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By Oleg Vukmanovic , Drazen Jorgic and Ruma Paul
LONDON/ISLAMABAD/DHAKA (Reuters) - Vitol is targeting Southeast Asia's booming liquefied natural gas (LNG) markets to boost sales and catch up with rival commodity traders by developing import projects in Pakistan and Bangladesh.
In its biggest potential project, the trader is teaming up with France's Total on a floating LNG import facility in Port Qasim, Karachi, industry and government sources said.
The unusual alliance between the Swiss trade house and oil major shows how emerging markets' appetite for gas is becoming a focal point for the global LNG industry as it faces years of strong supply growth.
The Vitol-Total project joins around eight other proposed LNG terminals in Pakistan - largely clustered around Port Qasim - vying to tap into a market set to expand five-fold by 2022 to 30 million tonnes per annum.
Floating terminals, known as FSRUs, are faster and less costly to set up than traditional land-based units and offer commodity traders a route into new markets, helping to absorb a growing LNG surplus on international markets.
FSRU projects tend to cost around $250 million which factors in the full range of costs including chartering, port and pipeline infrastructure.
Vitol declined to comment.
Industry sources said Total, which is also developing projects in Myanmar and Ivory Coast, started co-operating with Vitol after a separate Pakistani LNG project it was involved with collapsed last year.
However, he questioned the probability of success given Pakistan only had space for up to four more terminals in the next few years.
The playing field may be more level in Bangladesh where all players face headwinds.
For example, Trafigura and Gunvor have struggled to progress their small FSRU projects meant to supply fertiliser producers on the Karnaphuli river due to space and logistical constraints, industry sources said.
Even Vitol's rival scheme in the Bay of Bengal faces challenges.
"The (Sangu) platform is in six metres of water, so they would need very small LNG ships to reach it ... but this is not our headache, they will take the risk," a director at state-run energy firm Petrobangla's LNG division told Reuters.
A gas pipeline runs from the platform to shore.
"Once you factor in all of the specialised equipment, cost starts to become a real challenge," a LNG industry source whose company is active in Bangladesh said.
(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)