DHAKA (Reuters) - Bangladesh will sign a 15-year deal with Qatar’s RasGas Co to import liquefied natural gas (LNG) starting in 2018 as the South Asian country turns to the supercooled fuel to fill a domestic supply gap for power generation, two officials told Reuters.
The deal will be signed on Sept. 25 in Qatar, said Mohammad Quamruzzaman, managing director of the Rupantarita Prakritik Gas Co, a unit of state-owned oil firm Petrobangla.
Under the deal, RasGas will supply 1.8 million tonnes a year of LNG for the first five years and 2.5 million tonnes a year for the next 10 after that, the Petrobangla officials said.
The deal is Bangladesh’s first LNG import agreement and will help to cover the country’s domestic natural gas shortfall. The contract with the world’s biggest LNG exporter underscores the rise of South Asia as a new market for the fuel.
The deal is for less gas than the 4 million tonnes a year Bangladesh agreed to take in a 2011 memorandum of understanding with state-owned RasGas, since it instead plans to take more spot cargoes amid a supply glut that has lowered prices.
In June, Rupantarita Prakritik Gas posted a notice on its website looking to shortlist suppliers of LNG spot cargoes starting in 2018.
“We have got a huge response ... about 40 companies showed their interest to supply LNG,” Quamruzzaman said.
Bangladesh’s first floating storage and regasification unit (FSRU), supplied by Excelerate Energy of the United States, is to be commissioned by April 2018. Its second, supplied by the country’s own Summit LNG of the Summit Group, is due for commissioning by next October.
Bangladesh is also looking to add two additional floating LNG terminals next year.
Bangladesh, a country of more than 160 million people, could import as much as 17.5 million tonnes of LNG a year by 2025, Nasrul Hamid, Bangladesh’s state minister for energy and power, told Reuters last month.
The country’s own gas reserves are depleting at the same time it is seeking to almost double its power capacity to 24,000 megawatts by 2021. Bangladesh is planning to tap the currently cheap and plentiful global LNG supplies and invest heavily in importing the fuel.
South Asia is emerging as a hotspot for LNG, with Pakistan and Bangladesh set to join India as major consumers and help ease the oversupply that has dogged the market for years.
Asian spot LNG prices have fallen 70 percent from an early 2014 peak to $6.40 per million British thermal units.
Reporting by Ruma Paul; Editing by Tom Hogue