Excelerate to supply spot LNG cargo to Bangladesh, working on Payra deal

US FSRU player Excelerate Energy has sold a spot liquefied natural gas cargo to Bangladesh’s Petrobangla, while the firm continues to advance the development of its planned Payra project in the country.

Spot LNG prices in Asia dropped considerably this year from record highs in 2022, sparking interest from buyers from Bangladesh, China, India, and other countries to purchase spot LNG supplies.

The JKM LNG price for April settled at $13.271/MMBtu on Monday.

Excelerate’s CEO Steven Kobos told analysts during the company’s 2022 results conference call on Tuesday that Excelerate was “successful in selling a spot LNG cargo to Petrobangla just last week.”

“With domestic gas supply declining rapidly, LNG imports need to increase over time to displace those volumes and maintain natural gas as a critical part of Bangladesh’s energy mix,” he said.

Kobos noted during the call that the company sold four spot LNG cargoes to Bangladesh in 2021, and all of these shipments were sourced from the US.

The CEO did not provide further information regarding the newest spot LNG deal.

Local media reports suggest that Excelerate offered a price of $13.69/MMBtu for the spot LNG delivery in April.

Bangladesh returned to buying spot LNG in February this year since a government decision in July 2022 to halt purchases due to high prices.

The country currently imports LNG via Bangladesh’s first LNG import facility, Moheshkhali Floating LNG or MLNG, operated by Petrobangla, and via Summit Group’s FSRU-based terminal.

Both of these facilities feature Excelerate’s FSRUs.

Payra LNG project

Besides these two terminals, Excelerate is also working on another FSRU-based facility in Bangladesh.

The proposed scope of the Payra LNG project, which is located in the southwestern part of the country, involves the development of an offshore FSRU import terminal and an onshore pipeline to the city of Khulna.

As part of the project, Excelerate is also negotiating a long-term LNG supply agreement with the government of Bangladesh.

The firm previously said that the facility would need about 3-4 mtpa of LNG supply and that it could go online in 2025.

“We are continuing to advance the development of our planned Payra project. Payra has the potential to effectively double Bangladesh’s LNG import capacity,” Kobos said.

He said said that the company invested about $5 million in the project up to date.

“In addition to finalizing a term sheet with Petrobangla, our team is evaluating financing options and is in discussions with potential partners for the project,” he said.

LNG supply

Bangladesh mostly receives LNG under long-term contracts from Qatar and from the spot market.

Kobos said that Excelerate expects Bangladesh to enter into long-term LNG contracts in 2023 to secure “more affordable, reliable and predictable LNG pricing.”

“Those long-term contracts obviously would likely commence in 2026, 2027,” he said.

Excelerate recently signed its first long-term deal to buy LNG from Venture Global LNG.

Under the 20-year sales and purchase agreement, Excelerate will buy 0.7 million tonnes per annum of LNG on a free on board (FOB) basis from the Plaquemines Phase 2 in Louisiana.

Discussing the company’s plans for LNG sourcing in the future, Kobos said that “while we may very well wish to source additional US volumes, we want a diversified LNG supply portfolio, and that’s why we remain and continue discussions with suppliers around the world.”

“We are determined that if we build this diversified LNG supply portfolio, with strong partners, it doesn’t matter where the strong partners are. But with strong partners like Venture Global, it’s going to allow us to offer more flexible, more cost-effective products to existing and new customers,” Kobos said.

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