Govt moves to build 2nd LNG terminal

The government has moved to build the country's second liquefied natural gas (LNG) terminal without awarding contract for the first one after four years of initial tendering, a top government official said Wednesday.
Power Cell, a state-owned entity under the Power Division of the Ministry of Power, Energy and Mineral Resources (MPEMR) has floated international tender seeking expression of interests (EOIs) from interested global players to build an onshore LNG import terminal to facilitate LNG import to run gas-fired power plants, he said.
The second terminal will have the capacity to handle import of around 3.5 million tonnes of LNG per annum, which is equivalent to about 500 million cubic feet per day (mmcfd).
Tender was floated on April 19 last to build the land-based LNG import terminal at Matar Bari in Moheshkhali Island in the Bay of Bengal under Cox's Bazar district in southern Bangladesh.
The bid winning contractor will be appointed to handle engineering, procurement and construction (EPC) works with the responsibility of designing and commissioning of the LNG terminal for receiving, unloading, storage, and re-gasification of LNG.
The terminal will have all facilities for receiving, unloading, storage and re-gasification of LNG, gas pipelines, infrastructure and interconnection.
The contractor will maintain the LNG import terminal on build, own and operate (BOO) basis.
The project is expected to have the provision of procuring LNG on long-term basis from one or more international suppliers, or from its own LNG supply portfolio, said the official,
It is expected to deal with delivering and selling the re-gasified LNG on a long-term, take-or-pay basis as a designated government entity of Bangladesh.
The project will be implemented under a special purpose vehicle (SPV), which will be initially promoted by the state-owned Bangladesh Power Development Board (BPDB).
The Power Division of the MPEMR has decided to collaborate with International Finance Corporation (IFC), of the World Bank Group for development of this project.
IFC through its Infra Ventures Fund will become a co-developer of the project with BPDB.
Initial development work like pre-feasibility studies, environmental and social assessments, clearances and land acquisition etc will be carried out by the SPV to be sponsored by BPDB with IFC as co-developer.
The bid winner firm or consortium will take majority stakes in the SPV and become the lead sponsor of the project.
Intending firms or consortiums have been asked to submit their EOIs within May 18 next to Director General of Power Cell.
For implementing the first LNG terminal, the government is currently in final negotiation with the US consortium of Astra Oil and Excelerate Energy to build a floating LNG import terminal in Moheshkhali Island in the Bay of Bengal.
The US consortium, selected to build Bangladesh's first LNG import terminal, wants to reach agreement on maintenance fees before signing the final construction contract with state-owned Petrobangla.
The fee would cover the cost of maintaining a terminal on its completion in the event there is delay in LNG imports, said a Petrobangla official.
The consortium sought $0.39 per Mcf (1,000 cubic feet) as a processing fee to cover installation costs and engineering, procurement and construction contract fee.
It also agreed to pay a $2 million bid bond and a penalty if it failed to provide the required services and to furnish a $20 million performance guarantee, he said.
However, it has not yet signed a final import agreement, which has prompted the US consortium to seek a provision for maintenance fees, the official said adding he was confident all the issues would be settled within a couple of months.
The US consortium was selected to build the LNG terminal in August 2012.
After a long delay in implementation Petrobangla in February invited the US consortium to finalize the contract.
Petrobangla is planning a floating LNG import terminal with a capacity to handle 5 million tonnes per year of LNG and a regasification capacity of at least 500 mmcfd.
It will have berthing and mooring facilities for LNG vessels with a capacity of 138,000-260,000 cubic meters, with the construction contract to be awarded on a build-own-operate-transfer basis for 15 years.
Building the LNG import terminal is important for Bangladesh as the reserve of natural gas depleting first.
It is especially critical for the energy-starved southeastern Chittagong region which has faced a supply crisis since 2006 as output from the Sangu gas field was exhausted.
The Sangu-11 well was permanently shut in October 1, 2013.
The country's average natural gas output is currently hovering around 2,310 mmcfd against the demand for over 2,700 mmcfd.
Hundreds of industries including power plants and fertilizer factories squeezed operations or remained shut due to gas crisis.