(Bloomberg) — Bangladesh was forced to pay the most for liquefied natural gas than it has in about four years, threatening to drive up energy costs as the government scrambles to contain rolling blackouts.
A cabinet committee approved the purchase of a cargo for early-October delivery from BP Plc at $28.03 per million British thermal units, according to a notice on Wednesday. That single shipment is worth almost $100 million, and would be the most expensive since 2022 in the wake of the Russian invasion of Ukraine, according to traders.
Qatari LNG exports through the Strait of Hormuz remain at a virtual standstill due to the Middle East war, effectively stranding around a fifth of global supply. That’s wreaking havoc in South Asia, where the fuel is used to generate electricity and also for industrial use.
Last week, Qatar extended force majeure, a legal clause that allows suppliers to suspend contractual obligations due to extraordinary events beyond their control, on shipments to Asian buyers into October.
Dhaka has been managing the shortfall by purchasing LNG on the spot market, while also implementing power cuts in periods when demand outstrips supply. Bangladesh has spent more than $2.1 billion on spot cargoes since April, according to Bloomberg calculations. Under the country’s long-term contracts with Qatar, those shipments would have cost about $1.2 billion.
The added costs are straining government coffers, and may result in higher power bills for households and businesses. The World Bank warned in April that under a partial pass‑through of higher energy prices, subsidy outlays are projected to rise to 2.8% of GDP in the current fiscal year — with costs increasing further in the absence of adjustments to domestic prices.
The energy crunch is also threatening Bangladesh’s textile industry, the mainstay of its economy. Around 40 to 50% of production at knitwear factories is being disrupted because of inconsistent gas supplies, Mohammad Hatem, the president of the Bangladesh Knitwear Manufacturers and Exporters Association, told the Financial Express, a local newspaper.
The country also agreed to buy three other cargoes for September and October delivery at prices ranging from $24 to $27.5 per million Btu, according to the traders.
Bangladesh’s total gas supply on Wednesday was down 18% compared with the same day last year, primarily due to weaker LNG flows, according to data from state-owned Petrobangla.
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