Petronet signs pact to set up $950 mn LNG project in Bangladesh

India's largest LNG importer Petronet has signed an agreement to set up a $950 million liquefied natural gas import project in Bangladesh.

Petronet signed a MoU with with Petrobangla to set up a 7.5 million tonnes a year project to receive and regasify LNG on Kutubdia Island in Cox's Bazar and lay a 26-km pipline to connect it to the consumption markets.

"We intend to start marine survey work this month and are targeting 2020 for completion of the project," Petronet LNG CEO and Managing Director Prabhat Singh told PTI here.

Singh signed the memorandum of understanding with Petrobangla secretary Syed Ashfaquzzaman on December 30.

The project envisions future expansion and can be used to supply LNG through small barges and LNG trucks to users which are not connected by gas grid.

While what has now been signed is just a preliminary agreement, a formal pact will be signed once a joint venture is agreed between Petronet and Petrobangla.

"We are keen that Petrobangla becomes part of the joint venture (building the LNG) project and are willing to offer them up to 26 per cent stake. But they are not keen to invest due to fund constraints. So we would like them to keep a nominal interest of say five per cent or so," he said.

Petronet, he said, is not looking at partnership with Petrobangla for funds but only for project securitisation. "We want an assurance that they will buy the gas we import," he said.

Singh said his company is also keen to rope in state gas utility GAIL India Ltd in the project at some point of time to help implement the pipeline that is to be laid to connect the import facility with consuming markets.

And others like Indian Oil Corp too can join if city gas projects are to be developed, he said.

"GAIL may be wanting to sell LNG into Bangladesh and then there is this pipeline. So, it will be a great fit if they join the project," he said.

Bangladesh has a lot of unmet demand. Gas demand is projected to more than double to 45 million tonnes from current 20 million tonnes in next 20 years.

"The LNG projects planned will not be able to meet all of this demand," he said.

Petronet's import terminal is expected to be completed within four years.

Excelerate Energy is looking at setting up a floating terminal at Moheshkhali.