Bangladesh will not buy liquefied natural gas (LNG) on the spot market in the coming months due to a steep rise in prices, two sources with direct knowledge of the matter said on Wednesday.
The south Asian country has not bought any spot LNG cargoes this month despite the country returning to frequent “load-shedding”. “There is no plan to import spot LNG cargoes in the next two months,” one government official said.
Petrobangla is in charge of LNG imports in Bangladesh, which include daily imports of about 300-400 million cubic feet under two long-term deals with Oman and Qatar. It has also been consistently tapping the spot market for LNG since February, buying two or three cargoes in a month.
Bangladesh last purchased its spot LNG cargo of 138,000 cubic metres for June 22-23 delivery at $24.25 per million British thermal unit (MMBtu) from trading house Gunvor. But prices have soared since, with the average price for August delivery into north-east Asia estimated at $40.50 per MMBtu, industry sources said.
The price for September delivery is expected to rise further, to $41.00 per mmBtu, a four-month high and close to the record high of $44.35 per mmBtu hit in December. Asian LNG spot prices are being buoyed by summer demand, an extreme heatwave in Europe and an outage at a Norwegian terminal.
That is having an impact on Bangladesh as natural gas accounts for nearly three-quarters of the country’s power generation while six percent comes from diesel-run power plants. With energy demand at summer highs and prices soaring, Bangladesh has been forced to taken a series of measures, including nationwide daily one-hour load-shedding, weekly closures of filling stations and the shutdown of diesel power plants.
The country could face power and energy shortages until winter when demand for electricity falls, a energy ministry official said. “The government is making frantic efforts to cope with the crisis. But there will be hardly any respite during the summer,” the official said.