The state-owned Petrobangla signed the country's first ever sales and purchase agreement (SPA) with RasGas Company Ltd. of Qatar on Monday to import 2.5 million tonnes of lean LNG (liquefied natural gas) annually for 15 years.
The procurement-price has been set at around 12.65 per cent of the three-month average Brent crude prices plus 50 cents per MMBtu (million British thermal unit), a senior official at the Energy and Mineral Resources Division under the energy ministry told S&P Global Platts.
At current levels, the LNG price would be around $6.50 per Mcf (1000 cubic feet) almost three times the weighted average price of natural gas price in Bangladesh at $2.19 per Mcf, he added.
Petrobangla, however, has options to review the terms of conditions with RasGas after nine years, the official said requesting anonymity, as he is not authorised to speak to the media.
The base volume of LNG to be imported from RasGas is 1.8 million tonnes per year. If petrobangla takes less than the base volume, it will have to pay the price on a take-or-pay basis, he added.
Petrobangla Chairman Abul Mansur Md Faizullah and RasGas Chief Executive officer Hamad Rashid Al-mihammadi signed the SPA at Hotel Sheraton in Doha, the official said.
State Minister for Power, Energy and Mineral Resources Nasrul Hamid and Qatar's Industries Minister Dr. Mohammad Bin Salah Al-Sada were present at the signing ceremony.
Bangladesh has moved to import LNG to ensure uninterrupted re-gasified LNG supplies to consumers, Nasrul Hamid said.
Qatari minister Dr. Mohammad said energy cooperation with Bangladesh would continue. Qatar will also help develop human resources and training, he added.
The supply from RasGas will require a third of Bangladesh's total LNG handling capacity of around 7.5 million tonnes per year, which will be ready following the 2018 commissioning of two floating, storage and re-gasification units.
The quantity could be increased later as the deal is flexible, said the energy ministry official.
Bangladesh will be able to ink more deals to bring enhanced quantity of natural gas from RasGas, like the agreements signed by Pakistan and India, he added.
Bangladesh will be importing lean LNG in line with the type of natural gas produced from the country's domestic fields.
The lean LNG will be blended with domestic gas before delivery to end-users, said the official.
The imported LNG should have a gross heating value within the range of 1,025-1,100 Btu/scf (standard cubic feet), he added.
Since the imported LNG is to be blended with sulfur-free, sweet gas produced domestically, the sulfur content in the imported LNG should be low, he said.
Bangladesh signed a memorandum of understanding with RasGas back in January 2011, a deal that has been extended several times subsequently, with a "confidentiality agreement" inked in 2015, said the official.
Petrobangla and RasGas inked an initial deal to import LNG on July 13 and Bangladesh's Cabinet Committee on Public Purchase has approved Petrobangla's initial agreement on August 30.
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