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Summit comes top for Bangladesh FSRU

The Bangladesh Cabinet has approved the award to local player Summit of a contract to provide the nation’s second liquefied natural gas floating storage and offloading unit, a project that is expected to cost an estimated $400 million to $500 million, writes Amanda Battersby.

The FSRU, which will be deployed off Moheshkhali Island, near Cox’s Bazar, will be developed jointly by Summit and GE as the equity investment partner. 

The floater contract is on a build-own-operate-transfer basis. The FSRU will be handed over to Petrobangla after 15 years of operation.

Operational start-up of the FSRU, which will send out 500 million cubic feet per day of gas, will be targeted 18 months after the contract is finally signed.

Summit is set to get a regasification fee of 45 US cents per thousand cubic feet of gas, two US cents less than the Dhaka administration agreed to pay Excelerate under a July 2016 agreement.

This will translate to a saving of about $2500 per day in regas and port charges compared with the tariff for the nation's first such project being carried out by US company Excelerate, according to local media reports.

“We want to ensure constant supply of primary energy for the country by implementing this project,” Summit Group chairman Aziz Khan earlier said.

US contractor Excelerate has the contract to supply Bangladesh’s first LNG FSRU, which is now expected to come into operation next year. This unit will also be stationed off Moheshkhali Island in the Bay of Bengal, near the port of Chittagong.

Petrobangla also has a preliminary agreement with India’s Petronet LNG for an onshore receiving and regasification terminal on Kutubdia Island. This LNG terminal and associated pipeline infrastructure comes with an estimated price tag of US$950 million.

Bangladesh is keen to start importing LNG, as current gas demand is around 3.3 billion cubic feet per day while domestic production is about 600 MMcfd less.

One source said the government has plans for two FSRUs and four onshore terminals. However, others believe that FSRUs could dominate — especially in the shorter term.