesh seeks to widen its sourcing options amid severe gas shortages and rising global LNG prices.

The state-run corporation will now allow companies to seek enlistment with just one successfully completed LNG supply contract and $50 million in financial capacity. This is a significant relaxation of the experience, financial and operational requirements introduced in March.

Tap here to add The Daily Star as a trusted source

The move comes at a difficult time for the country’s LNG procurement. Disruptions at its two floating LNG terminals, cargo delivery problems and a global supply squeeze pushed average gas supply to 2,235 million cubic feet per day (mmcfd) in August -- the lowest August supply in a decade.

Official demand was around 3,860 mmcfd.

The government had to make emergency direct purchases of LNG as industries struggled with low gas pressure and power generation was hit by fuel shortages.

Spot LNG prices have also risen sharply. Bangladesh last week approved a cargo at more than $28 per million British thermal units (MMBtu), the highest price since 2022. Before the Middle East war disrupted global supplies, the country typically paid $10 to $12 per MMBtu for spot LNG.

Against this backdrop, Petrobangla issued a fresh international invitation on August 29 to enlist more suppliers under “revised criteria”.

KEY REQUIREMENTS EASED

Under the March rules, applicants needed at least two years of LNG supply experience and deliveries of at least 0.5 million tonnes in each of two of the previous five years.

The new criteria require only one successfully completed LNG supply contract, with no minimum delivery volume.

The financial threshold has also been cut from $100 million in net worth in two of the previous three fiscal years to $50 million. Companies can meet the requirement through liquid assets, working capital, credit facilities or bank solvency.

Several other requirements have been removed.

Applicants no longer need experience supplying LNG to floating storage and regasification unit (FSRU)-based terminals or the ability to supply lean LNG containing at least 91 percent methane.

They also no longer need to show that they had no failed LNG cargo deliveries in the previous five years or own or charter an LNG carrier. The revised document marks these requirements as “Not Applicable”.

The requirement to provide arbitration history has also been removed. Previously, applicants could have no more than three arbitration awards against them in the previous five years.

Joint venture requirements have also been eased. The lead partner now needs only one successfully completed LNG supply contract.

The $50 million financial requirement can also be shared, with the lead partner meeting 75 percent and the other partner or partners the remaining 25 percent.

The changes could bring LNG traders with shorter operating histories, lower financial capacity and no LNG carrier of their own or under charter into Petrobangla’s supplier pool.

However, Petrobangla has not explained why it relaxed requirements introduced only a few months ago.

Petrobangla Director (operations and mines) Md Shoyeb, the contact person for the enlistment process, told The Daily Star that the changes aim to attract more suppliers.

“We are looking for more participants in the spot market,” he said.

A virtual pre-application meeting with prospective suppliers is scheduled for today, while applications are due by September 15.

The exercise will not replace existing suppliers, and companies already enlisted for spot LNG supply do not need to apply again.

Petrobangla currently has 30 companies on its latest spot LNG tender list. The new exercise could further expand a supplier pool that has grown significantly since the change of government in August 2024.

Before then, Petrobangla had Master Sale and Purchase Agreements with 23 suppliers, but spot LNG purchases were largely concentrated among four or five suppliers.

The interim government later brought spot LNG purchases under the public procurement framework after suspending procurement under the Quick Enhancement of Electricity and Energy Supply (Special Provisions) Act, 2010.

The latest enlistment is being conducted under the Public Procurement Rules 2025.