LNG Supply Uncertain as Suppliers Halt Contracts

A liquefied natural gas (LNG) tanker. File photo

Bangladesh is facing growing uncertainty in its liquefied natural gas (LNG) supply after three major suppliers invoked force majeure, forcing the country to rely more heavily on the volatile spot market amid the ongoing regional conflict.

Officials at Petrobangla said the latest notice was issued on 5 March by Oman-based OQ Trading Limited, followed by the US-based Excelerate Energy the next day. Earlier, on 2 March, Bangladesh’s largest LNG supplier, QatarEnergy, also invoked the same provision, citing disruptions linked to the war involving Iran.

Force majeure allows companies to suspend contractual obligations due to circumstances beyond their control. With all three suppliers activating the clause, Bangladesh risks losing several LNG cargoes scheduled under long-term contracts.

Petrobangla chairman Md Arfanul Hoque said authorities are now searching for alternative sources. The suspension could affect up to eight LNG cargoes expected in April under both long- and short-term agreements.

Bangladesh had originally planned to import 11 LNG cargoes in April, including six under long-term contracts, two under short-term deals and three from the spot market. However, officials say at least four of the scheduled long-term deliveries have already been cancelled following the suppliers’ decisions.

Energy officials explained that the moves are closely connected because QatarEnergy supplies roughly one-fifth of the world’s seaborne LNG. Supply arrangements with OQ Trading and Excelerate are linked to cargoes sourced from Qatar, making alternative deliveries difficult once the major supplier invoked force majeure.

Energy Secretary Md Saiful Islam said the government has stepped up efforts to secure LNG from the spot market to maintain energy supply. Authorities are also considering government-to-government purchases under direct procurement arrangements.

Short-term supply may also face disruptions. Bangladesh had planned to import two additional cargoes under short-term contracts, one from OQ Trading and another from Saudi Aramco. However, the delivery linked to OQ Trading has become uncertain after the company declared force majeure.

With long-term supplies under strain, the government has already invited bids to purchase LNG from the spot market for April delivery. Officials say four cargoes are being sought through an emergency tender.

Energy officials warn that the global spot market is tightening as major buyers such as China, Japan, South Korea and India compete for additional supplies, pushing prices higher.

Recent purchases illustrate the volatility. In a recent tender, Petrobangla secured one cargo at more than $28 per MMBtu and another at around $24, compared with prices below $10 per MMBtu earlier this month.

Energy Minister Iqbal Hassan Mahmood Tuku said fuel reserves are gradually improving after two fuel-laden ships arrived in Bangladesh. However, he cautioned that fuel consumption will continue to be controlled while the regional conflict persists.