Petrobangla eases LNG supplier rules amid gas shortages

Petrobangla has relaxed several requirements for companies seeking to become spot liquefied natural gas (LNG) suppliers, as Bangladesh looks to expand its sourcing options amid worsening gas shortages and higher international LNG prices.

Under the revised criteria, a prospective supplier now needs to show only one successfully completed LNG supply contract, with no minimum delivery volume. The required financial capacity has also been reduced to $50 million from the previous $100 million threshold.

The changes come as Bangladesh faces growing pressure on its gas supply. Average gas availability fell to 2,235 million cubic feet per day (mmcfd) in August, the lowest August level in a decade, while official demand stood at around 3,860 mmcfd.

Supply disruptions at the country’s two floating LNG terminals, problems with cargo deliveries and tighter conditions in the global LNG market have contributed to the situation. The government has already made emergency direct LNG purchases as industries faced low gas pressure and power generation came under pressure from fuel shortages.

International spot LNG prices have also increased sharply. Bangladesh recently approved a cargo at more than $28 per million British thermal units (MMBtu), the highest price since 2022. Before global supply disruptions linked to the Middle East conflict, Bangladesh generally paid around $10-$12 per MMBtu for spot LNG.

Against this backdrop, Petrobangla issued a fresh international invitation on August 29, calling for new suppliers to enlist under the revised requirements.

The previous rules, introduced in March, required applicants to have at least two years of LNG supply experience and to have delivered at least 0.5 million tonnes in each of two of the preceding five years. Those conditions have now been removed.

The financial requirement has also been made less restrictive. Instead of maintaining a net worth of $100 million in two of the previous three fiscal years, applicants now need $50 million in financial capacity. This can be demonstrated through liquid assets, working capital, credit facilities or bank solvency.

Petrobangla has also dropped several operational requirements. New applicants no longer need experience supplying LNG to floating storage and regasification unit-based terminals or the capacity to supply lean LNG containing at least 91% methane.

Requirements concerning failed cargo deliveries over the previous five years, ownership or chartering of an LNG carrier and certain arbitration records have also been removed from the eligibility criteria.

The rules for joint ventures have been eased as well. The lead partner now needs only one successfully completed LNG supply contract. The $50 million financial requirement can be shared between partners, with the lead partner responsible for 75% and other partner or partners covering the remaining 25%.

The revised conditions could allow LNG traders with shorter operating histories and lower financial capacity to enter Petrobangla’s supplier pool, including companies that do not own or charter LNG carriers.

Petrobangla Director (Operations and Mines) Md Shoyeb said the changes were intended to increase participation in the spot market.

A virtual pre-application meeting with prospective suppliers is scheduled for September 8, while applications must be submitted by September 15. Existing enlisted suppliers will not need to apply again.

Petrobangla currently has 30 companies on its latest spot LNG tender list. The supplier pool has expanded considerably since the change of government in August 2024. Before that, Petrobangla had Master Sale and Purchase Agreements with 23 suppliers, while actual spot LNG purchases were largely concentrated among four or five companies.

Following the change in government, the interim administration brought spot LNG procurement under the public procurement framework after suspending purchases under the Quick Enhancement of Electricity and Energy Supply (Special Provisions) Act, 2010.

The latest supplier enlistment process is being conducted under the Public Procurement Rules 2025, with Petrobangla seeking to broaden participation at a time when Bangladesh is facing both domestic gas shortages and higher costs in the international LNG market.