Bangladesh's maiden liquefied natural gas import was tied up yesterday after Petrobangla and Qatar's RasGas signed a 15-year agreement.
RasGas will supply 2.5 million tonnes of LNG every year. The LNG would be supplied at: 12.65 percent of the three-month average price of Brent oil plus $0.50 constant per MMBTU (1 million British thermal units).
“It is essential to ensure uninterrupted supply of energy,” said Nasrul Hamid, state minister for power, energy and mineral resources, at the agreement signing event yesterday in Doha.
About 2,500 industrial units are awaiting gas connections, he said.
Abul Mansur Md Faizullah, chairman of state-run Petrobangla, and Hamad Mubarak Al Muhannadi, chief executive officer of RasGas, signed the agreement on behalf of their respective sides.
Hamid and Qatar's Energy and Industries Minister Mohammad Bin Salah Al-Sada were present at the signing ceremony.
“The two countries can work together to develop human resources along with training,” Al-Sada said, adding that the energy cooperation with Bangladesh would continue.
Bangladesh is planning to invest more for ensuring uninterrupted energy supply as the energy demand is on a constant rise, Hamid said.
The construction works for the two floating LNG terminals and the land-based LNG terminals are progressing well, he said.
The government has also undertaken an initiative to construct an LNG-based power plant alongside importing small-scale LNG, Hamid said. “So Bangladesh is exploring various sources of primary energy,” he added.
As per the terms of the agreement, Petrobangla will have to deposit standby letter of credit equivalent of the price of two months' LNG on the basis of a base annual contract quantity to a first-class international bank as financial security.
Payment has to be made in the US dollar within 15 days of submitting import invoice. If there is a delay of seven days, the rate of interest would be LIBOR plus 4 percent. For further delays it would be LIBOR plus 5 percent.
Apart from Qatar, the government has been holding talks with various countries, including Oman and Indonesia, for importing LNG. Bangladesh is looking outside to alleviate its energy shortage, largely caused by the depletion of domestic reserves and rising demand.
At present, gas supply stands at about 2,750 MMCFD (million cubic feet of gas per day) against the demand for 3,600 MMCFD. The shortage of gas has affected power generation as well as industries and households.
The demand for gas will stand at 8,000 MMCFD in 2041, according to an estimate of the energy division.
The finance minister has already indicated that from June next year the gas price may be hiked.