LONDON (Reuters) - Bangladesh has picked Swiss commodity merchant AOT Energy to help line up supplies of liquefied natural gas (LNG) on its behalf from mid-2018, showing how new buyers are emerging to soak up a gas glut.
AOT said in a statement that under a memorandum of understanding signed on Tuesday, the company would set up supply deals for state-run Petrobangla.
U.S. shipping company Excelerate Energy will install Bangladesh’s first floating LNG import terminal at Moheshkhali, which is due to begin accepting cargoes in May next year.
Gas is by far the main fuel source in Bangladesh. With indigenous output set to decline from 2018, LNG imports are needed to meet rapid consumption growth, according to the Oxford Institute of Energy Studies.
Tempted by cheap gas on world markets, Petrobangla has signed preliminary deals for two more terminals, with India’s Petronet and Summit LNG Terminal Co.
They are due to start in coming years if given final approval, setting Bangladesh up to become a major new LNG importer alongside Pakistan and Jordan.
Up to now, AOT Energy - formerly known as Astra Transcor Energy - has kept a low profile in trading LNG cargoes, though it has led efforts to set up Bangladesh’s first import terminal.
AOT is tasked with finding supply to fill about half the 3.5 million-tonnes-per-year import project, an industry source said, brightening prospects for producers hit by low prices and weak demand.
Finding new markets to soak up a looming supply glut is seen as key to improving producers’ bottom lines and lifting spot prices LNG-AS, which are down 70 percent since early 2014.
Petrobangla is also in talks to buy LNG from top producer Qatar.
Bangladesh stands with its plan to import nearly 4 million tonnes from Qatar, despite the move by several Middle East countries to cut ties with the gulf country, a senior Petrobangla official said.
“We will go ahead with our planned LNG import with Qatar,” the official said.
Earlier this month, Saudi Arabia, Egypt, the UAE and Bahrain cut their ties with Qatar, accusing it of supporting terrorism, opening up the worst rift in years among some of the most powerful states in the Arab world.
Reporting by Oleg Vukmanovic; additional reporting by Ruma Paul in Dhaka,; Editing by Dale Hudson, Larry King