Bangladesh, ENOC agree to feasibility study for LPG terminal

DHAKA (Reuters) - Bangladesh and Dubai-based Emirates National Oil Company (ENOC) agreed on Thursday to conduct a feasibility study on setting up a liquefied petroleum gas (LPG) terminal in the country, a Dhaka-based official said.

"Today we held talks with the ENOC delegation and decided to conduct a feasibility study for a joint venture project to build an LPG terminal," said Sayed Mohammad Mozammel Haque, a director of state-owned Bangladesh Petroleum Corporation.

"This is a positive step. After the study, we will finalise the capacity for the terminal and other related things," he told Reuters after the meeting in Dhaka.

Bangladesh currently imports LPG mostly from Oman and Qatar, Haque said.

Transport costs for LPG are now about $100 per tonne but once the terminal is built that cost could fall to $30 as it will allow big ships to anchor, which would translate into a 10 percent lower price for end-users, he said.

The LPG terminal could be built at Matarbari on Moheshkhali Island in the Bay of Bengal, where the country's first deep-sea port will be built, the official said.

A shortfall in supplies of natural gas has prompted the government to encourage the use of LPG for households.

LPG, a mixture of propane and butane, can be used for cooking and transport, as well as in the petrochemical industry.

Bangladesh's demand for LPG now stands at 1 million tonnes against a supply of 600,000 tonnes, the official said, adding the demand could go up to 2 million tonnes by 2022 as it will be a key source for cooking gas in Bangladeshi households.

The south Asian country has also turned to liquefied natural gas to offset falling domestic gas output to feed industrial demand and electricity generation in the nation of 160 million people.

(Reporting by Ruma Paul; editing by David Evans)