Bangladesh bought two liquefied natural gas (LNG) cargoes for delivery in October at record prices, two industry sources said on Friday, as low inventory in Europe boosts competition with Asia for supplies ahead of winter.
The south Asian nation bought one cargo from trader Vitol for delivery in mid-Oct. at $35.89 per million British thermal units (mmBtu) and another from Gunvor for late Oct. delivery at $36.95 per mmBtu, said an official of state-run Petrobangla.
"Winter is yet to come but prices have gone crazy," the official said, speaking on condition of anonymity.
"It is really tough to cope with such abnormal prices. At the moment, we have no other option but to buy to keep economic activities going."
Asia spot LNG prices LNG-AS surged to a record of more than $56 per mmBtu, before dropping to more than $35 per mmBtu on Thursday, as low gas inventory in Europe drives up competition for LNG with Asia ahead of expected winter demand.
More than half of Bangladesh's electricity comes from natural gas, although some power plants also run on heavy fuel oil and diesel.
Record gas prices are hitting countries such as Bangladesh hard as they typically import bigger volumes of spot cargoes than other nations in Asia, leaving them exposed to price volatility.
Bangladesh is also reviewing renewals of the leases of five oil-fired power plants which are nearing expiry, despite its plan to move from oil towards natural gas for power generation.
Last month, it considered dropping a plan to renew the leases on finding it was not cost-effective to do so, but power ministry officials have said the plan is now back on the table.
"An energy crisis is coming," one of the officials told Reuters. "We need to be prepared. LNG prices are breaking all records. We simply don't know how far it will go. That's why we are keeping all options open."
Rising oil prices are also hitting the economy, said an official of state-run Bangladesh Petroleum Corp, adding, "The government is making a frantic effort to cope with the crisis."