Gunvor's LNG Deal May Be Costly for Bangladesh in Short Term

Petrobangla has signed a 13-year long-term agreement with Gunvor USA LLC for 117 LNG cargoes to be delivered between 2026 and 2038.

The deal's two market-linked pricing mechanisms, which replace the Brent crude oil index used in most of Bangladesh's long-term LNG purchases, could make the agreement costly in its initial three years.

Gunvor's JKM-linked pricing appears lower than those of existing short-term contracts, but because deliveries from 2026 to 2028 will be priced against JKM, Bangladesh will remain exposed to a market that is currently trading at almost twice the prices implied by its existing oil-indexed long-term contracts.

The Gunvor deal's premium during its Japan Korea Marker (JKM)-linked phase appears lower than those of the country's existing short-term contracts. However, because deliveries from 2026 to 2028 will be priced against JKM, Bangladesh will remain exposed to a market that is currently trading at almost twice the prices implied by its existing oil-indexed long-term contracts.