Risk of 'monopoly' by the two currently operating floating LNG- terminal owners in Bangladesh's gas- supply system holds back deals on two more to be awarded to the same duo.
"We have in our mind the country's growing dependency to be on them for LNG re-gasification if they were awarded more LNG terminals," Prime Minister's adviser on energy issues Dr Tawfiq-e-Elahi Chowdhury told reporters recently about the dilemmas.
The government has not yet inked any deal with either local Summit Group or US's Excelerate to build two new floating storage and re-gasification units (FSRUs), one each, he said, to clear the mist of criticisms.
State-run Petrobangla, however, has decided in principle to ink deals with Summit and Excelerate to build these new liquefied natural gas (LNG)-import terminals.
If awarded, the overall LNG re-gasification capacity by the two firms will double to around 2,000 million cubic feet per day (mmcfd) from their current LNG re-gasification capacity of around 1,000mmcfd.
Their combined LNG re-gasification capacity will also be almost similar to the overall natural gas-production capacity, which is now hovering around 2,200mmcfd.
If the current trend in natural gas depletion continues from local gas fields, the overall LNG re-gasification capacity will surpass the combined gas production from local fields when the terminals will come online , a senior Petrobangla official told the FE Saturday.
Sources say Petrobangla intends to award two new FSRUs to the current operators sans tender under the Speedy Supply of Power and Energy (Special Provision) Act 2010 that allows bending the rule for tendering.
The law has a provision of immunity to those involved with such a quick fix.
One of the new floating LNG-import terminals will be built at Moheskhali island in Cox's Bazar and the other at Payra in Patuakhali, as the country now heavily banks on LNG imports to cater growing gas needs against slowing local production.
Energy experts and rights groups fear establishing a monopolistic situation in LNG re-gasification by private sector if both the private firms are awarded these new FSRUs without competitive bidding again.
The government will be at risk of counting additional capacity payments for not utilizing in full the new FSRUs, they forewarn.
Currently, Summit and Excelerate own 3.75 million tonne per year (MTPA)-capacity FSRUs each at Moheshkhali with the capacity to re-gasify around 500mmcfd equivalent of LNG each.
Both Summit and Excelerate are learnt to be lobbying government high-ups for inking deals with Petrobangla to supply LNG for longer terms sans biddings, sources say, though this special measure was stipulated to meet energy emergencies.
Summit has quoted LNG price at around US$20 per million British thermal unit (MMBTU) based on Henry Hub index, which is similar to that on volatile spot-market rates.
The government has ceased importing LNG from spot market since July 2022 amid global price spike, Petrobangla sources say.
Excelerate offered to supply LNG following JKM (Japan, Korea, Marker) index-meaning the price will reflect the spot-market value of LNG cargos delivered into Japan, South Korea, China and Taiwan for 2022.
For 2023 and onwards, Excelerate has proposed to supply LNG at around 11.70 per cent of the three-month average price of Brent crude oil plus US$ 0.35 constant per MMBtu.
"It will make sure syndicated business of a certain quarter," says energy adviser of the Consumers Association of Bangladesh (CAB) Prof M Shamsul Alam.
"It is pre-planned and an outcome of intentional non-exploration of local energy resources," he told the FE.
The special law has given shield to this 'misdeed' to create a monopolistic situation in energy sector, Mr Alam deplores.
It contradicts the creation of Bangladesh Competition Commission and Bangladesh Energy Regulatory Commission (BERC), the CAB leader opines.
He suggests that Petrobangla should build in future FSRUs or such type of infrastructures of its own.
It should select engineering, procurement and construction (EPC) contractors, instead of awarding private sectors to build more FSRUs bypassing tenders, Mr Alam says.
The government will become 'hostage' to only these two private firms if it awards FRSUs and further LNG-supply deals to them, energy expert Prof Badrul Imam also fears.
"The whole country will become captive to them as a consequence," says the energy expert, Mr Imam, a professor of Geology at Dhaka University.
"It will be risky if the government continues relying on only two private firms for future FSRUs," says another energy expert, Prof Ijaz Hossain.
Time has come to enact new law to limit operations of any private firm in energy-sector business to avoid monopoly by private firms in the sector, Mr Hossain of Bangladesh University of Engineering and Technology (BUET) suggests as a measure to avert getting trapped in 'captive market'.
Officials said both the private firms earlier had attained the permission to build their first FSRUs and supply re-gasified LNG under the special law as Petrobangla did not float any international tender to select contractors to do the job.
Bangladesh opted for importing LNG in August 2018, in the wake of a stalemate in prospective gas exploration in the country's onshore and offshore hydrocarbon turfs.
Bangladesh has a 15-year contract with Qatargas to import around 2.5- million-tonne-per-year LNG, at a 12.65-percent slope of the three-month average Brent price plus a 50-cent constant.
A similar contract is also stands with Oman's Oman Trading International (OTI) for 10 years at an 11.9-percent Brent slope plus 40 cents.
Azizjst@yahoo.com
© 2025 - All Rights with The Financial Express