Petrobangla, Summit set to initial Terminal Use Agreement today

Petrobangla, the State Owned oil and gas corporation, is set to sign an initial  today with local conglomerate Summit Group for Terminal Use Agreement (TUA) to set up a floating storage and re-gasification unit (FSRU) under build-own-operation (BOO) basis for 15 year period.
Summit Group in association with the General Electric (GE) will install the terminal within 18 months after signing the original deal having capacity to process 500mmcfd of LNG, according to the proposal, Petrobangla official said.
The FSRU will be able to process up to 3.5 million tonnes a year (mta) of LNG. It will use a submerged turret loading buoy for mooring and transferring the regasified cargo to shore.
"Summit is going to invest in between US$400m-$500m for implementing the project," a senior official said.
The government would able to save at least $20m for using the Summit's liquefied natural gas (LNG) platform to reduce cost on feasibility study and margin of interest for setting up the terminal by the local firm, the official hoped.
He said per unit processing cost would be lowered compared to that of the under construction LNG terminal signed between Petrobangla and Accelerator Energy (AE) Bangladesh Limited.
The government has agreed to import US$1.6 billion worth of LNG a year through a floating regasification and storage unit (FSRU)-based terminal at Moheshkhali in the Bay of Bengal.
Initially, the partners hoped to take delivery of the first cargoes this year. But it has taken longer than expected for Bangladesh to agree the venture, and the preparation work will take at least a year, making it unlikely that the US$500m project will start before 2018.
The FSRU near Moheshkhali Island will serve southeastern Bangladesh, including Chittagong, which suffers acute power shortages. Petrobangla has agreed with Summit Group and its project GE to charter a 138,000m3 FSRU for 15 years, under a build, own, operate and transfer (BOOT) arrangement.
The facility will include the installation of a subsea buoy system anchored offshore which will act as both the mooring mechanism for the FSRU and as the conduit through which natural gas is delivered to shore through a subsea pipeline.
A term sheet is a non-binding agreement setting forth the basic terms and conditions under which an investment will be made. It serves as a template to develop more detailed legal documents.
Once the parties involved reach an agreement on the details laid out in the term sheet, a binding agreement that conforms to the term sheet details is then drawn up.
Located offshore near Moheshkhali island in the Bay of Bengal, the terminal based on floating storage and a re-gasification unit (FSRU) will provide much needed natural gas to Chittagong.
International Finance Corporation, the private sector financing arm of the World Bank Group, will have equity participation in the terminal company, according to the statement.
According to the energy ministry's estimate, the government will have to spend around $2.7 billion annually to import 500 mmcfd LNG and to use the floating terminal.
For the last decade, the country faced a shortfall of around 500 mmcfd of gas. As per the forecast, this would persist even if the country adds new gas to the national grid from its own resources in the coming years.