Rush for selling LNG to govt
“We are getting huge proposals, but the govt will take the decision as per the requirements”.
Shahed Siddique
At least 15 companies have offered to sell bulk liquefied natural gas (LNG) to the government as the power, energy and mineral resources ministry has chalked out plans to meet the current crisis through gas imports. A high-ranking official in the ministry disclosed that a lot of companies, all of which enjoy political patronage, were exerting pressure on the ministry and Petrobangla, the state-owned energy company, to accept their proposals. Two of these companies are interested in the offshore Sangu platform to make a liquefied form of gas and then inject it into the national grid line, disclosed sources at the policymaking level. Petrobangla chairman Istiaque Ahmad told The Independent recently, We are getting huge proposals, but the government will take the decision as per the requirements. Hong Kong Shanghai Manjala Power Ltd, in collaboration with Malaysias Petroliam Nasional Berhad (Petronas), made an offer to the government on June 9, saying they can install a fixed jetty at the Sangu platform with a floating storage unit (FSU). They also said they would be able to use the existing Sangu gas pipeline to Salimpur station. Intraco LNG Ltd, a Dhaka-based firm, submitted its proposal to Petrobangla on June 13, saying it can use the unutilised Sangu platform for transporting LNG to the gridline. The Sangu platform is connected to the Sangu gas field, which was abandoned after the field dried up.
Indias New Delhi-based Petronet LNG Ltd presented its proposal on April 2, stating it is interested in investing to set up a LNG terminal at Kutubdia.
China Huanqi Contracting and Engineering Corporation, Mitsui and Co. Ltd of Japan, China Offshore Oil Engineering Company, Singapore-based SembCorp Utilities Pte Ltd, China CAMC Engineering Co., KOGASMGCBKSBL Consortium, China Petroleum Pipeline Bureau (CPPB), Siamgas and Petrochemicals of Thailand, and Pune, India-based Summit Corporation Ltd also presented their proposals to the government.
Glencore Singapore Pte Ltd and China-based Guangdong Zhenrong Energy Co. Ltd have also evinced interest in building their own operating system (floating storage regasification units or FSRUs) in the coastal area. All 15 companies are aiming to sell 500 to 1,000 million cubic feet (MMCF) of gas per day.
However, an official of the Energy Division disclosed that only Summit and Petronet LNG have elicited some positive response from the government as the others have not submitted all relevant documents. Summit made its presentation on the proposal on August 8. Petrobangla has given a positive note on the proposal. The Summit proposal has been sent to the ministry for further consideration.
To complete the negotiations with Summit, the government has formed a committee headed by an additional secretary of the energy ministry. In its first meeting on the issue, the committee has requested Summit to submit more specific proposals on the financial, technical and environmental aspects, an energy ministry official said.
Petronet LNG has also sought to submit a feasibility study and other related documents to the government. The Indian company has also sent a draft memorandum of understanding (MoU) to the department. The ministry has sent the draft to lawyers for their opinion before finalising anything. Sources said Summits proposal has been accepted on a preliminary basis, but not finalised yet. After the report is submitted by the additional secretary, the ministry will take a final decision.
The government has agreed to receive LNG-based 700 MW of power from Indian giant Reliance Power at Moheshkhali area, which could be put into production in 201819. Reliance will set up a FSRU at this area and will import the gas for Bangladesh. Three months earlier, the Indian company had made an offer to sell 200 MMCF of gas to Petrobangla.
A ministry official said it had chosen to produce power, but later Reliance pushed for LNG sales to the government. No final decision has been taken in this respect.
The country is currently producing 2,700 MMCF of gas per day, but the demand exceeds 3,500 MMCF. After five years, the demand for gas will double. That is why the government is planning to import LNG.
Last June, two agreements were signed between Excelerate Energy, the power, energy and mineral resources ministry, and state-owned oil company Petrobangla. The agreements will clear the decks for the construction of a floating LNG terminal in Coxs Bazar and its subsequent use.
The US-based Excelerates investment of USD 500 million is going to be the biggest in Bangladesh by any US company after Chevron. The agreement allows Bangladesh to use the terminal for 15 years after its completion. In order to import LNG, the government would have to fork out USD 1.5 billion, it has been disclosed. An additional USD 90 million would be incurred as rent for the terminal, while another USD 22.54 million would be borne towards payments of value-added tax (VAT) and other taxes.
