A 13-year-old LNG regasification vessel arrived near Maheshkhali Island in Cox’s Bazar on Tuesday to facilitate supply of 14.16 million cubic metre gas a day from imported liquefied natural gas for the next 15 years.
The vessel, owned and operated by US firm Excelerate Energy, brought 60,000 tonnes of LNG in its storage, an energy division official said.
It would require 8-10 days to begin the gas supply using a 91km pipeline connecting Maheshkhali and Anwara in Chittagong, Rupantarita Prakritik Gas Company Limited managing director Md Quamruzzaman told New Age.
The contract also has a provision of unavailable service for 87 days a year.
Commissioned in 2005 with 25-30 years of economic life, the regasification vessel would be handed over to Petrobangla after 15 years, when it would have almost no asset value, energy division officials said, adding that a new vessel would cost $300 million.
They, however, claimed that Petrobangla would be able to use the regasification vessel for the next 3-5 years after a major overhauling.
Petrobangla would also receive a similar vessel from local firm Summit in October for LNG regasification near Maheshkhali Island for 15 years, according to another build-own-operate-transfer contract.
State minister for power, energy and mineral resources Nasrul Hamid admitted that the issues of remaining asset value with the two vessels or their remaining economic lives were not considered during the signing of the contracts.
He said that both the contracts were only limited to LNG regasification service for 15 years.
He, however, declined to reply why Petrobangla signed the contracts with the provision of transfer of the assets which would ultimately turn into a liability.
The price of LNG re-gasification service might have been lower if it was a build-own-operate contract, said officials.
In the wake of severe shortage of gas supplies, Petrobangla signed two terminal use agreements with Excelerate on March 31, 2016 and Summit on April 20, 2017 to facilitate LNG imports to increase gas supply by up to 28.32 million cubic metres per day.
Petrobangla now supplies natural gas at the rate of about 76 mmcmd against a demand for 105 mmcmd.
In March, the gas distribution utilities submitted proposals to the Bangladesh Energy Regulatory Commission for fresh hikes in gas prices by 75 per cent on an average, from Tk 7.39 per cubic metre to Tk 12.95 to offset their potential loss for increasing gas supplies by 28.32 mmcmd from imported LNG.
Earlier, the commission raised the gas prices by about 22 per cent on an average in two phases, from March 1 and June 1 in 2017.
On September 25, 2017, Petrobangla signed a 15-year contract with Qatar’s state-run RasGas Company Limited to import 1.8 million tonnes of LNG a year for the first five years and 2.5 million tonnes for the next 10 years.
On April 18, the cabinet committee on national purchase also approved the pricing formula for LNG imports from Oman.
Qatar’s LNG would cost 13 per cent of the three-month average of Brent crude in addition to 0.50 per cent LIBOR (London Interbank Offered Rate) per 28.32 cubic metres while Oman’s gas will cost 11.9 per cent of Brent crude oil price in addition to $0.40.
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