Qatar-Bangladesh Liquid Natural Gas Deal

What's the message for the energy hit world during the global energy crisis?

Qatar-Bangladesh long-term deal on LNG imports: A ray of hope in times of crisis? Bangladesh has signed a long-term agreement to import liquefied natural gas (LNG) from Qatar at the rate of 1.8 million metric tons (MMT) per annum for 15 years. The agreement was signed on Thursday (June 1). According to the agreement, Bangladesh will receive an additional 1.8 MMT of LNG annually, starting in 2026. The long-term LNG sales and purchase agreement (SPA) was signed between Bangladesh Oil, Gas and Minerals Corporation (Petrobangla) and Qatar Energy's LNG trading arm at Qatar Energy's headquarters in Doha.

This is a very important news for Bangladesh. Many countries around the world are struggling with power generation capacity shortages. The world has been plunged into a chronic energy crisis due to the Ukraine war and subsequent Western sanctions on Russia. Rising oil and gas prices and disruptions in supply chains have had major repercussions for emerging economies in the developing world, including all oil and gas importing countries. As the fastest growing country in the world, Bangladesh is heavily dependent on gas and oil for stable energy supply in the country. The crisis in the power and energy sector is becoming evident. The crisis started last year. At times the situation is improving but it is getting worse. Dues of Bangladeshi companies to foreign companies supplying energy products are increasing day by day. This long-term agreement is showing a light of hope when Bangladesh is struggling with the energy crisis along with the rest of the world. When Bangladesh is suffering from energy crisis, the light of hope has been lit at that very moment. Through the increased production of electricity, Bangladesh has achieved great economic progress in the past decade by enriching the country's industrial sector.

However, the Covid-19 global pandemic and the ongoing Ukraine war and its associated syndromes have significantly disrupted gas and oil supplies, which are crucial for power generation in Bangladesh. About 60 percent of the country's power plants are powered by gas. According to the Power Development Board of Bangladesh, at least 24 of the country's 152 power plants currently face gas supply shortages. Gas supply to power plants has fallen to 900mmcf against demand of around 1,600mmcf. In addition to high prices and gas supply disruptions, the world is witnessing high inflation rates and increasing devaluation of local currencies in many countries against the US dollar. This has created a multidimensional economic crisis in the world that has plagued both developed and developing countries. From the US to Turkey, Germany to Sri Lanka, each country is adjusting to the changing context of food and energy production and supply. Countries like Australia, Indonesia, South Africa and Pakistan have already resorted to load shedding.

This support from Qatar will help strengthen our fast growing economy. The world is facing an energy crisis in this unstable situation of war between Russia and Ukraine. We hope to overcome the upcoming challenges by meeting the energy demand.Prime Minister Sheikh Hasina met Qatari Prime Minister Mohammad Bin Abdul Rahman Bin Jassim Al Thani during the Qatar Economic Forum, where they discussed strengthening bilateral relations and increasing energy cooperation between the two countries.

In a bilateral meeting at the Qatar Economic Forum held in Doha, Qatar, Prime Minister of Bangladesh Sheikh Hasina expressed the desire for closer energy cooperation between the two countries. Qatari Prime Minister Thani assured Bangladesh of Qatar's commitment to further strengthen their friendly relations and emphasized their status as true friends. Prime Minister Sheikh Hasina appreciated Qatar's assistance in providing stability to Bangladesh and requested its continued assistance in the energy sector. In response, Prime Minister Al Thani assured that Qatar would fully assist Bangladesh in meeting its energy needs.

During their meeting at Raffles Towers in Doha, Prime Minister Al Thani expressed Qatar's keen interest in strengthening friendly relations with Bangladesh. He called Bangladesh a true friend and praised Prime Minister Sheikh Hasina for bringing stability to the country. In response, Prime Minister Sheikh Hasina expressed her desire for Bangladesh's energy cooperation, and the Emir of Qatar assured Bangladesh of all facilities to supply larger LNG from his country to meet the country's energy needs. This is a very important news for Bangladesh. On March 23, 2023, Emir Sheikh Tamim bin Hamad Al Thani told Prime Minister Sheikh Hasina in a meeting at Amiri Diwan in Doha, I promise you that I will give you all kinds of facilities as Emir because Bangladesh is a friendly country.

