Monopoly in LNG supply business must be abolished
A SCHEDULED liquefied natural gas (LNG) shipment failure of Oman Trading International (OTI) aggravated the winter-time crisis of natural gas supply across the country over the past couple of weeks. As a consequence, furnace oil import also increased by around 33 per cent in January to around 200,000 tonnes. Due to higher-than-expected consumption by the power plants concerned after squeezing of electricity generation in the gas-fired power plants. Gas-guzzling industries, power plants, compressed natural gas (CNG) filling stations and household consumers are still suffering the pinch coupled with the decade-long winter-time gas supply crisis.
LNG re-gasification slipped to almost one third, as low as 200 million cubic feet per day (mmcfd), last week from the previous week’s around 600 mmcfd. Besides, overall natural gas supply dropped to around 2,700 mmcfd. The OTI’s LNG cargo, which was scheduled to supply around 138,000 cubic metres on January 18, 2021, shifted its delivery to January 22. Industry sources predicted that the supplier might have sold the scheduled cargo to spot market as spot LNG price in Asia is hovering the record high of US$ 24 per Mcf (1,000 cubic feet) during mid-January. Bangladesh’s heavy sulphur fuel oil (HSFO) import in December was around 150,000 tonnes, the lowest since May, as the onset of winter reduced air-conditioning demand. Petrobangla could not purchase LNG from spot market over the past several months, as it either did not receive any bid from LNG suppliers or their quoted prices were higher than expected. The government decided to continue floating tenders to import LNG from spot market despite non-submission of suitable offers from bidders over the past several months and higher quoted prices.
Under a 10-year term deal, Bangladesh imports around 1.5 million tonnes of LNG from OTI every year at 11.9 per cent of the three-month average price of Brent crude oil plus 0.40 cents per Mcf. As power generation sector highly dependent on the imported LNG, instead of a single supplier, the government needs to engage more suppliers at competitive price and remain out of the curse of monopoly.
Under a 10-year term deal, Bangladesh imports around 1.5 million tonnes of LNG from OTI every year at 11.9 per cent of the three-month average price of Brent crude oil plus 0.40 cents per Mcf. As power generation sector highly dependent on the imported LNG, instead of a single supplier, the government needs to engage more suppliers at competitive price and remain out of the curse of monopoly.
