A key long-term supplier of liquefied natural gas (LNG) to Bangladesh, OQ Trading Limited (OQT), has introduced a pricing structure tied to spot market rates as a condition for restarting shipments, effectively proposing to replace the terms of its existing contracts. This adjustment could lead to LNG costs nearly doubling compared to the rates established in the original agreements.
However, Rupantarita Prakritik Gas Company Limited (RPGCL), a subsidiary of Petrobangla, has dismissed the proposal outright. In a letter addressed to OQT’s CEO, Wail Al Jamali, and dated 9 October, RPGCL demanded that OQT honor its contractual commitments without altering the agreed-upon pricing framework. The letter further requested confirmation by 15 October that all 32 scheduled LNG cargoes for 2027—covered under two separate supply agreements—would be delivered as planned.
Contractual Obligations
In response, OQT submitted a revised delivery schedule on 14 October, outlining plans to supply just 16 of the 32 contracted cargoes—half the expected volume. RPGCL, however, said the plan seems not convincing and pressed for greater transparency regarding delivery guarantees.
OQT’s updated plan specifies that all 16 cargoes would originate from Ras Laffan port, a proposal RPGCL officials questioned. They cited OQT’s prior force majeure declarations, which attributed production disruptions to damage at its facilities and the closure of the Strait of Hormuz due to the US-Iran conflict. RPGCL argued that alternative loading locations should be considered, given OQT’s global supply network.
The new pricing model proposed by OQT is based on the Japan-Korea Marker (JKM) rate minus $0.04 per million British thermal units (MMBtu), diverging from the Brent crude-linked pricing formulas originally agreed upon in the two long-term supply contracts. Under this proposal, the cost would reach $26.235 per MMBtu, calculated from the JKM price of $26.275 on 14 October.
Pricing Dispute
By contrast, Brent crude was trading at $106.66 per barrel on the same date. Applying the original contract terms, the first agreement would have yielded a price of approximately $13.20 per MMBtu, while the second would have resulted in around $14.69. The proposed spot-market price represents a 99% increase over the first contract’s rate and a 79% rise compared to the second.
RPGCL insists on existing contracts, stating that the supply purchase agreements contain no provision for a price review or reopening of the agreed pricing terms.
Since the onset of LNG supply disruptions following the US-Iran conflict on 28 February, OQT has repeatedly declined Petrobangla’s requests to fulfill its contractual obligations. The company has invoked force majeure, citing the Strait of Hormuz’s closure and broader regional shipping and production challenges.
Prior to RPGCL’s 9 October correspondence, OQT had notified the subsidiary that force majeure would apply to a cargo scheduled for delivery on 18 October. According to the 2026 Annual Development Programme, the shipment, designated OQT-PB02-2026-04, was part of the second supply agreement and was due to arrive on that date.
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Bangladesh’s preliminary import plan for 2027 includes 115 LNG cargoes, though the final schedule remains under review. Of these, 32 are expected from OQT under the existing long-term contracts, with the balance sourced from other long-term providers and the spot market.
Petrobangla officials have noted that supply disruptions have forced Bangladesh to rely more heavily on the volatile spot market, where prices have surged due to the regional conflict. Additionally, force majeure declarations from QatarEnergy and Excelerate Energy regarding 2026 deliveries have further complicated procurement efforts, necessitating additional spot-market purchases at raised costs. OQT first presented its alternative pricing framework to RPGCL on 16 September, while simultaneously consulting with vessel operators to assess the feasibility of resuming safe transit through the Strait of Hormuz. The operator of QatarEnergy’s Ras Laffan LNG facilities continues to evaluate security risks to determine operational resumption conditions.
RPGCL remains skeptical of OQT’s proposal to load all 16 cargoes exclusively from Ras Laffan, given the company’s previous force majeure claims. The subsidiary insists on deliveries from diverse global sources, aligning with OQT’s established supply flexibility.
Force Majeure Declarations
OQT has consistently declined Petrobangla’s requests for contracted LNG deliveries since regional disruptions began in late February, attributing delays to force majeure stemming from the US-Iran conflict and the Strait of Hormuz’s closure. The QatarEnergy facility operator at Ras Laffan is still assessing security conditions to determine when operations can safely restart.
OQT continues to engage with shipping companies to establish parameters for secure LNG carrier passage through the strait. Meanwhile, Petrobangla has drafted a tentative 2027 import plan for 115 cargoes, though adjustments may occur. Of these, 32 are allocated to OQT under the existing agreements, with the remainder secured through alternative long-term suppliers or spot purchases.
Supply Agreements and Pricing Formulas
Bangladesh signed two long-term LNG supply agreements with OQT. The first agreement has a pricing formula based on Brent crude prices. The second agreement has a similar pricing formula.
The pricing formulas are 12% of Brent crude prices plus $0.40 per MMBtu and 13.3% of Brent plus $0.50 per MMBtu. RPGCL cited Article 5.1 of the supply purchase agreements in its letter to OQT. The company also urged OQT to source LNG from various countries.
RPGCL reminded OQT that Article 15.1(a) requires the seller to notify the buyer by 15 October 2026 of the anticipated LNG quantities available for delivery in each quarter of the 2027 programme year. The company reserves its contractual and legal rights under the agreements. No delay or omission by the buyer in exercising any right or remedy shall operate as a waiver of it.
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