Long-term LNG supplier OQT seeks spot-linked price to resume supply to Bangladesh

OQT’s plan proposed loading all 16 cargoes from Ras Laffan port, which an RPGCL official described as a dubious move since OQT had been enforcing force majeure citing damage to its production site due to the US-Iran conflict and the closure of the strait.

An RPGCL official, seeking anonymity, said, “The plan OQT sent us seems not convincing. We sent a letter seeking clarity and certainty of delivery. If delivery from the Ras Laffan port is not secured, there is no point in sending a delivery plan. We want delivery from other locations, as their portfolio is versatile and flexibly spread across the world.”

OQT proposal

The Omani state-owned company has proposed a price of the Japan-Korea Marker (JKM) minus $0.04 per million British thermal units (MMBtu), instead of the Brent crude-linked formulas agreed upon under two long-term supply purchase agreements with Bangladesh.

The proposal comes as OQT continues to withhold contracted LNG deliveries following the disruption caused by the US-Iran war and the closure of the Strait of Hormuz, forcing Bangladesh to rely more heavily on the volatile spot market to meet its gas demand.

According to the proposal seen by The Business Standard, the JKM-linked formula would put the price at $26.235 per MMBtu, based on the October 14 JKM price of $26.275.

By comparison, Brent crude was trading at $106.66 per barrel, according to the OilPrice.com index on 14 October. At that level, the price under Bangladesh’s first OQT agreement would be approximately $13.20 per MMBtu, while the second agreement would put it at around $14.69.

The proposed price is therefore about 99% higher than the price under the first agreement and 79% higher than that under the second, based on the stated market prices and contractual formulas.

RPGCL insists on existing contracts

Bangladesh signed its first long-term LNG supply agreement with OQT on 6 May 2018 and a second on 19 June 2023.

Under the first agreement, the pricing formula is 12% of Brent crude prices plus $0.40 per MMBtu. The second agreement provides for 13.3% of Brent plus $0.50 per MMBtu.

Each contract covers 51 million MMBtu annually, equivalent to 16 LNG cargoes, meaning Bangladesh expects to receive 32 cargoes from OQT in 2027.

In its 9 October letter, RPGCL said it remained confident that OQT would continue to honor the agreements, citing Article 5.1 of the supply purchase agreements.

The company also urged OQT to source LNG from countries beyond Oman, including Algeria, Nigeria, Equatorial Guinea, Egypt, France, Belgium, the United States, Angola, and the Netherlands, as it had done in 2019, 2020, and 2021.

RPGCL said the contracts require OQT to deliver the agreed quantities regardless of the loading port, provided the relevant contractual requirements are met.

“The buyer expects that notice to confirm the full base annual contract quantity under each SPA (supply purchase agreement) and to identify the loading port for any cargo to be supplied from a source other than Qalhat,” the letter said.

Citing Articles 2 and 7.1 of the supply purchase agreement, RPGCL said the seller was obliged to sell, transport, deliver, and discharge the contracted quantities at the delivery point for each contract year.

“Article 7.1 makes clear that those quantities are fixed in BTUs. Under Article 6.2, the Seller must, at no cost to the Buyer, provide, maintain, and operate the Seller’s Facilities in order to fulfill those obligations throughout the Term,” the letter reads.

RPGCL also 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.

TBS approached relevant officials of Petrobangla, RPGCL, and the Energy Division about the recent communication between OQT and RPGCL, but they declined to comment on this issue. TBS has copies of the correspondence.

No provision for price revision

Rejecting OQT’s alternative pricing proposal, RPGCL said the existing supply purchase agreements contain no provision for a price review or reopening of the agreed pricing terms.

Energy Division officials said Petrobangla could pursue legal action if OQT continues to refuse deliveries under the existing agreements.
RPGCL said it reserves all its contractual and legal rights, including the right to treat any failure or refusal by OQT to perform its obligations as a breach of the agreements.

“No delay or omission by the buyer in exercising any right or remedy shall operate as a waiver of it. All of the buyer’s rights and remedies under the supply purchase agreements, at law and in equity, including under Articles 16 and 20 and the right to treat any failure or refusal by the seller to perform as a breach of the supply purchase agreements, are expressly and fully reserved,” the letter stated.

OQT continues to invoke force majeure

OQT first proposed the alternative JKM-linked pricing formula in a letter sent to RPGCL on 16 September.

The company has been declining Petrobangla’s repeated requests to deliver cargoes under the two agreements since the LNG supply disruptions began following the outbreak of the US-Iran war on 28 February.

OQT has cited force majeure, referring to the closure of the strait and disruptions to LNG production and shipping in the region.

Before RPGCL sent its strongly worded 9 October letter, Liz McGowan, senior operations executive–LNG at OQT, notified the company that force majeure would be applied to a cargo scheduled for 18 October.

According to the 2026 Annual Development Programme, cargo OQT-PB02-2026-04 under the second supply purchase agreement was scheduled to arrive on that date.

In a letter dated 28 September, OQT said the operator of QatarEnergy’s LNG production facilities at Ras Laffan was continuing to assess regional security risks and the conditions required to resume operations.

“The operator of the LNG production facilities at Ras Laffan is continuing to conduct regular risk assessments and is evaluating resumption of its operations based on its assessment of the regional safety situation, its ability to provide adequate safeguards for its employees and contractors working on its facilities, and its ability to manage the operational constraints as well as its ability to secure the passage of vessels through the strait,” the letter said.

OQT also said it remained in contact with vessel operators to determine the conditions under which LNG carriers could resume safe, predictable, and continuous transit through the strait.

“The seller is fully engaged with all relevant stakeholders with the intention to resume performance,” the letter added.

Bangladesh plans 115 LNG cargoes for 2027

Petrobangla has drawn up a preliminary plan to import 115 LNG cargoes in 2027, although the final schedule has yet to be confirmed. Officials said the number could be as low as 112 cargoes.

Of the planned imports, 32 cargoes are expected to come from OQT under the two existing long-term agreements, with the remainder to be sourced from other long-term suppliers and the spot market.

Petrobangla officials said the disruptions to contracted supplies have increased Bangladesh’s exposure to spot market prices, which have risen sharply amid the regional conflict.

The company has also faced force majeure declarations from QatarEnergy and Excelerate Energy over LNG deliveries in 2026, further complicating supply planning and forcing Bangladesh to purchase additional cargoes from the spot market at substantially higher prices.