Bangladesh's 13-Year LNG Deal May Come with a Steep Price Tag

Bangladesh's energy crisis has led to a scramble for LNG supplies from a volatile spot market. To address this, Petrobangla signed a 13-year agreement with Gunvor USA LLC for 117 cargoes between 2026 and 2038.

The deal marks a departure from traditional oil-indexed long-term contracts. Instead, it uses two market-linked pricing mechanisms: JKM (Japan Korea Marker) and Henry Hub. Initially, deliveries will be priced against JKM, which is currently trading at almost twice the prices implied by existing oil-indexed contracts.

Under JKM plus $0.0875, Bangladesh will buy 14 cargoes from 2026 to 2028. However, this pricing structure may make the agreement costly in its initial three years. Oil-linked contracts remain significantly cheaper at current market prices.