Sept LNG cargoes cost more than double pre-war rates

Bangladesh has agreed to pay over $24 per million British thermal units (MMBtu) for two LNG cargoes to be delivered in September, as the country continues to scramble for supplies amid a global market squeeze triggered by the US-Israel war on Iran.

The Cabinet Committee on Government Purchase yesterday 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.

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The prices are more than double the $10-$12/MMBtu that Bangladesh typically paid for spot LNG before the war began in late February this year.

September LNG cargoes are costing over $24 per MMBtu, more than double the pre-war rate of $10-$12 and above recent purchases of $21-$23 per MMBtu

The latest purchases also mark another jump from the prices paid for several recent cargoes.

The government approved a cargo from Aramco Trading Singapore at $21.55/MMBtu earlier this month, while two cargoes approved last week from BP Singapore were priced at $21.878 and $21.778/MMBtu.

Another cargo approved on August 19 from Aramco Trading was priced at $23.93/MMBtu.

The rising prices are adding to the pressure on Bangladesh’s LNG import bill at a time when the country is increasingly dependent on spot purchases to compensate for disruptions to its long-term supplies.

Each LNG cargo contains around 33.6 lakh MMBtu of gas, meaning the two latest shipments will each cost roughly Tk 1,000 crore at the approved prices. At the pre-war spot-market rate of $10-$12/MMBtu, a similar cargo would have cost around Tk 410-490 crore.

Bangladesh had bought 35 spot LNG cargoes since March, according to Kpler data, as Qatar, its largest long-term supplier, cut scheduled deliveries following the outbreak of the war.

But securing cargo has itself become increasingly difficult.

Bangladesh needs roughly 10 LNG cargoes a month to maintain its imported gas supply. Yet the government struggled to secure cargoes for the final week of August even after repeatedly floating tenders.

The latest procurement difficulties emerged after the 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 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 percent 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 (million cubic feet per day), according to energy ministry data.

The war and disruptions to shipping through the Strait of Hormuz have affected supplies for Bangladesh, which has a long-term LNG supply contract with Qatar.

The Gulf nation usually ships a significant share of its LNG through the Strait of Hormuz, through which roughly one-fifth of global LNG trade passes.

In March this year, 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.