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US-based Excelerate Energy's bid for building a floating storage and regasification unit (FSRU) near Payra seaport, its third in the Bay of Bengal, fails as an initial deal is rescinded.
The interim government has scrapped the term-sheet agreement with the energy giant's Bangladesh outfit, said sources.
State-run Petrobangla has issued a letter terminating the non-binding agreement with Excelerate Energy, they said.
The scrapping of Excelerate Energy's deal with Petrobangla happens to take place within a couple of weeks of former US ambassador to Bangladesh Peter D Hass having joined Excelerate Energy as a strategic adviser.
The Energy and Mineral Resources Division (EMRD) under the Ministry of Power, Energy and Mineral Resources (MPEMR) earlier had directed Petrobangla to cancel the deal as the interim government decided not to ink any fresh deal under the Quick Enhancement of Electricity and Energy Supply (Special Provision) Act 2010 (Amended 2021), Petrobangla chairman Zanendra Nath Sarker told the FE Tuesday.
Petrobangla would need to extend the tenure of the term-sheet agreement and ink a terminal use agreement (TUA) with Excelerate Energy to ensure its effectiveness, he said.
The corporation on November 8, 2023 had inked three agreements along with term-sheet agreement with the US multinational Excelerate Energy's Bangladesh outfit.
"The tenure of the non-binding accord was set to expire on November 7, 2024 automatically if the tenure was not extended," said the Petrobangla top brass.
Under the term-sheet agreement to build an FSRU near Payra seaport, the US firm was expected to clinch a contract to build a new 4.5 0MTPA FSRU in southern Bangladesh.
It would also have to lay around a 60-70km regasified LNG (RLNG)-carrying pipeline from the FSRU's mooring facility near Kuakata to southern Khulna to feed gas-guzzling industries, power plants and other consumers in the country's southwestern region.
The other two agreements that Petrobangla inked with Excelerate Energy last year are long-term liquefied natural gas (LNG) sales and purchase agreement (SPA) and expansion of Moheshkhali Floating LNG terminal's capacity.
The firm has already expanded the capacity of its floating storage and re-gasification unit (FSRU) -- Moheshkhali Floating LNG terminal - by 20 per cent to 600 million cubic feet per day (mmcfd) from 500mmcfd, said a senior official of state-run Rupantarita Prakritik Gas Company Ltd (RPGCL).
The long-term LNG, SPA is linked with the expansion of the Excelerate's FSRU capacity.
Under the long-term LNG sales and purchase deal, Excelerate Energy will supply 0.85-million-tonne per year (MTPA) of LNG from January 2026 to December 2027 and 1.0 MTPA of LNG from January 2028 to December 2040.
It means Petrobangla will buy a total of 12 LNG cargoes each year during 2026 and 2027 and 16 LNG cargoes from 2028 until 2040.
Bangladesh will purchase LNG from Excelerate Energy at around 13.35 per cent of the three-month average Brent crude oil prices-plus US$ 0.30 cents per million British thermal unit (MMBTu), under the long-term SPA.
The country started importing LNG in August 2018 after inking its first-ever SPA with Qatar's RasGas, later renamed Qatargas and finally QatarEnergy, on September 25, 2017 to buy up to 2.5 MTPA of lean LNG over 15 years.
Sources say Excelerate Energy is the owner of both the operational FSRUs in Bangladesh having the total regasification capacity of around 1,000mmcfd.
Apart from owning its own FSRU named MLNG terminal, Excelerate provided FSRU to Summit Group's Summit LNG Terminal Company Ltd under a 15-year charter agreement.
Petrobangla last week cancelled contract of Summit Group on the building of its second 4.5MTPA-capacity FSRU due to non-compliance with contract terms.
It sent the termination letter on October 7 afternoon and requested Summit LNG II Terminal Co. Ltd, the implementing entity of the FSRU, to collect performance bond worth US$20 million,
The Terminal Use Agreement (TUA) and Implementation Agreement (IA) with Summit were also cancelled in line with an instruction from the EMRD under the MPEMR.
The Summit LNG II Terminal Co. Ltd, a subsidiary of Summit Group, was supposed to build the FSRU on build, own, operate and transfer (BOOT) basis by 2026 and continue operations for 15 years.