Petrobangla hopes to ink the final deals in July with foreign-firm Excelerate to construct Bangladesh's maiden LNG terminal as the cabinet committee on government purchase has approved awarding the contract.

"We want to ink the deals as soon as possible. It might be in July," Petrobangla chairman Istiaque Ahmad told the FE Saturday.

He said the state-run petroleum corporation has already completed all necessary preparations for striking the deals, as the government attaches high priority to catering gas needs in various economic sectors.

The cabinet committee approved Wednesday the awarding of contracts to Excelerate Energy Bangladesh Ltd for construction of LNG (liquefied natural gas) terminal at Moheshkhali island in the Bay of Bengal.

The terminal would be a FSRU (floating, storage and re-gasification unit) where the whole infrastructure to re-gasify LNG would readied on a ship, he said.

Petrobangla would ink three separate deals — Terminal Use Agreement (TUA), Implementation Agreement (IA) and Side Letter Agreement (SLA) — with the firm.

Excelerate Energy Bangladesh Limited (EEBL), as subsidiary of Singapore's Excelerate Energy, would set 

up the FSRU on build- own-operate-transfer (BOOT) basis.

The company, however, started in advance carrying out geophysical works on the project site early May.

Excelerate and state-run Petrobangla on March 31 initiated the deal on the LNG terminal use over building the FSRU.

This would be Bangladesh's first LNG terminal aimed at importing LNG and re-gasifying it before supplying the fuel to national gas grid.

Excelerate would charge US$0.49 per Mcf (1,000 cubic feet) against its service.

Petrobangla would have to count an additional $0.10 per Mcf to cover other related costs, which include the costs for fuel, tag- boat operation, port facility etc, said the official.

The petroleum corporation will have to pay around US$159,186 per day as fixed-component fees, $45,814 per day as operating- component fees and $32,000 per day to the terminal operator, under the approved deals.

Regasified LNG from the terminal would be sold on a take-or-pay basis to Petrobangla, which would have back-to-back gas-sale agreements with power-plant owners or operators and other consumers at the user end.

The FSRU will have berthing and mooring facilities for LNG tankers with a capacity of 138,000 cubic metres. 

It would have the capacity to supply around 500 million cubic feet per day (mmcfd) of natural gas to national gas grid. The capacity could be increased to around 700 mmcfd.

The tenure of the construction contract would be 15 years.

Excelerate would have to complete construction of the FSRU within 18 months of inking final deals.

The government eyes supply of first re-gasified LNG from this terminal in early 2018.

Petrobangla has estimated that the government would have to spend around $1.56 billion annually to import 182.50 billion cubic feet (Bcf) per year of LNG from abroad at an estimated cost of $8 per Mcf.

This means, Bangladesh has to spend about $2.5 billion annually to supply 500 mmcfd re-gasified LNG to national gas grid.

Petrobangla on February 25, 2015 inked a term-sheet for the terminal-use agreement with Excelerate to build the LNG import terminal.

Excelerate has already carried out a met-ocean study by Marin of the Netherlands and found building the terminal viable.

State-run Gas Transmission Company Ltd, or GTCL, is installing a 91-km pipeline for carrying re-gasified imported LNG from Moheshkhali Island in the Bay of Bengal to Anwara in the port city of Chittagong to facilitate its transmission to user-ends.

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Source: The Financial Express