Govt secures 90% LNG premium cut from US firm Gunvor, approves 117 cargoes

Highlights:

• 117 LNG cargoes approved from US-based Gunvor USA
• Supply period runs from 2026 to 2038
• 14 cargoes in 2026–28 priced at JKM + $0.0875/MMBtu
• 10 cargoes annually to be supplied from 2029 to 2038
• Bangladesh plans to import around $15b of US LNG over 15 years
• Committee also approved six additional LNG cargoes from Hong Kong, UK and Oman

The government has secured a 90% reduction in the price premium for 14 LNG cargoes to be imported from US-based Gunvor USA LLC, bringing the premium down from $0.875 to $0.0875 per MMBtu following negotiations with the supplier.

The Cabinet Committee on Government Purchase today (12 August) approved the revised proposal to import 117 LNG cargoes from Gunvor between 2026 and 2038 under a long-term government-to-government (G2G) agreement.

The approval came at a meeting chaired by Finance Minister Amir Khosru Mahmud Chowdhury. Petrobangla will now sign the agreement with the US company.

Under the revised terms, Gunvor will supply 14 cargoes at Japan-Korea Marker (JKM) plus $0.0875 per MMBtu, with the JKM serving as the benchmark for LNG prices in Asia. Of them five cargoes are to be supplied in 2026, six in 2027 and three in 2028. 

The revised premium – extra paid for fast delivery or supply security – marks a sharp reduction from the JKM plus $0.875 per MMBtu quoted in the proposal that the committee returned on 7 August.

Petrobangla subsequently renegotiated with Gunvor and managed to secure the lower premium, according to officials. The reduction will significantly lower the premium payable by Bangladesh for the 14 cargoes.

Under the long-term deal, Gunvor will also supply 103 cargoes – three cargoes in 2028 and 10 cargoes annually from 2029 to 2038 – for which the approved price has been set at 121% of the Henry Hub price plus $5.20 per MMBtu. Henry Hub is the benchmark for natural gas pricing in North America.

According to the US Energy Information Administration (EIA), the Henry Hub price today was $2.81/MMBtu. Under the 121% Henry Hub + $5.20 pricing formula, the price would be $3.40 + $5.20 = $8.60/MMBtu.

Under the new arrangement, if Bangladesh imports LNG at JKM + $0.0875, the price would be $21.28/MMBtu as the Platts Japan/Korea Marker (JKM) spot traded today at $21.19 per MMBtu.

The agreement is part of Bangladesh's planned long-term LNG purchases from the US under the energy and trade cooperation provisions of a trade agreement signed during the interim government. The government plans to import around $15 billion worth of US LNG over 15 years through long-term contracts.

Besides the Gunvor deal, the purchase committee approved the import of two LNG cargoes from Hong Kong this year at $14.95 per MMBtu through direct procurement.

It also approved two cargoes from UK-based Blackcube International at $15.50 per MMBtu and two cargoes from Oman-based Maxwell International SPC at JKM plus $0.54 per MMBtu.

The committee, however, rejected an Energy Division proposal to import four additional LNG cargoes through direct procurement from two companies in Australia and Malaysia.

Earlier, on Tuesday, the Cabinet Committee on Economic Affairs, also chaired by the finance minister, gave in-principle approval to import eight LNG cargoes from different countries.

Of these, two cargoes each are to be imported from Hong Kong-based Zhenyu Shipping Co Ltd and Malaysia-based Petronus LNG Ltd, while two cargoes are to be imported from China-based Runze Holdings Group Ltd and another two from US-based DARAB Inc.