Bangladesh PM's office revives Swiss trader AOT's LNG supply deal

LONDON, Feb 20 (Reuters) - Bangladesh’s prime minister has given the nod to a multi-billion dollar LNG supply deal with Swiss trader AOT Energy but the energy ministry will make a final decision on whether it goes ahead, an official at the premier’s office said on Wednesday.

The deal with AOT to supply 1.25 million tonnes of liquefied natural gas (LNG) for 15 years has long been in the works, with terms agreed last February. Last month, the gas company that oversees Bangladesh’s LNG supplies, Rupantarita Prakritik Gas Co, said the deal would not go ahead.

However, a document issued by the office of Prime Minister Sheikh Hasina on Jan. 28, and seen by Reuters on Wednesday, showed the government has not scrapped the plan.

“In reference to the letter of (the) global head of AOT Energy, the Energy Ministry has been asked to take necessary action for finalising a long-term deal for LNG with AOT Energy,” the document said, referring to communication the prime minister’s office had received from AOT about finalising a deal.

Tarikul Islam, director of the prime minister’s office, confirmed the letter. However, he said this did not seal the deal.

“Based on a letter from AOT Energy, we have sent a letter to the energy ministry to take necessary action. But this is the ministry’s call whether they want to go ahead with them or not,” Islam said.

The energy ministry did not respond to requests for comment. AOT declined to comment.

The terms of the deal are secret but broadly speaking, using current LNG prices, the deal would be worth $6.3 billion.

This would be AOT’s first long-term LNG contract although it trades LNG on the spot market and has short-term contracts. Its pipeline gas and LNG volumes amounted to 6.5 billion cubic metres last year, roughly 4.7 million tonnes’ worth of LNG.

Bangladesh is new to LNG and only began importing it last year. Industry players say it is still on a learning curve and that its strategy has been haphazard at times. One government official conceded the nation had taken on too many projects without proper planning.

The country received its first cargo of LNG last April. Qatar supplies one terminal under a 2.5 million tonnes a year (mtpa) deal. A 1 mtpa deal with Oman will kick in once a second terminal starts operations in March.

Bangladesh has imported around 1 million tonnes since September when regular supplies began, according to Refinitiv Eikon data.

With indigenous gas production dwindling, the nation of 160 million people is set to be a significant player in the global LNG market, alongside Pakistan and India.

However, it has tempered its initial enthusiasm. Officials at one point were considering a dozen import projects but have since pared the list down and shifted focus to building onshore rather than floating facilities. (Reporting by Sabina Zawadzki; Additional reporting by Ruma Paul in Dhaka; Editing by Susan Fenton)