Bangladesh to award LNG supply contract to Vitol

2/23/2022

Bangladesh will award a contract to the Asian unit of trading house Vitol to supply a cargo of LNG for mid-March delivery at $29.70 per million British thermal unit (mmBtu), two officials with direct knowledge of the matter said on Wednesday.

High gas prices are hitting countries such as Bangladesh hard as they typically import bigger volumes of spot cargoes than other nations in Asia, leaving them exposed to volatility.

With domestic gas production dwindling, the nation of 160 MM people is set to be a significant player in the global LNG market, alongside Pakistan and India.

The south Asian country had planned to resume spot LNG purchases from January, but bids as high as $51 per mmBtu forced it to cancel.

It then bought two cargoes for February delivery, resuming imports of the super-chilled fuel from the spot market after a near three-month hiatus due to high prices.

"Prices are too high but we have no other option but to buy to keep the economy running," one of the officials said.

Vitol will supply 138,000 m³ of lean LNG for March 11-12 delivery, the officials said, with Bangladesh paying $27.97 per mmBtu for a cargo for March 6-7 delivery compared to the around $30 per mmBtu it paid for two cargoes for February delivery.

Bangladesh has not bought on the spot market since a cargo from Gunvor for late October delivery at $36.95 per mmBtu.

Asian spot LNG prices are hovering at $25 per mmBtu but a colder weather outlook and uncertainty over European gas supply amid geopolitical tensions means that traders are bullish about potential rises.

Bangladesh earlier renewed the leases of five oil-fired power plants, which were nearing expiry, despite its plan to move from oil towards natural gas for power generation.

The country has two long-term contracts with Qatargas and Oman Trading International.

(Reporting by Ruma Paul; Editing by Jan Harvey and Alexander Smith)