Bangladesh approves Petrobangla's initial deal to buy 2.5 mil mt/year LNG from RasGas

Dhaka (Platts)--31 Aug 2017 414 am EDT/814 GMT

Bangladesh's Cabinet Committee on Public Purchase has approved state-owned Petrobangla's initial agreement to buy 2.5 million mt/year of lean LNG from Qatar's RasGas over 15 years, a senior official at the Energy and Mineral Resources Division under the energy ministry told S&P Global Platts Thursday.

The approval on Wednesday paves the way for a final agreement to be signed soon, he added.

The LNG purchase price has been set at around 12.50% of the three-month average Brent crude prices plus 0.50%, the official said.

RasGas and Petrobangla have signed the much-expected initial agreement on July 13. But it took around one-and-a-half months to get vetting from the law ministry prior to receiving approval from the cabinet committee, said the official preferring anonymity as he was not authorized to talk to media.

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He said the quantity of LNG imports could be increased later as the deal is flexible.

The RasGas supply will take up a third of Bangladesh's LNG handling capacity of 7.5 million mt/year, which will be ready following the 2018 commissioning of two floating, storage and regasification units.

The lean LNG -- similar to natural gas produced from Bangladesh's domestic fields -- will be blended with domestic gas before delivery to end-users, said the official.

The official did not elaborate on the quality of LNG to be imported from RasGas but said it would be similar to the specifications set for spot LNG.

Rupantarita Prakritik Gas Company Ltd, or RPGCL, a wholly owned subsidiary of Petrobangla in charge of the country's LNG purchases, has set out specifications for spot LNG it would import separately.

Under the specifications, the imported LNG should have a gross heating value within the range of 1,025-1,100 Btu/scf, RPGCL managing director Quamruzzaman said previously, adding it could be problematic for exporters of lean LNG from Australia's Queensland or rich LNG from the Middle East.

Since the imported LNG is to be blended with sulfur-free, sweet gas produced domestically, the sulfur content in the imported LNG should be low, Quamruzzaman added.

RPGCL has received expressions of interest from 39 global firms to supply LNG on a spot basis in its tender which closed August 17.

Bangladesh's first LNG import terminal, a 3.75 million mt/year FSRU being developed by US-based Excelerate Energy, is expected to be commissioned in April 2018 and its second, also with a capacity of 3.75 million mt/year, being developed by Summit Group, is expected to be commissioned by end-2018.

Both FSRUs will be located at Moheshkhali Island in the Bay of Bengal, and ownership of the vessels will be transferred to Petrobangla after 15 years of operations.

Petrobangla is also planning to set up at least two onshore LNG terminals, each with a capacity of 7.5 million mt/year, by 2025.

Separately, Petrobangla has signed a memorandum of understanding with Switzerland-based AOT Energy, with a sales and purchase agreement due to be signed by year-end.

--Mohammad Azizur Rahman,

--Edited by Irene Tang,

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