As part of its efforts to address gas crisis in the country, state-run Petrobangla has planned to start importing lean LNG from Oman by May 2019.
Petrobangla and Oman Trading International (OTI) agreed recently to initiate LNG import and re-gasify it in the FSRU at Moheshkhali Island in the Bay of Bengal, a Petrobangla official said.
The LNG (liquefied natural gas) would be imported from the middle-eastern firm OTI under the country’s second long-term LNG import contract.
Bangladesh signed a 10-year LNG sale and purchase agreement (SPA) with Oman to directly import liquefied natural gas (LNG) every year to meet its growing energy demand.
According to agreement OTI will supply around 1.0 million tonnes per year of LNG.
Excelerate Energy and Summit Corporation will regasify the LNG in equal shares using their respective terminals in Moheshkhali and pump it into the national network.
LNG would be supplied at 11.9 percent of the three-month average price of Brent oil plus $0.4 constant per MMBTU (1 million British thermal units).
For the first six years, OTI would supply 1.8 million tonnes of LNG each year and it would go up to 2.5 million tonnes for the following four years, according to the draft contract. In September last year, the government signed a 15-year contract with Qatar’s RasGas, which would supply 2.5 million tonnes of LNG every year.
In case of Qatar, the LNG pricing formula is: 12.65 percent of the three-month average price of Brent oil plus $0.5 constant MMBTU.
Bangladesh started regular imports of LNG from RasGas around one year after inking the SPA from September 9.
Petrobangla’s SPA with OTI is under a delivery ex-ship arrangement, with the price including transportation costs for LNG to be delivered to the terminal.
Under the deal, the base quantity of 500,000 tonnes per year is subject to the completion of the first LNG terminal and another 500,000 tonnes per year is subject to the completion of the second terminal owned by Summit Group. Excelerate Energy’s floating, storage and re-gasification unit Excellence, the Bangladesh’s first LNG import facility for re-gasification, started commercial operation on August 18. The second FSRU is expected to come online by April, 2019.
It also signed a letter of intent with Indonesia’s Pertamina to import around 1.0 Mtpa of LNG over 10 years. Petrobangla also has shortlisted over two dozen LNG suppliers to purchase LNG on a spot basis. The country would require importing around 30 Mtpa of LNG to meet the mounting demand from various sectors including industries, power plants and fertiliser plants by 2041 as domestic gas reserves are depleting fast, according to a report prepared by Copenhagen-based research firm Ramboll in association with Geological Survey of Denmark and EQMS Consulting Limited.
Country’s current natural gas production is hovering around 3,050 mmcfd, including re-gasified imported LNG, against the demand for 3,960 mmcfd, according to Petrobangla.