The Sultanate of Brunei has offered to export 12-18 LNG (liquefied natural gas) cargoes to Bangladesh under a long term contract of 10 years, with an option to extend the deal for a further five years.
According to a document seen by UNB, the Brunei Energy Services and Trading (BEST) Sdn Bhd, sent the offer to Bangladesh state-owned Rupantarita Prakritik Gas Company Limited (RPGCL).
Each cargo size under the proposal would be approximately between 3,100,000 and 3,200,000 MMBtu (Million British Thermal Unit, a unit used to measure LNG), with the price quoted at JKM+0.87 USD per MMBtu.
JKM stands for Japan Korea Marker, an index that measures the price of LNG delivered to Japan, South Korea, China, and Taiwan, and is accepted as the Asian standard. The JKM as of November 20, according to S&P Global, is 14.65 USD.
In the past, Bangladesh has usually imports LNG cargoes measuring 3,360,000 MMBtu.
The BEST, Brunei’s state-owned company, is primarily engaged in the trading of crude oil, LNG and methanol in the regional energy market while the RPCL is a subsidiary of the state-owned Petrobangla which remains engaged in importing LNG from abroad.
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Official sources at Petrobangla said that the idea of importing LNG from the energy-rich Southeast Asian nation is not new, as Bangladesh had received an offer from the country in 2018 as well. That led to the signing of a memorandum of understanding (MoU) between the two ‘brotherly’ nations in August 2018.
But that MoU did not materialise into the proposed energy trade between the two nations which finally resulted in extension of the deal between Dhaka and Bandar Seri Begawan for another 5 years.
Official sources said the final push came from Brunei in this regard when its Sultan Haji Hassanal Bolkiah paid a 3-day state visit to Bangladesh on October 15-17 in 2022.
Initially Bangladesh agreed with the offer, a top level source at Energy and Mineral Resources Division said, speaking on condition of anonymity considering the sensitivity of the subject. There are widespread allegations that the then-state minister for energy and power Nasrul Hamid was opposing the offer as his business interests were best served by LNG supply from the international spot market.
As a result, Brunei became disappointed with such opposition from Hamid, the source said.
After the fall of the Awami League government in a mass uprising last August 5, Brunei resumed its courtship, and this time saw a breakthrough.
The Energy and Mineral Resources moved the Petrobangla’s proposal to import LNG from Brunei on a long term basis under a government-to-government (G-to-G) contract.
The Advisory Council Committee on Economic Affairs (ACCEA), in a meeting with Finance Adviser Dr Salehuddin Ahmed in the chair, approved the proposal in principle on November 13.
Currently, Bangladesh has been importing a total 3.5 million metric tonnes per annum (MTPA) of LNG from Qatar and Oman on a long term basis under G-to-G agreements.
Qatar supplies 2.5 MTPA on a 15-year contract while Oman supplies 1 MTPA on a 10-year contract.
Last year, the then-Awami League government signed two more contracts with the two countries and also with US-based Excelerate Energy and local conglomerate the Summit Group to increase the import by another 5.5 MTPA of LNG.
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About Brunei's proposal, Petrobangla Chairman Zanendra Nath Sarker said the deal is at the stage of ‘in principle’ approval, now the state hydrocarbons agency will start negotiations to finalise the price, and also a contract period.
“Until negotiations end, nothing will be set regarding the price and contract period of the supply,“ he told UNB.