It termed the termination "invalid" as any delay in the project, for which Summit has already invested an estimated $20 million, could result in further energy insecurity in Bangladesh.
Summit LNG Terminal II Co Ltd (SLNG II), a subsidiary of the Singapore-based Summit Power International Ltd (SPIL), wrote to Petrobangla to raise its objections to a recent notice.
SPIL is the parent company of the Dhaka-based Summit Corporation Ltd (SCL), which owns SLNG II, according to the statement.
Petrobangla and power ministry on January 14 issued a letter notifying that certain conditions under the terminal use agreement (TUA) was purportedly not fulfilled and as such the TUA has been terminated, it cited.
SLNG II signed the TUA and IA for the third FSRU on 30 March 2024 with the Petrobangla and the government of Bangladesh respectively.
The third FSRU, the second such project by Summit Group in Bangladesh, is supposed to have regasification capacity of 600 million cubic feet per day (mmcfd), requiring investment worth $550 million, reads the statement.
However, on 07 October 2024, Petrobangla notified that the project in the country's south-east would be terminated.
Since then, Summit has obtained legal advice from both local and international law firms, which affirmed that such termination is invalid pursuant to the terms of the TUA, argued the statement.
Based on such advice, Summit Group has been engaged with Petrobangla and the government of Bangladesh to reconsider the decision, it said.
In its notice, Petrobangla said the decision to terminate was made as a performance bond (PB) for the project was not submitted by SLNG II but by SCL.
The submission of the PB did not comply with an agreed template and it was not submitted within a 90-day stipulated deadline, according to the statement.
In reply, SPIL, citing advice from renowned law firms Herbert Smith Freehills of Singapore and Dr Kamal Hossain & Associates, said Petrobangla had earlier acknowledged receipt of the PB submitted in the form of a bank guarantee, which does not provide any less security.
Nonetheless, as a gesture of goodwill, SLNG II is willing to replace the PB in the form of a bank guarantee issued in its name, the statement claimed.
SPIL said the TUA provides a strict timeline of 30 days by which Petrobangla may raise any objections with regard to any performed conditions precedent.
Petrobangla did not raise any objection during the stipulated time.
SPIL has been advised by their counsels that the issues raised by Petrobangla for the purported termination of the agreement are not supported by the terms of the agreement, the statement claimed.
If any condition precedent of the TUA is not met, either party needs to submit a written notice within the 30-day stipulated period, but Petrobangla did not do so and, therefore, does not have any right to terminate, it stated. SPIL also clarified that as the PB submission deadline fell on 28 June 2024, a non-banking day in Bangladesh, the bond was delivered on 30 June 2024, the next banking day.
Under the Bangladesh law, if any act is directed to be undertaken on a certain day when the office is closed that day, the act is considered to be undertaken in due time if it is done the next working day. SLNG II has already incurred approximately $20 million for long lead items, metocean and geophysical studies, and administrative and legal fees related to the project, it claimed.
azizjst@yahoo.com