The government seeks to renegotiate with the suppliers of Qatar and Oman to trim down import costs of fuel following a drastic fall in its prices on the spot market.
The energy ministry is planning to reinitiate talks over price cuts after neighbouring India had succeeded in lowering the prices of long-term LNG import following renegotiations with Qatar, USA and Russian LNG (liquefied natural gas) suppliers.
The Energy and Mineral Resources Division under the Ministry of Power, Energy and Mineral Resources is expected to reopen negotiations with QatarGas and Oman Trading International (OTI) from next month, a senior Petrobangla official told the FE.
He said top officials from the Qatari LNG supplier is expected to visit Dhaka next month.
Sources said Indian LNG importer GAIL renegotiated with Russian Gazprom to lower LNG import price in 2018. It inked a 20-year deal to import 2.5 million tonnes per annum, Mtpa, of LNG from Gazprom in 2012.
India's Petronet also got a reduced LNG price following renegotiations with US's ExxonMobil in 2017.
India also trimmed down LNG import costs from Qatar in 2015 following renegotiations.
They, however, could not tell about the exact price changes after renegotiations.
Officials said state-run Petrobangla inked LNG sales and purchase agreement with RasGas in September 2017. RasGas later in January 2018 merged with QatarGas.
Petrobangla has been importing LNG under long-term deals at prices ranging from $8.0 per mmBtu (million British thermal unit) to $10 per mmBtu over the past one and a half years.
Two global suppliers-Qatar's QatarGas and Oman's Oman Trading International- are currently supplying LNG to Bangladesh.
Petrobangla started regular imports of LNG from September 09, 2018.
People familiar with the market said LNG cargoes were trading below US$4.0 per mmBtu, in the spot market over the past several months due to a supply glut.
Indian Oil Corp bought a cargo for delivery in the second half of August from commodity trader Trafigura at $3.69 per mmBtu while China National Offshore Oil Corp purchased a cargo for delivery in early September from Vitol at $3.90 per mmBtu, they said.
Spot market for LNG was developed over the past several years with a glut of LNG output alongside the growth of emerging markets for LNG.
Petrobangla signed a deal with RasGas to buy around 2.5 million tonnes per year, or Mtpa, of lean LNG over 15 years.
During the initial five years of the deal, RasGas will annually supply around 1.8 million tonnes of LNG, which will increase up to 2.5 Mtpa in the next 10 years, said a senior Petrobangla official.
The purchase price has been set at around 12.65 per cent of the three-month average price of Brent crude oil plus $0.50 constant per mmBtu.
If Petrobangla will have more demand during the first five years, it can increase the LNG import volume annually to 2.5 Mtpa; and during the next 10 years, Petrobangla has the option to reduce the amount by 10 per cent every year.
If Bangladesh takes less than the base amount of LNG in any year, it will have to pay the price on a take-or-pay basis.
It has similar agreement with Oman's firm to import annually around 1.0 Mtpa of LNG for 15 years.
Petrobangla has been purchasing LNG at around 11.9 per cent of the three-month average of Brent crude oil prices plus $0.40 cents per mmBtu and the payment is to be made within 25 days of delivery.
Petrobangla has the option of increasing LNG imports to 1.5 Mtpa or lowering it to 0.9 Mtpa without having to pay the penalties.
Petrobangla currently has a preliminary agreement with AOT Energy AG to import around 1.25 Mtpa of lean LNG for 15 years.
It also signed a letter of intent with Indonesia's Pertamina to import around 1.0 Mtpa of LNG for 10 years.
