Dhaka,  Wednesday
29 May 2024

BD to buy LNG from controversial Vitol Asia

Jannatul Ferdushy

Published: 08:37, 9 April 2024

BD to buy LNG from controversial Vitol Asia

Photo : Messenger

The Ministry of Power, Energy, and Mineral Resources is going to import three cargoes of liquefied natural gas (LNG) at a cost of Tk 1,256 crore from three international companies, one of which is the controversial Vitol Asia Pte. Ltd.

On April 3, the meeting of the cabinet committee on government procurement, chaired by Finance Minister Abul Hassan Mahmood Ali, approved the import of this LNG.

Among these, one cargo of LNG will be purchased from Singapore’s Vitol Asia Pte Ltd, one from Gunvor Pvt Ltd., and one from Total Engineering Gas and Power of Switzerland. The total cost will be Tk 1,256 crore, 92 lakh, 84 thousand, 728.

The Coordination and Reform Secretary of the Cabinet Department, Mahmudul Hossain Khan, said that the import of LNG from the spot market has been approved under the ‘Rapid Supply of Electricity and Energy (Special Provisions) (Amendment) Act-2021’. Pursuant to the proposal of the Division of Energy and Mineral Resources, approval has been given to import one cargo of LNG from Singapore’s Gunvor Private Limited. A total of 33,60,000 MMBTU LNG imports will cost Tk 410 crore, 65 lakh, 90 thousand, 488 at $9.49 per MMBTU.

Following another proposal by the Division of Energy and Mineral Resources, approval has been given to import one cargo of LNG from Singapore’s Vitol Asia Private Limited. At $9.68 per MMBTU, the total cost of importing 33,60,000 MMBTU of LNG will be Tk 418 crore, 59 lakh, 41 thousand, 760.

Additionally, the cabinet committee on government procurement has approved the import of a cargo of LNG from Switzerland’s Total Engineering Gas and Power Limited at a cost of Tk 427 crore, 67 lakh, 52 thousand, 480. In this case, the price per MMBTU will be $9.89.

It is known that among these three organizations, Vitol Asia is the controversial organization globally due to various reasons.

The Bangladesh government buys LNG from Vitol Asia from the spot market at intervals of a few days. Many countries have now blacklisted Vitol Asia after the international energy company was found to have bribed the US. Additionally, Vitol Asia also has energy trade with Russia.

According to the proposal of the Ministry of Energy, two floating LNG terminals with a capacity of 500 mmcf and 600 mmcf per day have been set up at Maheshkhali in Cox’s Bazar to meet the existing and increasing gas demand of the country. Currently, 2.5 MTPA of LNG from Ras Lafan Liquefied Natural Gas Company Limited (Qatargas) for a period of 15 years and Oman Trading International (now OQT) for a period of 10 years under the agreement signed with Petrobangla on a G-to-G basis through the two terminals. A total of 3.5 MTPA of LNG is being imported, including 1.0 MTPA of LNG.

Apart from long-term imports of LNG for the uninterrupted supply of gas to electricity, industry, and fertilizer factories in the country, LNG is also being purchased from the spot market. In view of this, the Minister of Power, Energy, and Mineral Resources (Prime Minister) gave policy approval on March 22 for the purchase of an additional 10 cargoes of LNG from the spot market for the period of January to June 2024.

The proposal further states that for the purchase of LNG from the spot market, following due process, a Master Sale and Purchase Agreement (MSPA) is prepared, and necessary approvals are obtained. Petrobangla then signed the final MSPA with 23 MSPA signatories. Five cargoes of LNG are required to be procured from the spot market in May 2024 for the uninterrupted gas supply to power, captive power, industrial, and commercial sectors.

The proposal also states that when quotations were called for the 13th cargo of LNG in 2024, two companies responded. Among them, the controversial Singapore-based Vitol Asia Pvt Ltd quoted a price of $9.68 per unit, and Switzerland-based Total Energy Gas & Power quoted a price of $9.69 per unit.

One cargo (14th) of LNG will be supplied by Switzerland-based Total Energy Gas and Power Limited participating in another tender. The firm was the lowest bidder, quoting $9.89 per unit of LNG. The Singapore-based company Vitol Asia Pvt Ltd is the second lowest with a price of $10.36 per unit.

Another cargo (15th) of LNG was bid on by three companies. Among them, Singapore-based Gunvor Singapore Pvt Ltd quoted $9.49 per unit, Vitol Asia Singapore $9.58, and Accelerate Energy of the United States mentioned $10.08. Gunvor Singapore Private Limited, as the lowest bidder in the tender, will supply this one cargo of LNG.

Messenger/Sajib

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