Cyclone Remal costs Bangladesh around $622 million in economic losses and damage due to non-operation of the Summit LNG Terminal, according to the US-based Institute for Energy Economics and Financial Analysis (IEEFA).
"The storm reportedly cost Bangladesh $600 million in economic losses and damage, in addition to the $22 million demanded by Summit LNG Terminal Company-partly owned by Japan's JERA (16.5%) and Mitsubishi (25%)-for contractual payments while the terminal was offline."
The IEEFA made this statement in a report styled 'Floating LNG import terminals pose cost and climate challenges for Asian market' on Monday.
Summit LNG Terminal, one of the country's two floating liquefied natural gas (LNG) import facilities, remained offline for nearly six months through September 2024, it said.
After undergoing routine repairs from January to March, the terminal sustained structural damage done by Remal in May and was sent to Singapore for further repairs.
Upon its return to Bangladesh in July, challenging oceanic conditions then hindered the reconnection process, delaying the terminal's restart to September, according to the IEEFA report.
Interruptions are often brief, it reads, but Bangladesh's recent experience demonstrates that weather-related operational challenges can have prolonged impacts on fuel supply, foreshadowing energy security risks for other countries building offshore LNG import projects.
South and Southeast Asia are expected to be the largest growth markets for LNG over the next two decades, but LNG import projects have often faced extensive delays.
To expedite growth in these key regions, the LNG industry has promoted floating terminals as quicker, cheaper options than larger onshore facilities. However, such facilities face several overlooked drawbacks that may undermine their uptake in potential growth markets, according to a new briefing note from the IEEFA.
For example, while offshore terminals have lower upfront capital costs compared to onshore configurations, their higher operating costs can make them more expensive within just seven years.
Additionally, their inability to operate in inclement weather conditions presents a critical risk proposition for South and Southeast Asian markets, which are increasingly exposed to severe weather and oceanic conditions driven by climate change, reads the study. "Stronger and more harmful weather events increasingly threaten the reliability of offshore LNG projects and the energy security of importing countries," says Sam Reynolds, the briefing note's co-author and LNG or gas research lead for IEEFA Asia.
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