Gas supply to increase from April

The country's gas supply may increase by 500 million cubic feet per day (mmcfd) from April this year with an apprehension that there might be a substantial rise in its price for consumers.

Currently, the country's gas supply is about 2550 mmcfd against a demand for over 3000 mmcfd.
The 500 mmcfd gas will be added to the national gas supply network through import from Qatar and some other countries as Bangladesh's first FSRU (floating storage and regasification unit) is set to go into operation in April next.

A second FSRU will be coming into operation in October to double the supply of imported LNG to 1000 mmcfd, official sources at the Energy Division and state-owned Petrobangla said.

According to the sources, now the average gas supply cost per cubic meter is being calculated at Tk 7.21 per cubic meter. Once the very costly imported LNG (liquefied natural gas) is blended with the local gas, the supply cost will go up to Tk 18-19 per cubic meter.

"So, it'll be indispensable to adjust the price at the consumer level," said Md Quamruzzaman, managing director of the Rupantarita Prakritik Gas Company Limited (RPGCL).

The state-owned RPGCL, which is responsible to import LNG and supply it to the national grid, has so far taken a huge number of projects.

Among its projects, installation of the very first FSRU of 500 mmcfd LNG regasification capacity at Moheshkhali Island is now nearing completion and scheduled to be commissioned in April next as per the deal signed with its operator US-based Excelarate Energy.

The second FSRU is being set up by Summit Group in the same area with a schedule to come into operation from October this year. It regasification capacity is also 500 mmcfd.

Quamruzzaman said RPGCL is very hopeful of timely commissioning of the two FSRUs to increase the supply by 1000 mmcfd by the year-end.

He said the government has already signed a contract with Qatar's RasGas to get 60 percent of first phase import of 500 mmcfd LNG while the remaining 40 percent will be coming from international LNG spot market through quotation.

Besides, the final deals are being ready for signing with another three companies-Pertaminaof Indonesia, OTI of Oman and AOT of Switzerland, to annually import another 3.25 million tonnes of LNG to regasify at the second FSRU to increase the supply by another 500 mmcfd.

"We hope, we'll be able to sign the final deals with the last three companies within the first half of the current year so that they can supply LNG from the beginning of the second FSRU commission," he told.
When such good news is waiting for the gas-starved industries, the household and other consumers have to be ready to pay an increased price of gas anytime in near future as import LNG will push up the overall supply cost.

Officials said the cost of local gas is about $3 per mmcfd while the imported one will cost over $9 per mmcfd.

According to the officials, the imported LNG will be re-gasified through FSRU and supplied it to the consumers through blending with the local gas which ultimately push up the overall cost.

After the blending, the current average cost of the gas will be Tk 18-19 per cubic meter at the consumer level against the current average cost of Tk 7.21 even if enjoys a tax waiver to LNG import, said a top official at Petrobangla.

BSS said the government has already decided to give a tax waiver for gas import to keep the cost low from the calculated cost with tax.

An Energy Division official said Petrobangla is examining the matter to determine the exact gas cost after the LNG import.

Being directed by the Energy Division, the state-owned gas distribution companies like Titas, Jalalabad and Bakhrabad have already submitted their proposals to Bangladesh Energy Regulatory Commission (BERC) to raise the gas price.

But a top official at the BERC said the regulator is yet to respond to their proposals. "Possibly, BERC might take steps to adjust gas price after the start of LNG import to see its impact on the local price," he said preferring anonymity.

Finance Minister AMA Muhith and State Minister for Energy Nasrul Hamid on various occasions also dropped broad hints that the government would require to raise gas price after the start of LNG import.