Bangladesh Lines up 3.25mn mt/yr more LNG
Bangladesh has initialled deals with two global LNG suppliers and signed a letter of intent with another firm over the past week to buy 3.25mn metric tons/yr of lean LNG, Petrobangla chairman Abul Mansur Md Faizullah told NGW February 1. The official hopes that LNG import from these firms would start this year.
They are Swiss-based AOT Energy, for 1.25mn mt/year of lean LNG for 15 years, signed January 30; and state Oman Trading International to import 1.0mn mt/year for 10 years, signed January 31. And Petrobangla inked a letter of intent with Indonesia’s Pertamina for 1.0mn mt/year for 10 years January 28, after a meeting between Bangladesh’s prime minister Sheikh Hasina and Indonesia’s president, Joko Widodo.
The deal with AOT Energy was inked under the Speedy Supply of Power and Energy (Special Provision) Act 2010, which bypasses the usual rules for a tender. The law has a provision of immunity to those involved with the quick-fix remedies, he said.
Final sales and purchase agreements, or SPAs, with all these three firms will be inked after the ministry for justice and the cabinet committee on public purchases have given approval.
These deals bring Bangladesh’s total LNG import quantity to 5.75mn mt/year, including the SPA with Qatar’s RasGas to import 2.5mn mt/year of lean LNG. The country is in negotiations with four other suppliers for long-term deals and is also eyeing short-term and spot purchases.
The prices have been indexed to the three-month average Brent crude oil price, said the managing director of state-owned Rupantarita Prakritik Gas Company (RPGCL), Md Quamruzzaman, February 1. The LNG price would, however, be lower than that of RasGas’s, he indicated. RPGCL, a wholly owned subsidiary company under Petrobangla, is in charge of the country's LNG purchases.
During the initial five years of the deal, RasGas will supply 1.8mn mt/year of LNG, rising to 2.5mn mt/year in the next 10 years, said a senior Petrobangla official. The purchase price has been set at around 12.65% of the three-month average price Brent crude oil plus $0.50/mn Btu, he said.
Petrobangla has the option to reduce the amount by 10% from the upper value every year, according the terms of the SPA, but if it takes less than the base amount in any year, it will incur take-or-pay penalties.
Bangladesh will receive LNG in floating terminals and its first LNG import terminal, a 3.75mn mt/year FSRU being developed by US-based Excelerate Energy, is expected to be commissioned in April. Its second, also with a capacity of 3.75mn mt/year, is being developed by Summit Group and is expected to be commissioned by October.
The power sector is expected to consume at least half of the 1.4bn ft³/d of LNG that is to be imported in 2018, Petrobangla said late January.