Qatar offers shorter,cheaper LNG contracts to entice Asian buyers amid US competition

Qatar is proposing to provide smaller and more affordable deals for liquefied natural gas in order to secure buyers for an increase in production projects. This is stemming from the increase of rivalry with the United States.

Sources with knowledge of the matter disclosed that a recent agreement between the leading LNG exporter worldwide and Bangladesh consisted of payment timelines that were more flexible compared to the usual standards.

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According to undisclosed sources, the supplier is striving to become more flexible towards its customers' requirements, particularly in the emerging nations of Asia. These regions often struggle with high energy expenses or cannot commit to lengthy agreements.

QatarEnergy, the company that made an agreement with Bangladesh, chose not to answer a comment request. The Ministry of Power and Energy in Bangladesh didn't respond to the comment request immediately.

The country is constructing the largest LNG expansion project globally with a target to increase its production by over 60% until 2027. However, it has only made agreements for a small portion of the supply so far. It is currently looking for potential customers while exporters in the US are also increasing their production and securing numerous flexible contracts with significant players in the industry.

It has been a long-standing practice in Qatar to have stringent clauses incorporated into supply agreements, which mandate delivery to particular ports, and also gives preference to contracts with extended durations.

This situation has caused some potential buyers in Japan and Europe to hesitate in making more purchases, as they anticipate a switch from non-renewable energy sources to sustainable options that could result in inflexible and protracted supply contracts.

According to sources, some Asian countries are now being offered deals by the nation with durations that are less than 20 years.

The contract that Bangladesh agreed to has a duration of 15 years and is approximately linked to Brent crude oil at a rate of 12.6 percent, with an additional charge of 50 US cents per million British thermal units.

According to sources, the current prices are lower than those offered last year when the world was experiencing a severe energy crisis.

Persons who have information regarding the matter, and have asked for anonymity, have disclosed that individuals from China, India, Taiwan, and Pakistan are currently engaged in negotiations with Qatar to obtain more supply.

Saad al-Kaabi, the Energy Minister of Qatar, stated in the previous month that the country might finish signing all the agreements for its expansion by the year's end.

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QatarEnergy is set to ink a long-standing agreement with Bangladesh for the supply of LNG.