Summit asks for reconsidering FSRU deal, says it could save $1.10b

Summit LNG Terminal II Company Limited has urged the government to reconsider the interim government's decision to cancel a deal for setting up the country's third floating storage and regasification unit (FSRU) for LNG imports.

The company said retaining the agreement instead of proceeding with an FSRU proposed by a Chinese company could save Bangladesh around $1.10 billion.

In a letter sent to the chairman of Petrobangla on 6 September, Summit said if the agreement signed in March 2024 is retained, the FSRU, mooring system and subsea pipeline would be handed over to Petrobangla free of cost after 15 years of operation.

Bangladesh currently has two FSRUs – one owned by Summit Group and the other by US-based Excelerate Energy Bangladesh. During the Awami League government, the authorities signed an agreement with Summit on 30 March 2024 to set up another FSRU.

Before the FSRU is handed over, it will undergo a full dry-docking and certification by a globally recognised classification society. This, Summit said, would ensure that the FSRU remains fit for another 10 years of operation.

The government is taking various initiatives to address the country's energy shortage, including plans to install additional FSRUs. As part of this effort, the Cabinet Committee on Economic Affairs on 28 July gave in-principle approval to set up a third FSRU through China National Energy Engineering and Construction Company under a government-to-government arrangement.

The Chinese company submitted its proposal to the government on 19 June.

In the letter signed by Summit LNG Terminal II Company Secretary ASM Nazmul Haider, the company said the second terminal was supposed to be implemented under a Build-Own-Operate-Transfer (BOOT) model under its agreement with Petrobangla.

However, the Build-Own-Operate (BOO) structure currently being considered for the Chinese company's proposed third FSRU would not provide for the transfer of the FSRU to Petrobangla.

As a result, Petrobangla would not obtain full ownership of the FSRU, causing an estimated economic loss of around $883 million, Summit said.

Citing reports published in the media, Summit said the proposed Chinese FSRU would have a daily charter rate of around $3,42,000, compared with approximately $3,00,000 for its second terminal.

This would mean a saving of around $42,000 per day if the Summit terminal agreement is retained, amounting to approximately $230 million over 15 years.

"Therefore, the total financial savings would be approximately $1.10 billion," the company said.

Summit also claimed it has already invested more than $20 million in the project.