State-owned Petrobangla will invite Singapore-based consortium of Astra Oil and Excelerate Energy to ink the final deal to build the country's first floating liquefied natural gas (LNG) terminal soon, a senior official said.
"We will invite the consortium to sign the deal and subsequently start preparatory works for building the LNG terminal at Moheshkhali island in the Bay of Bengal," Petrobangla Chairman Ishtiaque Ahmad told the FE Thursday.
He said a feasibility study needs to be carried out before start of the construction for the LNG terminal.
The top brass unveiled the Petrobangla's plan for building the terminal on the following day of approving the 'term sheet agreement' by the Cabinet Committee on Economic Affairs for building the LNG terminal.
The approval from the cabinet committee came five years after floatation of the initial tender to build the terminal in June 2010.
The Petrobangla inked the initial LNG terminal deal with the consortium on June 26 last year after several years of negotiations.
The terminal would have a capacity to handle LNG of around 5.0 million tonnes per year and a re-gasification capacity of at least 500 million cubic feet per day (mmcfd).
It will have berthing and mooring facilities for LNG tankers with a capacity of 138,000-260,000 cubic metres, with the construction contract to be awarded on a build-own-operate-transfer basis for 15 years.
The consortium will pay for the construction of the floating storage and re-gasification unit.
The LNG terminal might require the consortium about US$500 million to build.
The Petrobangla will have to pay the consortium $91.16 million annually over 15 years on a 'take or pay' basis, meaning it would have to pay whether or not it imports LNG through the terminal.
The Petrobangla has estimated the country's gas supply cost to triple as it will have to spend nearly $2.7 billion per year to meet the costs of importing around 500 mmcfd of gas.
Of the total required amount, $2.58 billion will be needed to import LNG and $90.16 million to meet LNG terminal charges.
This will almost triple the country's weighted average natural gas price for consumers to $4.39 per Mcf (1,000 cubic feet) from the current $1.60 per Mcf.
The import cost of the LNG has been estimated at $17.10 per Mcf at the transmission end with import cost of $14 per Mcf, operation fee for providing storage and re-gasification service at $0.49 per Mcf and freight charges.
Bangladesh currently produces around 2,470 mmcfd of natural gas, but has to buy almost 52 per cent of it from the international oil companies operating the fields in the country, at an average price of around $2.62 per Mcf. It gets the rest from local gas field operators paying a nominal 10 cent per Mcf and also having access to some supplies free of cost under contract terms, the official said.
The government then supplies this gas to state-owned gas-fired power plants and fertiliser factories at a subsidised rate of $1 per Mcf and to private power plants and factories at $2.2 per Mcf. Averaging the two, the price of gas is $1.60 per Mcf currently. But with the import costs added, this average will rise to $4.39 per Mcf, tripling costs for power plants and fertiliser factories.
At the end-consumer level, the electricity tariff will go up to around Taka 10 (around 13 cents)/kWh from existing Taka 6.40/kWh, Petrobangla has estimated.
azizjst@yahoo.com
