Five years after an initiative to build a floating storage and re-gasification unit (FSRU), Petrobangla has finally signed an agreement with a Singapore-based firm to set up the country’s first FSRU – popularly known as an LNG terminal.
Petrobangla and Excelerate Energy Limited Partnership signed the term sheet, under the Speedy Supply of Power and Energy (Special Provision) Act 2015, to set up the terminal at Moheshkhali island in the Bay of Bengal.
The move came after the Cabinet Committee on Economic Affairs, on January 14, approved a much talked-about proposal to build the terminal.
Petrobangla, the state-owned oil company under the Ministry of Power, Energy, and Mineral Resources, will implement the project.
According to the term sheet, the Petrobangla will pay 0.474 cents per million BTU (mmbtu) – a measure of the energy content in fuel – for the FSRU, under a build-own-operate-transfer basis, for 15 years. Petrobangla will receive the LNG within the range between 500 million cubic feet per day (mmcfd) and 600mmcfd.
Petrobangla Secretary Shafiqur Rahman and Director (project origination) of Excelerate Energy Sampo Suvisaari signed the term sheet at Petro Centre in the city yesterday.
During the signing ceremony, the prime minister’s Energy Adviser Tawfiq-e-Elahi Chowdhury said the time had been delayed for the lack of experience and bringing in of new technologies.
He said the price of the LNG will be higher than that of indigenous gas. But the appropriate cost would be extracted by using the LNG in productive works.
At the ceremony, Petrobangla Chairman Istiaque Ahmad told the Dhaka Tribune: “Excelerate Energy will conduct a metocean study over weather and climate to determine which measures have to be taken in different weather conditions to maintain the terminal, geo-technical study and detailed engineering design.
“After metocean study, a terminal use agreement will be signed for 15 years following the approval of the Cabinet Committee on Public Purchase.
“They [Excelerate] will set up the terminal within 16 months from the date of signing the final terminal use agreement. The LNG storage capacity of the FSRU will be 138,000 cubic metres,” he said.
Petrobangla would pay the port service charges and tax on behalf of Excelerate Energy during the period, the Petrobangla chairman said.
After the signing ceremony, Excelerate’s Sampo Suvisaari said: “Astra Oil and Excelerate Energy consortium has got the work order to install LNG terminal and they will be named as Excelerate Energy Limited Partnership. Within two or three months, we will start a metocean study to be completed within nine months.
“Excelerate Energy would have to invest $500m for infrastructure costs and other expenses to set up the terminal by taking a loan from International Finance Corporation,” he added.
A Petrobangla official said that once the terminal is set up, the government would have to import the LNG from Qatar or other countries by paying $16-$18 per unit.
After assuming office in 2009, the Awami League-led government during its last tenure decided to import LNG to feed the national grid by 500mmcfd from 2013.
Separately, state-owned Gas Transmission Company Limited (GTCL) moved to lay a 91km Moheshkhali-Anowara gas transmission pipeline to carry re-gasified LNG from the terminal to shore.
In 2010, Petrobangla issued a pre-qualification for the terminal development process to find suitable investors.
Considering the country’s ongoing and future gas crisis, Petrobangla took the initiative to install the LNG terminal. The terminal will help easy off-loading of imported LNG containers by ships and transmit LNG into the national gas system.
At present, the country’s gas production is about 2,350mmcf per day against a demand of 3,000mmcfd.
