Summit Group has signed an initial contract with Petrobangla to set up a liquefied natural gas terminal on Moheshkhali Island in Cox's Bazar at a cost of about $500 million.
Summit LNG Terminal Company, a unit of Summit Group, will develop the floating facilities in 18 months after signing the final contract, the company said in a statement yesterday.
Energy Secretary Nazimuddin Chowdhury, Petrobangla Chairman Abul Mansur Md Faizullah, Summit Group Chairman Muhammed Aziz Khan, Vice-Chairmen Md Latif Khan and Md Farid Khan and General Electric's Infrastructure Director Peter Mackey were present at the signing of the initial agreement at Petrobangla in Dhaka on Tuesday.
The floating terminal will supply 500 million cubic feet of natural gas per day. The LNG will cost the government $0.45 per 1,000 cubic feet of natural gas. Summit will transfer the facilities to Petrobangla after operating it for 15 years.
Summit will implement the project jointly with US-based GE as equity investment partner, and plans to implement the LNG terminal project with its own funds.
“We want to ensure constant supply of primary energy for the country by implementing this project,” said Aziz Khan.
LNG will be the easiest, most cost-effective, environment-friendly and quickest solution to meet the primary fuel demand as the current supply of gas will start declining in 2018, he said.
Khan also said the floating terminal will help Summit implement a large gas-based power plant, having a capacity of generating 600 megawatts of electricity.
This is the third LNG-related agreement the government has signed so far.
In December, Petrobangla signed an initial agreement with India's energy company Petronet to set up an LNG re-gasification terminal on Kutubdia Island and a pipeline at an estimated cost of $950 million.
In July, the state-run corporation and US-based Excelerate Energy signed the final deals to set up Bangladesh's first LNG terminal, which will handle imported LNG and supply it to the national grid from early 2018.
The terminal will be set up at Moheshkhali in the Bay of Bengal.
Bangladesh is looking outside to ease its energy shortage largely caused by depleting domestic reserves and rising demand. Gas supply stands at about 2,700 MMCFD against the demand for 3,300 MMCFD.
The government aims to set up four land-based LNG terminals and one or two floating storage and re-gasification units.