Summit Group has urged the Bangladesh Oil, Gas and Mineral Corporation - Petrobangla to reconsider a notice to terminate the country’s third Floating Storage and Regasification Unit (“FSRU”), know as LNG Terminal, project.
In a press release, it said the termination was not only invalid but that any delay to the project, for which Summit has already invested approximately $20 million on implementation, could result in further energy insecurity.
It mentioned that Summit LNG Terminal II Co Ltd (SLNG-II), a Dhaka subsidiary of Singapore-based Summit Power International Limited (SPIL), wrote to Petrobangla to raise its objections to the notice.
Petrobangla and the Bangladesh Ministry of Power, Energy and Mineral Resources on January 14 issued a letter notifying that certain conditions under the Terminal Use Agreement (TUA) signed earlier with SLNG-II had purportedly not been fulfilled and as such the TUA is terminated.
SLNG-II had signed the TUA and implementation agreement (IA) for the 3rd FSRU on March 30, 2024 with Petrobangla and the Government of Bangladesh respectively.
The TUA and IA were legally vetted and approved by the Cabinet Committee on December 12, 2023.
The 3rd FSRU, the second such project in Bangladesh undertaken by Summit Group, has a planned regasification capacity of 600 million standard cubic feet per day, which would require investment of about $550 million coming in as foreign direct investment (FDI).
However, on October 7, 2024, Petrobangla notified that the project in southeast Bangladesh would be terminated.
Since then, Summit Group has obtained legal advice from both local and international legal firms which affirmed that such termination is invalid pursuant to the terms of the TUA.
Based on such advice, Summit Group engaged with Petrobangla and the Government of Bangladesh to reconsider the decision.
Petrobangla’s notice of January 14 states that the decision to terminate was on the basis that a performance bond (PB) for the project was not submitted by SLNG-II but by its local parent, SCL; that the submission of the PB did not comply with an agreed template; and that the PB was not submitted within a 90-day stipulated deadline.
In response, Summit Group said, the SPIL, citing advice from renowned law firms Herbert Smith Freehills of Singapore and Dr Kamal Hossain & Associates, said Petrobangla had earlier acknowledged receipt of the PB submitted in the form of a bank guarantee, which does not provide any less security.
