Bangladesh Cabinet Approves RasGas LNG Deal
Bangladesh is all set to start importing Qatari LNG from April 2018 with the completion of construction of its first LNG import terminal. The country's cabinet committee on public purchase approved August 30 the deal between Qatar and Bangladesh's state-owned Petrobangla, a senior Petrobangla official told NGW August 31.
Qatar’s RasGas will supply 2.5mn metric tons/year of lean LNG to Petrobangla at a price fixed at around 12.50% of the three-month average of Brent crude benchmarks plus 0.50% for 15 years under the deal, he said. A final deal between Petrobangla and RasGas would be inked soon, confirming the July 13 agreement said the official.
It took around one and a half months for the law ministry to approve the initial deal, said the official on the grounds of anonymity as he is not authorised to talk to media. He said the quantity of LNG imports could be increased later as the deal is flexible.
The supply from RasGas will require a third of Bangladesh's total LNG handling capacity of around 7.5mn mt/year, which will be ready following the 2018 commissioning of two floating, storage and regasification units.
Bangladesh will be importing lean LNG, in line with the type of natural gas produced from the country's domestic fields. It will be blended with local gas before supplying end-users, said the official.
The official did not elaborate on the quality of LNG to be imported from RasGas but said it would be similar to the specification as set for spot LNG.
Rupantarita Prakritik Gas Company (RPGCL), a wholly owned subsidiary company of state-owned Petrobangla, which is in charge of the country's LNG purchases, set the quality specification for spot LNG it would import separately.
The imported LNG should have a gross heating value within the range 1,025-1,100 Btu/ft³, RPGCL managing director Quamruzzaman said earlier, adding, which could be problematic for exporters of lean LNG from Australia's Queensland or rich LNG from the Middle East.
The imported LNG is to be blended with locally produced, sulphur-free gas before it is delivered to the end-user, so the LNG's sulphur content should be low, Quamruzzaman added. The LNG should be supplied on a delivered ex-ship basis and the vessels should range from 125,000m³ to 220,000 m³.
Bangladesh had signed a memorandum of understanding with RasGas back in January 2011 to import around 4mn mt/yr of LNG, a deal that has been extended several times subsequently, with a "confidentiality agreement" inked in 2015, said the official.
Separately, Petrobangla has signed an MOU with Switzerland-based AOT Energy on LNG, with an SPA due to be signed by year-end. It has also recently issued an international tender seeking expressions of interest to supply LNG on a spot basis.
Subsidies
Although Petrobangla's contract with RasGas will be priced against international crude benchmarks Petrobangla is counting on government subsidies to enable it to pay for the imported LNG. Earlier this year, the company requested a subsidy of $1.4bn from the government to foot its LNG import bill for 2018 – some 78% of the total estimated cost.
Subsidies will be aimed at bridging the wide gap between international LNG prices and domestic gas prices in the power and fertilizer sectors, which will be the key consumers of the imported LNG, accounting for more than 60% of Bangladesh's gas consumption.
Bangladesh eyes starting LNG imports in early 2018 and is making concerted efforts to move forward with LNG import infrastructure. The country's first LNG import terminal, a 3.75mn mt/yr FSRU being developed by US-based Excelerate Energy, is expected to be commissioned in April 2018 and its second, also with a capacity of 3.75mn mt/yr, being developed by Summit Group, is expected to be commissioned by end-2018.
Both FSRUs will be located at Moheshkhali Island in the Bay of Bengal, and ownership of the vessels will be transferred to Petrobangla after 15 years of operations.
Petrobangla is also planning to set up at least two onshore LNG terminals, each with a capacity of 7.5 million mt/year, by 2025.
Bangladesh has already completed construction of its first dedicated pipeline to move regasified LNG to end-users and has three more in the works, state-run Gas Transmission Company Ltd managing director Md Atiquzzaman said earlier.
The 91-km (56 mile) 30-in natural gas pipeline from Moheshkhali to Anowara, with a capacity of up to 800mn ft³/d, has been completed and undergone the necessary testing, he said. Three more pipelines would also be laid down soon to distribute supply across the country from Chittagong, he added.
Bangladesh’s overall gas production is now around 2.70bn ft³/d against the potential demand for around 3.30bn ft³/d, according to Petrobangla.
M Azizur Rahman