Bangladesh scrambles for short-term LNG deals

Qatar’s supply crunch after Iran’s attacks on the Ras Laffan Complex mean that it will only be able deliver 20 of the 40 scheduled LNG cargoes to Bangladesh.

What: QatarEnergy has advised Bangladesh that it will need to cut 2026 deliveries in half in 2026, while lower delivery levels could continue for the next three to five years.

Why: Attacks in March by Iran damaged two liquefaction trains at the Ras Laffan Industrial Complex that will take between three to five years for repairs to be completed.

What Next: Facing a supply shortage, Bangladesh is examining the market for short-term LNG procurement deals with suppliers from unlikely sources including South-Eastern Asia, Africa, Central Asia, and Oceania.

Bangladesh is scouring the market for short-term LNG deals after being notified by key supplier QatarEnergy that it will only be able to deliver half of its scheduled cargoes in 2026, Bangladesh local media The Business Standard reported on June 28.

Bangladesh had planned to import 115 LNG cargoes this year, making QatarEnergy responsible for almost 35% of its LNG cargoes imported.

However, following Iran’s attacks on the Ras Laffan Industrial Complex in mid-March that damaged two of 14 liquefaction trains at the plant along with a gas-to-liquids facility and the blockade of the Strait of Hormuz, Qatar has had to adjust its delivery schedules.

The world’s second-biggest exporter declared force majeure to its buyers on March 4. Nevertheless, Qatar was able to get one LNG tanker, the Lebrethah vessel, safe passage through the Strait of Hormuz from Ras Laffan to Bangladesh with an LNG cargo.

Indeed, Bangladesh knew there would be cuts to cargo deliveries in early March, however in June, QatarEnergy sent an email to the Rupantarita Prakritik Gas Company Limited (RPGCL), a subsidiary of state-run Petrobangla to notify that half of the cargoes scheduled would be pulled. A timeline was not provided for when full, long-term supplies would be back on schedule.

Meanwhile, Saad al-Kaabi Qatar’s Minister of Energy and President and CEO of QatarEnergy has stated that repairs to the two liquefaction trains could take between three to five years, removing 12.8 mn tonnes per year (tpy) of LNG from the market.

With repairs to the liquefaction units requiring at least three years to complete, QatarEnergy has also warned Dhaka that it may be forced to also deliver reduced supply in 2027 and beyond.

Bangladesh has attempted to be on the front foot of the challenge, establishing a committee to examine the shortfall and aggressively searching for alternate LNG suppliers. The South Asian country has looked far beyond the Middle East suppliers, inquiring with unlikely sources including South-Eastern Asia, Africa, Central Asia, and Oceania suppliers.

According to Petrobangla, QatarEnergy has extended its force majeure until July 16. In late June, Qatar's Prime Minister Sheikh Mohammed bin Abdulrahman Al Thani said that Qatar will return to normal LNG production within a few weeks. However, a full ramp-up depends on safe, sustained navigation through the Strait of Hormuz.

Meanwhile, The Business Standard reported that an official for Petrobangla speaking on condition of anonymity, claimed that QatarEnergy had informed RPGCL that even once production resumes, deliveries will be subject to periodic negotiation and assessment. Petrobangla believes it can obtain delivery of at least 80% of the originally scheduled cargoes.

Data from Petrobangla cited by The Business Standard indicate that QatarEnergy delivered eight cargoes from January to March before the supply disruptions. A total of 18 cargoes were scheduled to be delivered between August and the end of the year.

However, the impact of the closure of the Strait of Hormuz, extends beyond disruption of delivery of LNG cargoes from QatarEnergy. Other suppliers with short-term contracts with Bangladesh have faced disruptions as they have been unable to load in Qatar and traverse through the Strait of Hormuz.

While the strait was opened by Iran in mid-June following the ceasefire framework agreed to by the US and Iran, it remains far from being business as usual. Iran has insisted on charging toll fees for vessels to pass through, while Washington has attempted to have these fees dropped by promising to unfreeze some of Iran’s funds held abroad.

However, Tehran continues to not budge on the tolls. Additionally, with mines on the route, many shippers are concerned about the safety of their crews and vessels.

Meanwhile, another road-bump in returning to and ramping-up deliveries of cargoes to Bangladesh emerged when an explosion occurred at Qatar’s Barzan gas plant at Ras Laffan Industrial City on June 22.

While Prime Minister Al Thani stated that Qatar would resume normal LNG output within weeks after the accident occurred, it is plausible that further investigation of the damage could reveal that it is worse than initially believed.

Bangladesh’s gas supply plays a key role in electricity generation and industrial production. Power plants, factories and exporting industries rely heavily on imported LNG to supplement declining domestic gas reserves.

Bangladesh has been successful in sourcing some cargoes of the super-chilled fuel from alternative sources, such as Angola. Bangladesh will now need to continue to be creative in finding unlikely suppliers. If it turns to the spot market to cover its supply shortage it will be costly. Other Asian countries, such as Pakistan have paid a premium for urgent delivery.