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Bangladesh scraps new floating LNG projects for land-based terminals

DHAKA/SINGAPORE (Reuters) - Bangladesh will scrap plans to build additional floating liquefied natural gas import (LNG) terminals in favour of land-based stations, a senior government official said.

Adverse weather is making it difficult to operate the country’s sole floating storage and regasification unit (FSRU) and, hence, Bangladesh does not plan to build any further FSRU projects, said Mohammad Quamruzzaman, managing director of the Rupantarita Prakritik Gas Co.

His firm is in charge of LNG imports at state-owned oil firm Petrobangla.

“We will not go for more floating LNG projects at this time. One is already online and another is expected to start in March next year,” he told Reuters.

The South Asian nation began importing LNG from Qatar on a regular basis in September through the country’s first FSRU operated by privately owned U.S. company Excelerate.

The FSRU arrived in April for commissioning at the port of Moheshkhali near the city of Cox’s Bazar but its start-up was delayed by several months due to technical problems and bad weather.

A second FSRU project, operated by Summit Corp with Japan’s Mitsubishi Corp as a partner, is expected to start operations in March next year, doubling the country’s import capacity to 7.5 million tonnes a year.

Scrapped FSRU projects will include a project by India’s Reliance Power and another by a consortium comprising Hongkong Shanghai Manjala Power and Malaysia’s Petroliam Nasional Bhd, Quamruzzaman said.

Reliance did not reply to requests for comment while Hong Kong Shanghai Manjala Power declined to comment. Petroliam Nasional did not immediately respond to a comment request.

Rupantarita Prakritik has short-listed five companies for a proposed land-based terminal that can import 7.5 million tonnes per year of LNG, including Japan’s Mitsui, Osaka Gas and JERA, and two other Korean companies, said Quamruzzaman.

The terminal could be built at Matarbari in Cox’s Bazar, though the details are not yet firm, he said.

Developing countries that have sought LNG supplies have adopted FSRU terminals since they are typically about half the cost of land-based terminals, twice as quick to deliver and can be moved to other destinations when they are no longer needed.

While upfront capital costs for land-based terminals are more expensive, operating costs for FSRUs are more because of potentially high charter rates for the ships, said Poorna Rajendran, a senior analyst at consultancy FGE.

While Bangladesh does have extreme weather conditions during the monsoon period, “with an adequate breakwater, this should typically not impact operations,” said Nicholas Browne, director of Asia-Pacific gas and LNG at Wood Mackenzie.

Breakwaters are structures built near the coast to protect a harbour or beach from waves caused by adverse weather.

Reporting by Ruma Paul in DHAKA and Jessica Jaganathan in SINGAPORE; additional reporting by A. Ananthalakshmi in KUALA LUMPUR; Editing by Christian Schmollinger