Petrobangla, the state-run Oil, Gas and Mineral Resources Corporation, on Tuesday initialed a contract with Summit, a local firm, on the use of a floating terminal to be set up at the offshore island of Moheshkhali in Cox’s Bazar.
Summit LNG Terminal Company Pvt Ltd, a subsidiary of Summit Group, would develop the facilities in 18 months after signing the final contract later this year to facilitate a maximum supply of 500 million cubic feet of natural gas per day from imported LNG, according to the draft contract. Summit would transfer the facilities to Petrobangla after 15 years of operation of those.
At the contract signing ceremony, energy division secretary Nazimuddin Chowdhury asked Summit to complete installation of the facilities in less than 18 months as the country was running out of its gas reserve.
Summit Group chairman Muhammad Aziz Khan said that 18 months was the highest time line for installation of the facilities.
He said that his company would start surveys in current month.
Petrobangla will pay US$ 0.45 to Summit for re-gasification of every thousand cubic feet of natural gas. The amount is US$ 0.02 less than the US firm Excelerate Energy would realise from Petrobangla under a similar contract signed on July 18, 2015.
Petorbangla would sign the final contract with Summit after obtaining vetting from the law ministry and approval from the cabinet committee on the government purchase, he said.
Each of the projects would require an investment of approximately US$ 450 million. The companies would borrow the funding from international financial system, officials said.
Both the contracts have been awarded under the Speedy Supply of Power and Energy (Special Provisions) Act 2010, which facilitates awarding contracts avoiding tenders and indemnifies officials concerned against prosecution for making decisions.
Being failed in discovering any significant gas reserves over the past two decades, the government started entertaining unsolicited proposals to set up LNG terminals to facilitate re-gasification of imported LNG.
Now Petrobangla supplies approximately 2,700 million cubic feet of natural gas against a demand for more than 3,500 million cubic feet per day.
A Petrobangla estimate says the current level of gas supply would start declining from 2018.
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