Bangladesh has asked QatarEnergy to make available LNG cargoes stranded inside the Persian Gulf as disruption to shipping through the Strait of Hormuz curbs Middle Eastern gas supplies and forces Dhaka to turn increasingly to the costly spot market.
Bangladesh’s state-owned Petrobangla has asked QatarEnergy to arrange supplies from liquefied natural gas (LNG) cargoes currently stranded or idled inside the Persian Gulf, behind the blockaded Strait of Hormuz.
The request was made on Wednesday during a meeting between a three-member Petrobangla delegation and representatives of QatarEnergy’s principal marketing arm.
About 15 loaded LNG carriers are understood to remain stranded or idled inside the Persian Gulf because of the continuing conflict between the United States and Iran and the resulting disruption to shipping through the Strait of Hormuz.
The issue was also raised during Bangladeshi foreign minister Dr Khalilur Rahman’s two-day official visit to Doha in August. He held a high-level meeting with Saad bin Sherida Al Kaabi, Qatar’s minister of state for energy affairs and chief executive of QatarEnergy, and appealed for additional LNG supplies.
QatarEnergy has indicated that it expects to increase LNG cargo allocations by about 65%, despite severe disruption to its S-2 and S-3 facilities, according to Petrobangla officials.
Petrobangla is also considering reducing energy subsidies to help meet the additional cost of securing LNG cargoes. It has already incurred an additional Tk7,300 crore in subsidy costs during the current financial year, including Tk1,900 crore in losses carried over from the previous financial year.
Bangladesh has a long-standing LNG supply relationship with Qatar. On 25 September 2017, an agreement was signed with Qatar Gas to import between 1.8 million and 2.5 million tonnes a year (MTPA) of LNG under a 15-year contract covering 2018 to 2032. The contracted volume is currently 2.5 MTPA, equivalent to about 40 LNG cargoes a year.
A second 15-year agreement, covering 2026 to 2040, was signed on 1 June 2023 with QatarEnergy Trading LLC for an additional 1.5 MTPA.
QatarEnergy has also proposed supplying LNG from its international exploration and production interests in Africa, the Mediterranean, South America and North America.
“QatarEnergy assured us to increase allocation of LNG cargoes subject to stabilise the Hormuz,” the Petrobangla chairman told Just Energy News.
He confirmed that QatarEnergy had proposed supplies from its international assets, but said the cost was currently prohibitive for Bangladesh.
“We have no way to procure it due to high cost,” the chairman said.
Qatar is currently supplying only about half of the volume under Bangladesh’s existing arrangements because of disruption caused by the blockade of the Strait of Hormuz.
The reduction in both long-term and short-term LNG deliveries has forced Bangladesh to rely increasingly on the volatile spot market to avert potential shortages. Middle Eastern supplies have been particularly affected by restrictions on shipping through the strategically important waterway.
Petrobangla is now being forced to purchase LNG at more than $28 per million British thermal units (MMBtu), adding to pressure on the country’s energy budget as it seeks to maintain gas supplies to consumers.