TotalEnergies and Gunvor Singapore issued notices to Bangladesh’s national oil company, Petrobangla, in early July to offset around $113 million in unpaid payments for LNG spot cargoes or forfeit monetary guarantees with the state-owned bank, according to senior Petrobangla officials and documents seen by S&P Global Commodity Insights.
Unpaid bills: Petrobangla asks state banks to intervene
The warnings prompted Petrobangla to ask the Ministry of Energy and Mineral Resources to intervene and ensure that state banks disburse dollars to avoid overdue interest on unpaid amounts, officials said.
While Petrobangla had enough money in the company’s bank account, the final invoices for three cargoes could not be paid on time by the bank due to a lack of dollars, they added. Petrobangla owed TotalEnergies around $84.5 million for two LNG cargoes, with one payment due at the end of June and a second at the beginning of July, while it owed Gunvor around $28.5 million at the beginning of July 11, according to the documents.
TotalEnergies’ two unpaid LNG cargoes were delivered to Moheshkhali’s floating storage and regasification unit from May 16 to 17 and May 25 to 26 at $13.33/MMBtu and $13.28/MMBtu respectively, and Gunvor’s unpaid spot LNG cargo was delivered on June 8.9 window at around $12.47/MMBtu to Moheshkhali FSRU, officials said. According to them, under a framework sales contract signed with spot LNG suppliers, Petrobangla is obliged to make payments within 15 days of delivery.
Emergency meeting following warnings from Gunvor and TotalEnergies: Petrobangla takes partial payment measures
TotalEnergies and Gunvor Singapore requested full clearance of the outstanding invoices within three working days of the week of July 14, or they would be forced to adjust the assessments of the guarantees under the Standby Letter of Credit, or SBLC, retained by Petrobangla with the state. .direct Agrani Bank Ltd. against the LNG trade with suppliers, officials said. In addition, unpaid amounts would incur interest at the prevailing LIBOR rate plus/minus 5% to be compounded quarterly, which is now called the Secured Overnight Rate, or SOFR, officials added.
In addition to deducting the dues from the bank guarantee, Gunvor Singapore also warned that if Petrobangla failed to pay within a 3-day window for the documents, it would not participate in Bangladesh’s one-off LNG tenders and would suspend the confirmation notice for the supply of two LNG cargoes for July and August deliveries under a recent tender. The two LNG cargoes were awarded to Gunvor Singapore for delivery on July 12-13 and August 22-23 at a price of $12.98/MMBtu and $13.85/MMBtu respectively to Moheshkhali FSRU, according to the results of the previous tender.
Petrobangla held an emergency meeting with ministry officials, which led to the remittance of a partial payment to Gunvor to maintain punctual LNG supply, as well as assurances that further payments would be cleared soon, officials said. The president of Petrobangla was not available for comment. Gunvor declined to comment and TotalEnergies did not immediately respond to questions.
TotalEnergies and Gunvor miss out on Petrobangla’s LNG tenders
Officials did not specify whether partial or full payments had been made to TotalEnergies. However, Gunvor and TotalEnergies did not bid in recent ad hoc tenders launched by Petrobangla. Excelerate Energy and Vitol Asia were the only bidders in Petrobangla’s tender for two spot LNG cargoes to be delivered on August 7-8 and August 25-26. The official said so far Gunvor had delivered its July 12-13 spot cargo schedule to Moheshkhali, and the trader was scheduled to deliver another cargo in August, on the 22nd or 23rd.
In his communication with ministry officials Petrobangla had stated that if the unpaid amounts were not cleared and adjusted against the SBLC guarantee, the issue “will be known inside and outside the country” which will result in financial losses, suppliers will lose interest in tenders, energy supplies will be disrupted and banks will be unwilling to issue SBLCs in favor of Petrobangla. Meanwhile, Petrobangla’s payments to other spot and forward suppliers have also been delayed, officials said.
In early June, S&P Global reported late payments by Petrobangla to its two long-term LNG suppliers, Qatargas and OQ Trading, as well as to certain spot LNG suppliers. In May, refined product suppliers warned that they would halt supplies after state-owned Bangladesh Petroleum struggled to clear outstanding dues against the backdrop of a sharp currency devaluation.
