Summit Group has applied to execute force majeure against a halt in the operation of its LNG (liquefied natural gas) terminal, according to sources.
Summit LNG Terminal is preparing to leave the mooring facility in the Bay of Bengal as it needs an overhaul to fix the damage caused during cyclone Remal that made landfall in late May.
Force majeure is a common contractual clause that relieves both parties from liability or obligation when an extraordinary event or circumstance beyond their control, such as war, strike, riot, crime, epidemic or sudden legal change, prevents one or both parties from fulfilling their obligations.
Summit has applied to the state-run Petrobangla to execute the 'force majeure' provision under the terms of use (ToU) agreement inked between the companies, a senior Petrobangla official told the FE on Tuesday.
The floating storage and regasification unit (FSRU) of Summit is expected to return in late July after carrying out essential repair, according to him.
The country's gas crisis is set to continue at least for the next one month as one of its two floating LNG terminals will remain out of operation. Market insiders said it would impact gas-guzzling industries, power plants and other consumers.
The state-backed Bangladesh Power Development Board is likely to rely more on oil-fired power plants to cope with gas shortages. State-run power entities have started enforcing load-shedding as the consequences, they added.
Currently, the lone running FSRU - Excellence of Excelerate Energy - is supplying around 859 million cubic feet per day (mmcfd) of gas.
This is around 30.15 per cent higher than the US company's official LNG regasification capacity of 600 mmcfd to cope with the short supply of regasified LNG.
Sources said the damage to the FSRU was spotted on May 29. Later, the authorities began reducing LNG regasification that reached zero by the morning of May 30.
They said the Summit-run FSRU only resumed operations in mid-April after a two-and-a-half-month overhaul in a Singapore dry dock.
Summit's 3.75-million tonne per annum (MTPA) capacity FSRU, located on Moheshkhali Island, began commercial operations on 30 April 2019.
It will remain operational for 15 years until 2033. The terminal has a previous record of ceasing operations on technical glitches.
It previously went dead for three months from November 2021 due to a ruptured mooring line from the mooring system in the Bay of Bengal.
The technical fault led to an acute gas crisis that affected operations of gas-guzzling power plants, industries, households and CNG filling stations.
Excellence, owned by the US-based Excelerate, had to regasify 10 per cent more than its official capacity to cope with the send-out shortfall, according to Petrobangla data.
Summit's FSRU resumed LNG regasification on 28 February 2022 to restore normalcy.
azizjst@yahoo.com