Emphasizing the importance of Qatar's assistance in meeting Bangladesh's growing energy needs, Prime Minister Sheikh Hasina said, "We want you (Qatar) to help us with energy. In response, Prime Minister Al Thani assured Bangladesh of Qatar's commitment of all possible assistance.

It is indeed another milestone in the strong bilateral relations between the two friendly countries with long standin bilateral ties based on mutual respect, values, common religious foundations, culture and traditions.

Emphasizing the importance of Qatar's assistance in meeting Bangladesh's growing energy needs, Prime Minister Sheikh Hasina said, "We want you (Qatar) to help us with energy." In response, Prime Minister Al Thani assured Bangladesh of Qatar's commitment of all possible assistance.

This is indeed another milestone in the strong bilateral relations between the two friendly countries, which have long-standing bilateral ties based on mutual respect, values, common religious foundations, culture and traditions. With the growth of Bangladesh's economy and increase in per capita income, the demand for energy is also increasing rapidly. Current power generation capacity stands at 25 thousand 284 MW.

The government has set a target of 40,000 MW by 2030 and 60,000 MW by 2041. Electricity coverage has reached 100 percent across the country. Bangladesh has emerged as one of the fastest growing economies globally. As a relatively clean energy source, LNG is a priority to meet growing energy demand. LNG imports will help fill the national gas grid network set up across the country.

Bangladesh will receive more than 3.5 million tons of LNG from Qatar every year. This supply reinforces our continued commitment to ensuring energy security for valued customers like Bangladesh and providing them with the reliable energy they need for socio-economic development and prosperity.

With this new SPA, Qatar Energy reaffirms its position as the LNG supplier of choice for its partners in the South Asian LNG market. Qatar currently supplies more than 3.5 million tons of LNG to Bangladesh annually.

Bangladesh already has a 15-year LNG SPA agreement with Qatar for the supply of 1.8-2.5 MTPA of LNG which was signed on September 25, 2017. From the start of delivery on September 9, 2018 to May 31, 2022, Petrobangla has successfully received 11.746 million metric tons of LNG through 191 LNG cargoes.

In 2017, Bangladesh signed a 15-year agreement to buy fuel from Qatar. That agreement was far-reaching and wise. According to a 15-year deal signed in 2017, Bangladesh now imports about 40 containers of fuel, which translates to 1.8-2.5 MTA. But now Bangladesh wants larger supply of LNG from Qatar.

Bangladesh and Qatar have ongoing cooperation on various bilateral issues, including labor migration (8 million Bangladeshi workers and US 1.3 billion in remittances), energy cooperation (15-year G-to-G NLG agreement), and continued support for the Rohingya. It continues to purchase liquefied natural gas from Qatar and Oman under long-term contracts and imports about four million tonnes of liquefied gas annually.

The agreement with Qatar will expire in 2032 and with Oman in 2029. Qatar is one of the top energy producing countries. Bangladesh has already signed a 15-year G-to-G LNG agreement with Qatar. However, due to the Ukraine crisis, Western sanctions on Russia and the subsequent increase in fuel prices, there is an energy crisis in Bangladesh. Bangladesh is currently struggling to meet the growing demand for natural gas due to declining production of natural gas from local gas fields and high prices of LNG in the international market.

Qatar is an oil-rich country in the Middle East. The country is largely dependent on foreign labor to support its economy: 89.5 percent of Qatar's residents are foreign nationals. In contrast, Bangladesh is one of the world's largest labor exporters. About 400,000 Bangladeshi expatriates work there, which is 12.5 percent of Qatar's total population. The oil-rich country is undoubtedly an important country for expatriates and migrant workers in Bangladesh.

In June 2017, Bangladesh signed an agreement with Qatari company Rasgas to receive 2.5 million tons of LNG annually for the next 15 years. It is important to note that the remittance flow from Qatar has touched US 1 billion in the last five years. As Bangladesh is suffering from energy crisis, Qatar will stand by Bangladesh to meet its growing energy needs.

Bangladesh and Qatar have recently strengthened their bilateral relations. Qatari businessmen and officials have already shown interest in investing in Bangladesh's energy sector, LPG storage terminals, power and infrastructure sectors. Bangladesh has already pursued Qatar for urgent LNG and extended loans for supplies at relatively low prices. Long-term contract of LNG will help Bangladesh in energy security by providing emergency supply.

ENDS

Erina Haque is a researcher, journalist, columnist, and author.

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