Summit's LNG terminal

The government faces 'capacity payment' risk

M Azizur Rahman | Published: April 14, 2019 09:35:02 | Updated: April 16, 2019 15:16:30

The government faces 'capacity payment' risk from the day one of the commercial operations of the country's second LNG import terminal.

The risk emanates as necessary transmission pipeline to evacuate re-gasified LNG has not been installed yet.

The country's second LNG import terminal owned by Summit Group is slated for commissioning next week, industry insiders said.

Officials concerned fear that the pipeline is unlikely to get ready before the start of the operations of the second floating, storage and re-gasification unit (FSRU) on the Moheshkhali Island in the Bay of Bengal.

It might take even several months to complete the pipeline for evacuation of the LNG, said a senior official at the Gas Transmission Company Ltd (GTCL).

With the existing pipeline network, some 650 million cubic feet per day (mmcfd) of LNG can be evacuated as against the total 1000 mmcfd capacity of two FSRUs. The Excelerate Energy's FSRU with 500 mmcfd is already operational.

The state-owned Petrobangla would have to pay 'capacity charge' for around 350 mmcfd, the official added.

The construction of two major pipelines -- one 42-inch 90 km pipeline from Moheshkhali to Anowara and another 36-inch 181 km Chittagong-Feni-Bakhrabad -- is required to evacuate the agreed quantity of LNG, which is around 1,000 mmcfd.

The GTCL is responsible for building gas transmission pipelines in the country.

US-based Excelerate Energy's Excellence is currently re-gasifying around 500 mmcfd of LNG for consumers.

According to the deals, Petrobangla is required to pay the US firm around $237,000 (Tk 20.14 million) a day -- no matter it re-gasifies the agreed quantity of 500,000 Mcf/d of LNG or less.

For Summit's FSRU, Petrobangla would have to pay around $217,000 per day.

Both the deals are on take or pay basis, meaning Petrobangla would have to pay the said amount after commissioning of the FSRUs, no matter it re-gasifies or not.

Both the FSRUs are designed to re-gasify around 500 mmcfd, which is the agreed quantity between the Petrobangla and contractor.

Earlier, the delay in the construction of a 30-kilometre 42-inch diameter Anwara-Fouzdarhat gas transmission pipeline forced Petrobangla to pay the capacity charge to the contractor of the country's first LNG terminal.

Petrobangla started re-gasifying around 100 mmcfd of LNG, which is one-fifth of the capacity, from the first LNG terminal from August 18, 2018.

Bangladesh began commercial operation of its maiden FSRU on August 18, 2018 after importing the first LNG -- with Excelerate's commissioning cargo on April 24, 2018.

The Excellence got connected to the subsea pipeline network on August 05, and commenced injecting the first re-gasified LNG into the pipeline network on August 12.

Technical issues and rough seas during the June-August south-western monsoon kept it stranded off the south coast of Chattogram for months.

Bangladesh is currently importing lean LNG from RasGas of Qatar and Oman Trading International, or OTI, of Oman under term deals.


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