Bangladesh has cancelled the tender to import liquefied natural gas (LNG) for November from the spot market as the offers were too expensive compared to the long-term contracts the country already has.
Confirming the development, Energy and Mineral Resources Division's Senior Secretary Md Anisur Rahman told The Business Standard that the tender was cancelled as the suppliers proposed a higher price.
"However, the tender process of spot market LNG import for December is still underway. Tomorrow [Wednesday] we will open the tender documents. We may have to take a similar decision if the proposed price is higher compared to our long term contracts," he added.
After a long debate centring LNG import costs under the long-term contracts, the energy division decided to import LNG from the open market or spot market this year, in a bid to take advantage of the lower oil and natural gas prices globally.
On 15 September, the country imported its first-ever shipment of LNG from the spot market. The Vitol Asia Pte Ltd delivered the LNG cargo after offering the best bid at $3.8321 per million British thermal units (MMBTu).
The same month, the state-run Rupantarita Prakritik Gas Company – which is in charge of LNG imports in Bangladesh – floated tender for the second shipment of LNG from the spot market, and received offers from the Asian unit of Vitol and Swiss trader AOT Energy to supply 138,000 cubic metres of LNG.
The shipment was scheduled for delivery on 12-13 November.
A report published by Reuters on Monday mentioned the Vitol submitted the lowest offer, but it was still higher than the prices of LNG that Bangladesh pays under the long-term contracts with Oman, and more than the price of the earlier spot cargo.
Bangladesh imported 3.89 million tonnes of LNG in 2019 under its long-term contracts with Oman Trading International and Qatar gas, with prices ranging from around $5.50 to $6 per MMBTu.
However, the prices for spot cargoes or shipments, typically scheduled for a November delivery, are gaining on expectations that colder weather during Northern Hemisphere winter will increase the LNG demand for heating purposes.
Spot LNG prices for Asia LNG-AS were estimated at $5.80 per MMBTu as of Friday, which is their highest in more than 11 months.
Bangladesh, with a population of about 160 million people, is set to become a major LNG importer in Asia as domestic gas supplies fall.
The country currently has two floating storage and regasification units with a total regasification capacity of 1 billion cubic feet per day, equal to about 7.5 million tonnes a year.