Petrobangla, US firm sign deal to build LNG terminal | The Daily Star
12:00 AM, April 01, 2016 / LAST MODIFIED: 12:12 AM, April 01, 2016

Petrobangla, US firm sign deal to build LNG terminal

Petrobangla and US-based Excelerate Energy yesterday signed an agreement to set up Bangladesh's first terminal to handle imported liquefied natural gas and meet growing demand for the energy in the country.

The terminal known as a floating storage and re-gasification unit will be set up on the island of Moheshkhali in the Bay of Bengal.

The unit will provide natural gas to Chittagong which has been facing an acute gas crisis for a long time.

Syed Ashfakuzzaman, secretary of state-run Petrobangla, and Karlman Tham, business development manager for Asia region of Excelerate Energy, signed the deal at Petrobangla in Dhaka.

Petrobangla will have to spend $1.6 billion a year to increase the supply of natural gas by 500 million cubic feet per day, according to a handout distributed after the signing of the agreement.

The agreement is the first step of the government to alleviate the gas crisis in the long-term, Nasrul Hamid, state minister for power, energy and mineral resources, said at the deal signing ceremony. 

Excelerate Energy, the pioneer and market leader in innovative floating LNG solutions, would develop the terminal in 23 months and operate it for the next 15 years to facilitate a supply of 500 million cubic feet of natural gas per day from imported LNG.

A 90km pipeline of 30-inch diametre will carry the gas from the floating terminal to Anowara to feed the national grid. The LNG will be imported from Qatar.

The LNG import is expected to start in early 2017.

In 2010, the government took the step to import LNG in the wake of declining reserves of natural gas which has worsened the gas crisis. The government plans to set three more LNG terminals. 

Bangladesh is now reeling from an acute natural gas crisis with the daily average output of around 2,700 mmcfd against the demand for over 3,200 mmcfd.

Petrobangla on January 25 inked a term-sheet for the terminal-use agreement with Excelerate to build the LNG import terminal after several rounds of negotiations and revising initial fiscal and technical terms.

The US energy firm has already carried out a met-ocean study and found the construction of the terminal viable. Excelerate Energy will realise $159,000 per day as rent of the floating terminal and $45,000 per day as operational charge, according to Md Quamruzzaman, a director of Petrobangla. As a result, the price of each thousand cubic feet of natural gas from imported LNG would be at least $3.2.

Tawfiq-e-Elahi Chowdhury, energy adviser to the prime minister, said the overall cost for handling and re-gasification of the imported LNG would be $0.59 for each thousand cubic feet of gas.

Of the total cost, Excelerate Energy will realise $0.49 and other service charges including, tugboat charge, fuel costs and port fees would cost another $0.10, he said.

The adviser also said two land-based LNG projects are underway to increase gas supply by 1,000 million cubic feet per day. Nazimuddin Chowdhury, secretary of the energy division, and Istiaque Ahmad, chairman of Petrobangla, also spoke.

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