Bangladesh to sign agreement with US company to procure LNG

The government is planning to enter into an agreement with the American company, Excelerate Energy Bangladesh Limited, for the supply of liquefied natural gas (LNG) to the private sector.

Under this arrangement, the company will provide LNG for 15 years starting from 2026. The draft of the proposed contract was approved by the Cabinet Committee on Public Procurement on Wednesday. 

Additional Secretary of the Cabinet Division, Syed Mahbub Khan, told this to reporters after the meeting. The meeting was presided over by Finance Minister AHM Mustafa Kamal.

Following the import of LNG, it undergoes regasification before being supplied to gas pipelines. Presently, two floating terminals, situated in Maheshkhali, Cox's Bazar, are designated for LNG storage and regasification. One of these terminals is operated by Excelerate Energy, while the other is managed by Summit Group.

The government is currently evaluating the proposals submitted by these two companies for long-term LNG supply, a decision that was preceded by policy approval during the Cabinet Committee on Economic Affairs meeting in August of last year. 

Excelerate Energy has committed to supplying between 1 million and 1.5 million tonnes of LNG annually. A 15-year contract with them has been negotiated, spanning from 2026 to 2040. The pricing for LNG per unit will be set at 13.35 per cent of the price of crude oil, in addition to USD 0.35. 

Furthermore, the proposal to enhance the capacity of Excelerate's floating terminal has received approval. Consequently, they will be capable of converting 600 million cubic feet of gas per day, a significant increase from the current capacity of 50 million cubic feet. 

Bangladesh started importing LNG in 2018. All the LNG imported thus far has been facilitated through government agencies. Presently, the government is engaged in LNG imports from Oman and Qatar through two long-term contracts.

Furthermore, this year, two additional agreements have been inked with these two nations to expand LNG imports, with the supply expected to commence in 2026. Additionally, LNG continues to be procured regularly from the open market.

In another development, the procurement committee meeting has given an approval to acquire one cargo ship of LNG from Singapore's Vital Asia Pvt. The cost for this acquisition is set at USD 17.55 per unit. The total price for 3.36 million units (MMBTU) of LNG will amount to Tk 7.62 billion. 

Meanwhile, the Cabinet Committee on Economic Affairs has approved in principle the proposal to import 1.5 million tonnes of crude oil from Saudi Arabia and the United Arab Emirates (UAE) in 2024.

Oil will be imported without any kind of tender which means it will be done in Direct Purchase Mode (DPM). Bangladesh has to import about 650 million tonnes of fuel oil annually. Of this, about 1.5 million tonnes are unrefined, the rest is refined.