The government will set up a small Liquefied Natural Gas (LNG) terminal using the mothballed offshore facilities at Sangu to meet the country's growing demand for energy in the short term.
The LNG will be imported by state-owned Petrobangla and then regasified before it is piped to an onshore processing plant. Then the gas will be stored and supplied to the national grid.
“The government wants to import LNG on a small scale to meet domestic demand until June 2018 by using the suspended Sangu pipeline,” a Petrobangla official said on condition of anonymity.
Sangu was the first offshore gas field in the country and was run by an Australian oil and gas exploration company called Santos until its closure on October 1, 2013.
The Sangu facilities consist of a platform in the Bay of Bengal connected to an onshore gas processing plant at Fouzdarhat in Chittagong by a 49km seabed pipeline of 20-inches in diameter.
Dr Badrul Imam, Professor of Geology at the Dhaka University, was critical of the decision to import LNG on a small scale through the plant.
“This can be a short-term plan. But if such imports continue for a long time, it will be damaging for the economy,” he told the Dhaka Tribune.
“The cost of fuel like LNG should not exceed our capacities. But if the LNG is imported, the price cannot be kept under control.”
The LNG imports are being made possible by the Speedy Supply of Power and Energy (Special Provision) Act 2010, which allows for imports of 100-250 mmcf per day to meet an urgent demand for power and energy. The law also exempts the government from floating tenders.
“We have already sent out invitations for Expression of Interest (EoI) to select international companies to install a small-scale LNG terminal on a BOO basis for importing LNG,” said Md Mahbub Sarwar, Director (PSC) of Petrobangla.
In the longer term, six large-scale LNG terminals will be established in Chittagong and Cox's Bazar with a storage capacity of 3,000 mmcfd. The LNG will be imported by Petrobangla from Qatar, Oman and Switzerland and will be added to the national grid by 2020.
“A large LNG terminal having the capacity to store 500 mmcfd of natural gas will require at least three years to complete, whereas a small LNG terminal with the capacity of less than 100 mmcfd takes only a year,” a Petrobangla official said.
Deals and memorandum of understanding (MoU) have already been signed for the six terminals with the US firm Excelerate Energy and local conglomerate Summit Group. The MoUs were signed with Indian giant Reliance Group and Hongkong Shanghai Manjala Power Ltd.
The MoUs were signed to build land-based terminals with China Huanqiu Contracting and Engineering Corp (HQC) and Indian Petronet.
Regarding the timeline for the small scale LNG imports through Sangu, Petrobangla Director Md Mahbub Sarwar said that after receiving the EoIs, the interested companies deemed best suited to perform the operation will be short-listed and sent the request for proposal (RFP).
The EoI states that any interested company must have experience in constructing and operating at least one small-scale LNG terminal in the last five years.
It needs to provide suitable bank guarantees and proof or certificate of operatorship from the host country, state-host company or relevant regulator.
The interested company must also submit its annual reports from at least the last five years, or a financial report certified by a chartered accountancy firm, and a certificate from the company’s statutory auditors stating the company’s net worth.
In case the parent company provides the financial and performance guarantee, the certificate from the parent company’s auditor should be provided.
The last date for submission of EoIs is August 27.