First-ever floating LNG terminal deal okayed to be built in Bangladesh
15 January 2015, Nirapad News : The government with a US-Singapore consortium will construct the first-ever floating liquefied natural gas (LNG) terminal with a daily capacity of 500 MMCF at Maheshkhali to meet the country’s energy demand. Gas is to be imported for $17.1 per million cubic feet (mmcf), 10 times higher than the national gas sales price.
The cabinet committee on economic affairs yesterday approved an unsolicited deal the “Term Sheet Agreement” signed with the US-Singapore consortium of Astra and Excelerate (AEC) under the Power and Energy Fast Supply Enhancement (Special Provision) Act, 2010.
The import of Liquefied Natural Gas (LNG), though at a very expensive rate, is likely to ensure the country’s energy security in the long run. Finance Minister AMA Muhith told reporters after yesterday’s meeting that the price of the imported gas would have been much higher, but not that much as it would be mixed with local gas. According to an energy ministry proposal, if LNG was mixed with local gas, the average cost of gas will rise to $4.39 per mmcfd from $1.7, implying that the government will have to hike gas price in future. However, the minister said the gas price would not go much higher for the consumers.
Prime Minister’s Energy Adviser Towfique-e-Elahi Chowdhury said the gas would take two years to reach the country and the price would be fixed in line with the oil price on international market.
The state-owned principal body in the country’s hydrocarbon sector, Petrobangla initialed a term sheet agreement with the Singapore-based Astra Oil and Excelerate Energy Consortium. As per the agreement, Astra Oil will set up the LNG terminal and operate it. It has to complete the construction work by 16 months from the date of final agreement targeting a tentative commission date of the project in 2017.
The AEC would install the terminal at Maheshkhali in Cox’s Bazar to facilitate LNG import from Qatar with which Bangladesh signed a memorandum of understanding in 2011. Finance Minister Muhith said the government’s agreement with Qatar would expire this month. He added fresh negotiations would start for extension of the tenure and expressed the hope that it would be done in time.
According to the energy ministry’s present estimate, the government will have to spend around $2.7 billion annually for importing 500 million cubic feet per day (mmcfd) LNG and using the floating terminal. For the last one decade, the country faced a shortfall of around 500 mmcfd gas. As per the forecast, this would persist even if the country adds new gas to the national grid from its own resources in the coming years.
Besides, the Cabinet Committee of Government Purchase (CCGP) has given nod to nine procurement proposals at another meeting, also chaired by the finance minister at the cabinet division, according to a news agency.