Written by The Banking Post
Dhaka, July 27 — Bangladesh is exploring a short-term liquefied natural gas (LNG) supply agreement with Saudi Arabia’s Aramco as part of efforts to stabilise domestic gas supply and reduce exposure to the volatile spot market.
The state-run Petrobangla is currently reviewing a proposal from Aramco to enter into a short-term sales and purchase agreement (SPA), Petrobangla Chairman Md Rezanur Rahman told on Saturday.
“Aramco has shown interest in supplying LNG to Bangladesh. We are scrutinising their proposal,” he said.
Aramco Trading Company — the trading arm of the Saudi energy giant — has already delivered one spot LNG cargo to Bangladesh through competitive bidding and has now been shortlisted as a potential supplier under short-term contracts.
If finalised, this would mark Aramco’s formal entry into Bangladesh’s LNG supply chain beyond ad hoc spot market transactions.
The proposed deal with Aramco is expected to mirror the country’s recent agreement with Oman’s OQ Trading, under which Bangladesh will import 17 LNG cargoes from August 2025 through December 2026. Of these, five shipments are due in 2025 and 12 in 2026, averaging one cargo per month.
The agreement with OQ Trading marked Bangladesh’s first short-term LNG supply deal and introduced a pricing mechanism indexed to the Platts-assessed Japan Korea Marker (JKM), the benchmark for LNG in Northeast Asia. Under that deal, Bangladesh will pay a fixed premium of $0.15 per million British thermal units (MMBtu) over the JKM price.
While pricing details of the proposed Aramco deal remain under negotiation, officials indicated it may adopt a similar JKM-linked formula. A draft agreement is currently under vetting by relevant authorities.
Officials believe such short-term contracts will help ensure energy security during peak demand periods such as the summer months and Ramadan, while reducing reliance on the unpredictable spot market.
At present, Bangladesh imports LNG under long-term contracts with QatarEnergy LNG (formerly Qatargas) and OQ Trading, with prices indexed to Brent crude. While these agreements provide base-load supply, they lack the flexibility of short-term deals.
In contrast, short-term SPAs offer agility in procurement and pricing, which is particularly important as Bangladesh plans to import up to 52 spot LNG cargoes in 2025 — the highest in a single year, according to Petrobangla estimates.
Rupantarita Prakritik Gas Company Ltd (RPGCL), the LNG procurement arm of Petrobangla, typically purchases three to four spot cargoes per month depending on market dynamics. That number increases during periods of heightened industrial and seasonal demand.
Earlier this year, RPGCL floated tenders for six additional spot cargoes between May and August. However, the bids received were either priced at high premiums or failed to materialise, largely due to long offer validity periods and perceived payment risks.
Market observers note that suppliers often quote premiums ranging from $0.50 to $0.70 per MMBtu — and in volatile markets, up to $1.50 — over JKM to hedge against price uncertainty during the bidding window.
The strip contract with OQ Trading helps mitigate these risks by locking in a consistent premium and ensuring more predictable costs for the government while reassuring suppliers of timely payments.
Officials see the Aramco proposal as another step in Bangladesh’s evolving LNG strategy aimed at balancing flexibility, cost control, and energy security in an increasingly dynamic global gas market.
