State-owned Petrobangla has sought approval of the Cabinet Purchase Committee to sign final deals with Singapore-based Excelerate Energy to set up an LNG terminal at Moheshkhali, Chittagong to facilitate the import of natural gas. Official sources said Energy Division recently moved a proposal on behalf of Petrobangla in this regard and submitted it to the Cabinet Division.
The deals are Terminal Use Agreement (TUA), Implementation Agreement (IA) and Side Letter Agreement (SLA). Once the Cabinet purchase body approves the proposed deals, the state hydrocarbon agency will sign those with Excelerate Energy Bangladesh Limited (EEBL), a subsidiary of the Singaporean Excelerate Energy, to pave the way for installing a 138,000 cubic metres capacity floating storage and re-gasification unit (FSRU). Dhaka, UNB News Agency Reported.
With these three deals, the officials said, Bangladesh will actually enter the final stage of implementation of its long desired LNG terminal project to mitigate its nagging gas crisis. “The deal will make it mandatory for the EEBL to set up the LNG terminal at its own cost within the next 18 months on a build-own-operate and transfer (BOOT) basis with the completion of necessary surveys in the Bay of Bengal in Bangladesh maritime boundary,” said a top official at Petrobangla.
An official document obtained by UNB revealed that once the FSRU started operation, Bangladesh will have to pay a total of$ 90 million as terminal charges excluding tax, VAT and insurance fee to the operator to use its facilities to supply the imported gas to the national gas network.
In that case, Petrobangla will have to pay about $159,186 per day as fixed component of fees, $45,814 as operating component fees and $32,000 to the terminal operator. In return, the operator will supply 500 million cubic feet per day (mmcfd) to the gas network from its storage. The calculation the total fees, Petrobangla officials said the terminal company on an average will charge 0.49 US cents per unit of gas for regasification and processing of the imported LNG.
Beyond this cost, the government has to spend about of $1.56 billion annually to import 182.5 billion cubic feet of LNG from abroad gas at an estimated cost of $8 per MMBTU gas. This means, Bangladesh has to spend about $2.5 billion annually to supply 500 mmcfd imported gas, according the officials.
Bangladesh has already signed a memorandum of understanding (MoU) with Qatar’s state-owned RasGas, which is supposed to supply the LNG to Bangladesh. After 15 years of operation, Excelerate Energy will transfer all of its assets and facilities to Petrobangla free of cost.
Earlier on March 31, Petrobangla this year signed a draft agreement with Excelerate Energy in this regard. Before that both sides signed term sheet agreement to proceed on for the project. Currently, Bangladesh is producing about 2,700 mmcfd gas against its demand for 3,200 mmcfd keeping shortfall of 500 mmcfd.
Energy experts believe once the LNG terminal starts operation with imported gas, per unit of gas will cost over $9 against the present production cost of below $2 per unit (1000 cubic feet). The government undertook the project in 2010, but it took almost six years to select a company for the project.