Fate of planned land-based LNG terminal becomes uncertain

Building Bangladesh's maiden permanent land-based LNG terminal now stalls with the cancellation of short-listing of bidders for the project aimed at ending reliance on expensive floating units hired for re-gasification of the imported liquid gas, sources said.

They said the planned land-based terminal-development project was undertaken to ensure country's stable liquefied natural gas (LNG) import and re-gasification.

State-owned Rupantorito Prakritik Gas Company Ltd (RPGCL), a wholly owned subsidiary of Petrobangla, issued Tuesday a notice cancelling the short-listing process.

The 1,000 million cubic feet per day (mmcfd)-capacity land LNG terminal at Matarbari in Cox's Bazar was processed under the Quick Enhancement of Electricity and Energy Supply Act (Special provision-2010), as revised in 2021, that provides for bypassing competitive tender for quick-fix solution invented by the past government to relieve fuel crisis.

Official sources have said the short-listing has been cancelled in line with the current interim government's decision to suspend all negotiations, selections, and purchasing processes of all power and energy projects under the special law.

Market sources said the RPGCL had short-listed eight firms following floatation of international tenders inviting expression of interest (EoIs) from interested developers in 2019.

It also issued request for proposals (RfPs) to the eight short-listed companies in March 2021 for submitting their proposals within six months, and the deadline for submission of the RfPs continued to be extended until its cancellation Tuesday.

They said the land-based LNG- terminal project got trapped in land-acquisition dilemmas for long while temporary floating ones - floating storage and re-gasification units (FSRUs) -- banked on swelling imports of the gas amid fuel shortages.

The plan for building the 7.50- million- tonne-per- year (MTPA) LNG terminal on land was made around a decade back, but the government could not arrange a suitable land for the project until its eventual demise.

On the contrary, they said, the Energy and Mineral Resources Division (EMRD) under the Ministry of Power, Energy and Mineral Resources (MPEMR) had awarded three FSRUs and inked term-sheet agreement (TSA) for another one over the past six years.

A senior official of the EMRD says the government initially had planned to build the on-land LNG-import terminal on Matarbari island back in 2014 when the plan to build first FSRU was also initiated.

"The deal on building the first FSRU on Moheshkhali island in the bay was inked in July 2016, but necessary land to build the land-based LNG terminal was not arranged," the official laments. A strong private-sector lobby for FSRU was creating obstacles towards building the land-based LNG terminal, it has been alleged.

After years of efforts to arrange land, the MPEMR had recently decided to buy the 'ash land' owned by state-owned Coal Power Generation Company Bangladesh Ltd (CPGCBL) at around Tk 30 billion for building the land terminal.

Then again, the land has yet to be handed over to the EMRD as payment to the CPGCBL not cleared, said sources. They said the proposed land-based LNG terminal is planned to be built by the selected contractor on build, own, operate and transfer (BOOT) basis.

The project company would own, operate and maintain the plant for 20 years until handover to the government.

Japanese consulting firm Tokyo Gas Co Ltd carried out feasibility study and prepared the RfP documents to help select the contractor.

The Japanese firm would also help the government in evaluating bids to select an efficient contractor to build the onshore LNG terminal.

The eight firms that got the RfPs to set up the terminal include Mitsui & Co Ltd, Japan Investment Corporation for Matarbari Regas Terminal, a joint venture of Inpex Corporation, Sojitj Corporation, Kyushu Electric Power Co and local Unique Hotel and Resorts Ltd, joint venture of Total Gas Electric Holdings and Total Gas and Power Business Service of France, Petronet LNG Ltd, joint venture of Qatar Petroleum LNG Services and Exxon Mobil of Qatar, joint venture of local Summit Corporation Ltd, Mitsubishi Corporation, and Jera Co Inc, and joint venture of United Enterprises & Co Ltd, Posco International Corp and Korea Gas Corporation and consortium of Sumitomo Corporation and Chugoko Electric Power Co. Inc.

Currently, two FSRUs are operational in Bangladesh, of which one is owned by Summit Group and another by Excelerate Energy of the United States.

The FSRUs have capacity to re-gasify around 1,100 mmcfd of LNG in total.

"The government should build the land-based LNG-import terminal immediately," says energy-expert Professor M Tamim.

Land-based LNG terminal will be cost-effective, which will be able to re-gasify LNG stably, he observes.

FSRU is considered temporary solution, while land-based LNG terminal is a permanent one, notes Mr Tamim, who was the chief of the MPEMR during the previous caretaker government.

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