Government authorities have agreed to build a sub-sea pipeline from the proposed floating liquefied natural gas (LNG) terminal to facilitate delivery of the fuel to the users’ end from the offshore station, a top official has said.
"We shall build the pipeline having the length of around two to three kilometres for smooth processing of the LNG and carrying the gas to end-users," Chairman of the state-owned Petrobangla Hussain Monsur told the FE Friday.
He could not say anything about the exact cost for installation of the pipeline but said a feasibility study on the entire LNG-terminal project could determine it.
A delegation of the US consortium of Astra Oil and Excelerate Energy will arrive here on June 23 to ink an initial deal with Bangladesh for building the country's first LNG-import terminal at Moheshkhali island in the Bay of Bengal.
The consortium during its previous visit last month almost finalised the issues for striking the preliminary deal on the project.
It sought a waiver on payment of taxes for using the port and does not want to pay carrier charge for transporting the gas.
The consortium wants Petrobangla to bear the cost of carrying out a feasibility study on the project. If the consortium's demand was met, the re-gasification charge to convert LNG to natural gas would stand at around US$0.50 per Mcf (1,000 cubic feet), said a Petrobangla official.
The state-owned petroleum corporation had earlier agreed to provide maintenance fees to the US consortium to keep the proposed terminal operative until LNG import starts.
The fee would cover the cost of maintaining a completed terminal in the event there was a delay in the start of gas import, the official said.
The US consortium has agreed to pay a $2 million bid bond and a penalty if it failed to provide the requisite services and to provide a $20 million performance guarantee, said the official.
The government hopes to ink the final deal with the US group by December 2014 and start importing LNG in 2016.
Bangladesh extended a memorandum of understanding with Qatar over the import of 4 million tonnes of LNG per year, which expired in March 2013, until June 2015 and is confident of completing the floating LNG terminal project by then.
However, it has not yet signed a final import agreement, which is what prompted the chosen US consortium to seek a provision for maintenance fees. The Petrobangla official was confident of completing necessary procedure of importing LNG before completion of the construction of the LNG terminal. The Astra Oil and Excelerate Energy consortium was selected to build the terminal in August 2012.
In its initial bid, it sought $0.39 per Mcf as a processing fee to cover installation costs, an engineering, procurement and construction contract fee and credit support. The bidder indicated it did not want to provide the $20 million performance guarantee that was stipulated in the tender, the official said.
After a long delay over implementation, Bangladesh's newly elected government in January announced it was fast-tracking the project. And Petrobangla, in February, invited the US consortium to finalize the contract.
Petrobangla is planning the floating LNG import terminal with a capacity to handle 5 million mt/year of LNG and a regasification capacity of at least 500 million cubic feet per day (mmcfd) at the Moheshkhali Island site.
It will have berthing and mooring facilities for LNG vessels with a capacity of 138,000-260,000 cubic metres. The construction contract will be awarded on a build-own-operate-transfer basis for 15 years.
Building the LNG terminal is necessary for the country, which is reeling from acute natural gas crisis due to absence of new discoveries and fast depletion of current reserves.
The country is rationing natural gas to industries, power plants, fertilizer factories and households due to a crunch.
The terminal is also critical for the energy-starved southeastern Chittagong region, which has faced a supply crisis since 2006 as output diminished from the nearby Sangu gas field.
The Sangu-11 well was permanently shut on October 1, 2013.
Bangladesh's average natural gas output is currently hovering around 2,320 mmcfd against the demand for around 3,000 mmcfd.
Subsea delivery pipeline to connect LNG terminal
M Azizur Rahman | Published: June 21, 2014 00:00:00 | Updated: November 30, 2026 06:01:00
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