Government Purchases Spot LNG to Address Gas Shortage, Experts Raise Concerns Over High Costs

PNN News Desk | Dhaka

To tackle the ongoing gas crisis in the country, the government has purchased an LNG cargo from international energy company Vitol through the spot market.

The cargo is expected to arrive in Bangladesh between August 15 and 16.

According to sources, the LNG price has been set at $22.35 per MMBtu, bringing the estimated total cost of the cargo to around $75 million.

However, the decision to purchase LNG at a high price from the spot market has raised concerns among energy sector experts.

Experts questioned why Bangladesh is relying on expensive spot LNG imports when relatively cheaper long-term supply agreements could be considered.

Sources said Summit Oil and Shipping is prepared to supply LNG under a long-term contract at around $11.5 per MMBtu.

The company claimed that because it has not received the opportunity to begin supply operations, the government is being forced to purchase LNG from the spot market at much higher prices to meet national energy demand.

According to the company, failure to implement lower-cost long-term supply arrangements is increasing import expenses and putting additional pressure on the country’s foreign currency reserves.

Energy experts said if there is a realistic opportunity to secure long-term and cheaper LNG supplies, it should be reviewed and implemented quickly.

They said while the spot market can help meet short-term demand, long-term dependence on it could create additional financial pressure on the country.

Experts also noted that if there are legal complications or disagreements regarding any agreement, those issues can be resolved through courts or negotiations.

They emphasized that reducing state expenditure and prioritizing public interest should remain the highest priority in ensuring energy security.

Experts believe that implementing long-term supply systems amid fluctuations in international energy prices could help control import costs and reduce pressure on foreign exchange reserves.

No immediate official statement was available from the concerned government authorities regarding the matter.

An official explanation has also not yet been provided as to why Bangladesh is purchasing expensive spot LNG despite the possibility of long-term supply arrangements.