State-owned Bangladesh Oil, Gas & Mineral Corporation (Petrobangla) and Excelerate Energy L.P. recently signed an agreement to build a floating storage and regasfication unit (FSRU) in the South Asian country, local media The Daily Star reported Friday.
The FSRU, the country's first receiving terminal for liquefied natural gas (LNG), will be located on the island of Moheshkhali in the Bay of Bengal offshore Bangladesh, with the new facility intended to meet rising domestic energy consumption, particularly in Chittagong, where there has been an acute gas shortage for some time now.
Company Secretary Syed Ashfakuzzaman and Excelerate Energy's Business Development Manager for Asia Karlman Tham signed the agreement Thursday at Petrobangla in Dhaka.
Petrobangla revealed during the signing ceremony that it will have to spend $1.6 billion a year to boost natural gas supply by 500 million cubic feet per day (MMcf/d).
Bangladesh's State Minister for Power, Energy and Mineral Resources Nasrul Hamid said the agreement for the FSRU is the first step which the government is taking to tackle the gas crisis, according to The Daily Star.
Under the agreement with Petrobangla, Excelerate Energy would develop the floating facility in 23 months and operate the FSRU, which will have a capacity to handle 500 MMcf/d of imported LNG from Qatar, for 15 years. A 56 mile (90 kilometer) 30 inch pipeline will carry the gas from the floating terminal to Anowara to feed into the national grid. Bangladesh plans to commence LNG imports in early 2017.
The government has plans to add another three more LNG receiving terminals in the country as part of its efforts since 2010 to turn to LNG imports in dealing with the energy deficit. Currently, Bangladesh has an average natural gas production of around 2,700 MMcf/d, a supply that is insufficient to meet its demand of more than 3,200 MMcf/d.
Md Quamruzzaman, a Petrobangla director, said Excelerate Energy, which had carried out a met-ocean study earlier and found the construction of the terminal viable, will collect $159,000 per day as rent for the FSRU and $45,000 per day as operational charge. As such, the price of each thousand cubic feet of natural gas from imported LNG would cost at least $3.2.
Tawfiq-e-Elahi Chowdhury, energy adviser to Bangladesh's Prime Minister, said that the overall cost for handling and re-gasification of the imported LNG would be $0.59 for each thousand cubic feet of gas, as reported in The Daily Star.
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