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Bangladesh prepares to follow Pakistan LNG import model

Tue 25 Sep 2018 by Mike Corkhill

Bangladesh prepares to follow Pakistan LNG import model

Bangladesh, like Pakistan, will soon have two regasification vessels in service. And, as is the case for Pakistan, Bangladesh’s LNG import ambitions don’t end there

Bangladesh is one of two countries commencing LNG imports this year, the other being Panama. Regasified cargo from Excelerate Energy’s Moheshkhali Floating LNG (MLNG) terminal began reaching customers in the Chittagong region for the first time on 18 August, at which point Bangladesh became the world’s 42nd LNG import nation.

Excelerate Energy is using its 138,000-m3, 2005-built floating storage and regasification unit (FSRU) Excellence to bring LNG to Bangladesh. The MLNG project utilises, as the point of entry for regasified LNG, a submerged turret loading (STL) buoy positioned off Moheshkhali Island in the Bay of Bengal.

Excellence, which has the capacity to regasify up to 3.5 mta of LNG, connects with the STL buoy by means of a moonpool arrangement in its bow and delivers regasified cargo ashore via a subsea pipeline.

Petrobangla, the country’s oil and gas company, is acquiring the necessary LNG import volumes in the world market. So far, it has signed 15-year sale and purchase agreements with Qatar for 2.5 mta and with Oman for 1 mta. The term coincides with the length of the Excellence charter.

The MLNG project was jointly developed by Petrobangla, Excelerate Energy and the International Finance Corporation (IFC). IFC is a sister organisation of the World Bank and promotes itself as the largest global development institution focused exclusively on the private sector in developing countries.

The start of Bangladesh LNG imports was not without its teething problems. Excellence arrived at its STL buoy site with an inaugural cargo of lean LNG from Qatar on 24 April and was due to start delivering regasified LNG to the national grid two weeks later.

However, technical issues and rough seas during the height of Bangladesh's monsoon season from June through August kept the FSRU stranded off Moheshkhali Island for more than three months due to an inability to safely moor to the STL buoy and regasify cargo.

Now that Excellence is operational, it will be replenished by LNG delivery carriers moored alongside for ship-to-ship (STS) cargo transfers using cryogenic hoses. Excelerate Energy has experience of such STS operations both in open seas and with the FSRU moored to its STL buoy.

Excellence will not be able to use its full regasification capacity until further improvements are made to the country’s pipeline infrastructure linking Moheshkhali Island with Chittagong. However, these constraints are expected to be alleviated in a matter of months.

LNG and economic growth

The second-fastest growing economy in Asia, Bangladesh is a country of 160M that relies on domestic natural gas reserves to meet 70% of its energy needs. Almost 25% of the nation’s population is without electricity.  

Although the Bay of Bengal is believed to hold further gas deposits, for the moment they remain undiscovered and gas consumption is currently growing faster than the ability to confirm new reserves.

Bangladesh has turned to LNG imports to meet a gas supply deficit now estimated at 20% and growing. A number of additional LNG receiving terminal projects have been tabled and, among these, a second is in its construction phase and set to augment Excelerate Energy’s MLNG scheme.

The Summit LNG (SLNG) project, which would use another Excelerate Energy FSRU on a 15-year charter, is due to commence operations in March 2019. The Summit FSRU will also utilise an STL buoy, to be positioned 6 km off Moheshkhali Island, not far from the MLNG project’s buoy.

The similarities don’t end there; the SLNG project will also have the capacity to process up to 3.5 mta of LNG. And like the Excelerate Energy commitment to the MLNG scheme, Summit is developing the SLNG project on a build-own-operate-transfer basis. The facility will transfer to Petrobangla after 15 years.

In August 2018 Mitsubishi Corporation (MC) agreed to acquire a 25% interest in Summit LNG Terminal Co. Following the deal, Summit Corporation Ltd now holds a 75% stake in the SLNG project and MC the remaining 25%.

PSA Marine Bangladesh, part of Singapore’s PSA Marine, will provide berthing, mooring, pilot and personnel transfer services to LNG ships calling at SLNG’s FSRU terminal. Ship-assist operations will use three escort tugs, one fast crew boat and one offshore supply vessel.

Next growth phase

The MLNG and SLNG projects will provide Bangladesh with the capacity to receive 7 mta of LNG by 2021. In the face of a continued depletion of domestic reserves, further LNG imports will be required on top of these projects to meet the rising demand for gas in Bangladesh. It is estimated that the country could be importing upwards of 20 mta of LNG by 2030.

Four further world-scale and two small-scale LNG import projects have been tabled. Two of the world-scale schemes – those put forward by Petronet and Powercell – call for the construction of shore-based terminals. All the others would utilise an FSRU-based approach.

The two world-scale FSRU projects have been proposed by Petronas and Reliance and would be able to handle LNG import volumes similar to those of the MLNG and SLNG projects over the same 15-year contract period. The Reliance scheme would be provided in tandem with a gas-fired power station.

The commodity traders Gunvor and Vitol are behind the proposals for the small-scale FSRU projects. The schemes would utilise barge-based units and would be stationed in the relatively shallow waters close to Chittagong where regasified cargoes would be used in fertiliser manufacture. The facilities would need to be serviced by coastal distribution LNG carriers of a similar shallow draft.

The 1.5-mta Gunvor initiative, launched at the behest of Petrobangla, is the furthest advanced. The company has chartered Exmar’s 25,000-m3 barge-based FSRU for 10 years and dispatched the vessel to Singapore for modifications in preparation for work in Bangladesh.

There has been some conjecture in recent weeks that the two small-scale Bangladesh FSRU projects are to be either postponed or cancelled as they would not be competitive with the MLNG and SLNG FSRUs on the basis of gas volumes processed. Petrobangla has hinted that the Gunvor and Vitol schemes may be delayed but no definitive decision has been announced as yet.

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