Vitol set to supply Bangladesh's first spot LNG

The Asian unit of trading house Vitol is set to supply LNG to Bangladesh as the country seeks its first spot cargo to capitalize on lower prices for the fuel, two energy officials with direct knowledge of the matter said.

Four traders competed for the tender by the state-run Rupantarita Prakritik Gas Company, which last month invited offers from 14 shortlisted companies.

The company sought 138,000 cubic meters of lean LNG for delivery from Sept. 30 to Oct. 8.

"Vital is likely to win the tender as it placed the lowest offer,” said one of the officials of the Petrobangla, in charge of LNG imports into the South Asian country.

Lower Asian spot prices compared with previous years are attracting some countries to import more spot cargoes rather than sign long-term contracts.

"We have got much lower prices in the tender comparing to the long-term deals," another Petrobangla official said, without disclosing the prices on offer.

Bangladesh, with a population of about 160 million people, is expected to become a major LNG importer in Asia, along with Pakistan and India, as domestic gas supplies fall.

The country currently has two floating storage and regasification units (FSRUs) with a total regasification capacity of 1 billion cubic feet per day - equal to about 7.5 million tonnes a year.

Bangladesh imported 3.89 million tonnes of LNG in 2019 - through two long-term contracts with Oman and Qatar.

It has a 10-year LNG import deal with Oman Trading International. That LNG is priced at 11.9% of the three-month average price of Brent crude oil plus a constant price of 40 cents per million British thermal units (mmBtu).

Under its 15-year deal with Qatar, Bangladesh pays 12.65% of the three-month average price of Brent oil plus a constant of 50 cents per mmBtu.

Last year, Bangladesh shortlisted 17 companies for spot LNG and among them 14 have signed sales and purchase agreement with Rupantarito Prakritik Gas Company.

(Reporting by Ruma Paul;Editing by Elaine Hardcastle)