Summit LNG Terminal unlikely to resume operation this summer

Summit LNG Terminal is unlikely to resume operations this summer due to fresh damage to the seabed pipeline structure, sources said.

A Singapore-based service provider, hired by Summit, identified damage to the disconnectable turret mooring (DTM) plug in the subsea landing pad that holds the Floating Storage Regasification Unit (FSRU) to the mooring facility, they added.

The provider took photographs of the damage, according to sources.

Summit verbally informed the state-run Rupantarita Prakritik Gas Company Limited (RPGCL) about the damaged DTM plug, a senior RPGCL official told The Financial Express.

The company has yet to officially announce a likely timeline for resuming LNG re-gasification, the official added.

A rights group, however, labelled the repeated delays in Summit's FSRU operations as "sabotage" -- which, they claim, is intended to prolong the country's energy crisis under the interim government.

"It is a clear sabotage not only regarding the delay of the LNG terminal but also over its tariff rates," said energy adviser of Consumers Association of Bangladesh (CAB) Professor Dr M Shamsul Alam.

Under the terminal use agreement (TUA) between Summit Group and state-run Petrobangla, the latter is obliged to pay around US$217,000 per day regardless of whether LNG is re-gasified in the agreed quantity or less.

The deal operates on a take-or-pay basis, meaning Petrobangla must pay the stipulated amount after the FSRU's commissioning, irrespective of LNG re-gasification.

The FSRU is designed to re-gasify around 500 million cubic feet per day (mmcfd) of LNG, which is the agreed amount.

Professor Alam described the FSRU contract award and LNG re-gasification tariff as irrational, and called for a public hearing by the Bangladesh Energy Regulatory Commission (BERC) to reconsider these terms.

Summit's floating, storage and re-gasification unit ceased operations on May 30 following damage caused by Cyclone Remal.

After repairing its ballast water tank, the FSRU returned to the offshore mooring facility on 10 July but suffered another accident the following day, damaging the DTM buoy messenger line while preparing to moor the FSRU with the DTM plug. Overseas experts took more than a month to assess the damage, due mainly to adverse weather and the nationwide unrest caused by the student quota reform movement, which led to the fall of the Awami League government on 5 August, the RPGCL official added.

Summit Group has applied for force majeure to excuse the halt in its LNG terminal's operations. Force majeure is a contractual clause that relieves parties from obligations due to extraordinary circumstances beyond their control, such as war, strikes, riots, crime, epidemics or sudden legal changes.

But the Energy and Mineral Resources Division under the Ministry of Power, Energy and Mineral Resources moved to review the existing deal to scrutinise Summit's force majeure claim.

"We shall see how long the FSRU can remain out of operation under the TUA," a senior Energy and Mineral Resources Division official told The Financial Express, requesting anonymity.

The division has asked its foreign consultant to investigate the matter, the official added. The country's gas crisis is set to prolong due to the ongoing shutdown of Summit's FSRU, a senior Petrobangla official said. This will affect gas-intensive industries, power plants and other consumers.

More than three dozens of gas-fired power plants are currently offline as Petrobangla has reduced gas supply to about 896 million cubic feet per day (mmcfd) against a demand of around 2,316 mmcfd as of 14 August, according to Petrobangla data.

The state-backed Bangladesh Power Development Board is likely to increase reliance on more expensive oil-fired power plants to address the gas shortage. Currently, the only operational FSRU -- Excellence of Excelerate Energy -- is supplying about 605 million cubic feet per day (mmcfd) of gas.

Previously, Summit's FSRU was also out of service for three months from November 2021 due to a ruptured mooring line in the Bay of Bengal.

The technical failure caused a severe gas shortage at the time, affecting power plants, industries, households and CNG filling stations.

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