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Bangladesh reinforces energy security by partnering with USA

Published : Friday, 10 November, 2023 at 12:00 AM  Count : 326

Against the backdrop of growing energy demand, Bangladesh's quest for energy security and economic prosperity has taken a significant step forward with the United States entering the ranks of long-term liquefied natural gas (LNG) supplier for the nation.

In a groundbreaking agreement between state-owned Petrobangla and and American Excelerate Gas Marketing Ltd Partnership, a subsidiary of Excelerate Energy, the two entities have forged a 15-year partnership, set to commence in January 2026. This monumental deal diversifies the roster of LNG suppliers in Bangladesh - marking the first long-term supply agreement with a private company - distinct from the Government-to-Government LNG deals with Qatar and Oman.

So far, both Qatar and Oman had been our key LNG suppliers.

However, terms of this transformative agreement stipulated that Excelerate will provide approximately 0.85 million tonnes of LNG annually in 2026 and 2027, with an expansion to 1 million tonnes per year from 2028 through to 2040. This long-term commitment reinforces Bangladesh's energy security while serves as a testament to the nation's rapidly expanding economy.

Excelerate Energy, a renowned player in the LNG infrastructure sector, is already operating a floating storage and re-gasification unit (FSRU) in Moheshkhali, with the capacity to re-gasify 500 million cubic feet of gas per day (MMCFD). This capacity is slated to expand to 600 MMCFD starting next year. Additionally, both parties have finalized a term-sheet agreement to establish another FSRU in Patuakhali's Payra, thereby fortifying Bangladesh's LNG infrastructure.

PM's energy adviser has reportedly underlined the significance of such agreements, particularly in light of the unforeseen energy expenditure stemming out from the Ukraine-Russia conflict. He emphasized that the $14 billion additional cost incurred could have served as a crucial reserve for the country's development. Moreover, the energy adviser also stressed on the need for long-term energy partnerships, so to mitigate unforeseen financial challenges.

Additionally, the state minister for power, energy, and mineral Resources, highlighted the pivotal role that US investments play in Bangladesh's power and energy sector, constituting roughly 60 percent of the country's total investments in this sector. US Ambassador Peter Haas pointed out that the United States stands as the largest foreign direct investor in Bangladesh, with US companies having invested approximately $4.1 billion, making the US the country's primary source of foreign direct investment.

Lastly, the entry of the United States into the realm of long-term LNG supply underscores the government's commitment to fortify its energy security and catalyze sustained economic growth. It not only diversifies the nation's LNG supply sources but also signals its willingness to collaborate with private enterprises to ensure long-term sustainable energy supply, thereby enhancing its standing in the global energy landscape.

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