HomeNewsPetrobangla to sign 10-year LNG deal with Oman Trading International

Petrobangla to sign 10-year LNG deal with Oman Trading International

6/19/2023

(Reuters) - Bangladesh's state-owned company Petrobangla is set to sign a long-term supply deal for additional stocks of liquefied natural gas (LNG) from Oman Trading International, an official at Petrobangla said on Monday.

Under the new contract, the South Asian nation will begin receiving an additional 0.5 million to 1.5 million metric tons per year of LNG from January 2026, the official said.

"They could also supply 0.25 million tons late in 2025. This is good for us as getting LNG at this rate is tough. The rate is very good in the current context of global markets," the official said, without disclosing the rate as it is a confidential deal.

The official, who declined to be identified as he is not authorized to speak to media, said the deal would be signed later on Monday in Dhaka.

This will be Petrobangla's second contract with Oman Trading International. It already has a 10-year contract for 1 million metric tons a year from 2019 to 2029.

Under the existing deal, the 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).

It will be Bangladesh's second long-term contract signed this year following a Petrobangla deal with QatarEnergy this month for the supply of 1.8 million metric tons of LNG a year, starting in 2026, for 15 years.

Bangladesh relies on imported LNG for nearly three-quarters of its power generation, amid dwindling domestic gas reserves and a lack of sufficient coal-fired capacity.

But high gas prices last year following Russia's invasion of Ukraine forced Bangladesh to curb spot LNG imports and ration gas supplies, driving down power output despite a rise in demand and leading to frequent power cuts.

In 2022, Bangladesh's LNG imports fell 13% from the previous year to 4.43 million metric tons, according to data firm Kpler.

This year, however, as Asian spot LNG prices eased from record highs, Bangladesh has returned to the spot market to beef up supplies. Petrobangla's chairman said in April the company was "making all efforts to ensure energy supplies to keep the economy running" as prices softened.

Bangladesh has imported 2.58 million metric tons of LNG this year.

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