After four years of negotiation, Petrobangla – the oil, gas and mineral corporation of Bangladesh – is close to signing agreements on import of regasified LNG from an Indian private company through a cross-border natural gas pipeline, officials at the state agency said.
As part of its bid to minimise the growing gas crisis in the country, the state-owned petroleum corporation is poised to enter a deal with Mumbai-based H-Energy Private Limited, they said.
Two agreements on pipeline installation and LNG supply are expected to be signed in the first half of the next fiscal year, the officials said.
“Discussions with H-Energy are nearing completion, with only three or four points outstanding. The Energy Division has been asked for its opinion on these unresolved issues. Once the Energy Division’s opinion is received, the agreement will be signed with the approval of the higher authorities concerned,” Petrobangla Chairman Zanendra Nath Sarker told TBS on 17 April.
The company will supply LNG within two years of signing the agreement, he said.
Petrobangla signed a memorandum of understanding (MoU) with H-Energy on 16 June 2021 for long-term import of regasified LNG.
The state agency had signed the first MoU with Indian Oil Corporation Ltd in 2017 for the same purpose.
According to officials at Petrobangla and the Energy Division, discussions are underway for importing 0.8 to 1 million tonnes per annum LNG from H-Energy.
A review of all potential aspects, including gas import through pipelines from the company, gas utilisation, economic benefits and losses, security arrangements, etc have been completed, they said.
Currently, discussions are ongoing regarding the payment method for the money given by the Indian company for pipeline installation, pipeline management, LNG price, etc, said the officials.
Once these are finalised, the matter will proceed to the agreement stage, they said.
Energy and Mineral Resources Division Secretary Md Nurul Alam told TBS on 18 April, “I came to know that progress had been made in discussions with H-Energy.”
Western region to get gas
A Petrobangla official said a 30-inch diameter 65-kilometre pipeline will be constructed from Satkhira to Khulna to transport gas from India. The plan is to bring 300 million cubic feet of LNG daily through the pipeline, he said.
The gas will be supplied to ongoing and future power plants in Khulna and thus the western region of the country will get gas for the first time, said the official.
According to a recent BBC news report, H-Energy has constructed India’s first floating storage and regasification terminal at Jaigarh Port in Maharashtra. The company has also signed an MoU with the Kolkata Port Trust to establish an LNG terminal in East Medinipur district of West Bengal. The company has informed that LNG will be sent to Bangladesh from the terminal.
Demand and supply
According to Petrobangla’s 18 April report, gas availability in the country was 2,133 million cubic feet per day (mmcfd) – 1,135mmcfd from local gas wells and 998mmcfd from import.
Against the demand for 2,317mmcfd, the power plants got 1,329.6mmcfd while fertiliser factories received 23.2mmcfd against the need for 329mmcfd on the day.
Gas import on the rise
According to Petrobangla documents, the government signed three LNG sale and purchase agreements last year. The first agreement was signed on 30 May last year with Qatar Energy Trading LLC for importing 1.5 million tonnes of LNG per annum for a period of 15 years starting in 2026.
The second agreement was signed on 19 June last year with OQ Trading Limited of Qatar to import an additional 0.25-1.5 million tonnes LNG per annum starting in 2026, in addition to the existing agreement.
The third agreement was signed on 8 November last year with the USA-based Excelerate Energy Bangladesh Limited to import 1 million tonnes LNG per annum for a period of 15 years.
Petrobangla has also signed an agreement with Summit Oil & Shipping Co Ltd, under which the company will supply LNG from 2026 for a period of 15 years.
In addition to these, a deal has been finalised to import 1 million tonnes of LNG per annum for one year from Perintis Akal Sdn Bhd, Malaysia. The Legislative and Parliamentary Affairs Division and the Cabinet Committee on Government Procurement have approved the deal. The agreement will be signed very soon.
The company will start supplying LNG this year. Discussions are also in the final stages to buy 24 LNG cargoes from Gunvor Singapore Pte Ltd over the next two years.
According to Energy Division officials, the demand for gas in the country is increasing steadily. As a result, the collection of LNG is being increased from the spot market as well as long-term contracts, they said.
Some 54 cargoes of LNG were imported from the spot market till last January starting in September 2020, the officials said. In addition, LNG is being imported from Qatar under long-term contracts, they said.
The officials said as it is currently not possible to meet the entire domestic demand for gas, the pipeline gas import move will lessen forex pressure for procuring LNG from the spot market.
