Bangladesh approves China’s third LNG terminal project

A Chinese state-owned company has secured government approval to build a third floating LNG terminal in Bangladesh’s Moheshkhali amid a fuel supply crunch.

The project will be developed at Kutubjum under a government-to-government arrangement, at a cost of up to Tk 131.61 billion over 20 years.

The Cabinet Committee on Government Purchase approved the proposal from China National Energy Engineering and Construction Co Limited (CNEE) at a meeting on Thursday, the finance ministry said.

Documents from the Energy and Mineral Resources Division identify CNEE as the recommended bidder.

The government will pay about Tk 123.24 billion over 15 years or Tk 131.61 billion over 20 years.

The same proposal was withdrawn from the committee about a month ago amid discussion of reducing the cost, but it has now been approved without a cut.

The documents do not specify the daily fee, terminal capacity or commissioning date.

The government has planned several new LNG terminals to ease the energy crisis, drawing interest from investors in China, the United States and South Korea.

CNEE submitted its proposal on Jun 19 for an offshore terminal at Kutubjum, with a daily regasification capacity of 600 million cubic feet (mmcfd), expandable to 750mmcfd.

Under the proposed 15-year deal, the company would charge $342,000 a day, compared with $254,000 for Excelerate Energy’s terminal and $249,115 for Summit LNG.

This would make CNEE’s fee 35 to 37 percent higher than the current rates.

Bangladesh needs about 3,800mmcfd of gas but normally supplies around 2,700mmcfd from domestic production and imported LNG.

The two existing floating terminals in Moheshkhali, operated by Excelerate Energy and Summit, have capacities of 600mmcfd and 500mmcfd respectively.

An outage at either facility can severely disrupt supplies.

The government plans to set up three to four more floating storage and regasification units (FSRUs).

On Sept 7, US Ambassador Brent Christensen called for a “transparent, competitive” process at a meeting with Commerce Minister Khandakar Abdul Muktadir.

Muktadir said US firms would get priority if they could demonstrate their ability to build a terminal quickly.

Despite the competing interest, the Chinese proposal is the first to secure approval. CNEE’s latest proposal in late October envisages the terminal becoming operational by 2028.

The purchase and Economic Affairs committees approved five LNG import proposals on Thursday amid supply concerns linked to the war in West Asia.

Petrobangla got approval for short-term direct purchases from Japan’s markets, while in-principle approval was given for imports from UAE-based ADNOC Trading and Nigeria’s Ojimadu and Merites Oil Marketing Limited.

The three proposals bypass competitive tenders under the Public Procurement Act. Prices and volumes will be submitted to the purchase committee later.

The purchase committee also approved three side letters for 2027 LNG cargoes from Oman’s OQ Trading and the purchase of two cargoes from Malaysia’s Petronas.

The meeting also cleared purchases of dates, fertiliser imports and several infrastructure projects.