After several delays to start injecting liquefied natural gas (LNG) into the national grid, Bangladesh’s first LNG terminal has started operations in August, initiating the county’s LNG supply for the first time in history.
The floating storage and regasification unit (FSRU), though arriving in Bangladesh in April, has been unable to offload its maiden cargo of LNG from Qatar until this month due to technical faults and poor weather. The facility was initially expected to began operations in May.
The commissioned LNG terminal will enable Bangladesh to import LNG to cope with declining domestic gas production in response to rising demand from industrial production and power generation in a nation where 30 percent of population live without electricity. Asian LNG prices are also expected to undergo significant hikes as Bangladesh may prepare to import more gas ahead of winter.
“It certainly adds to the factors that point to a very tight market this winter,” said Nicholas Browne, a gas analyst at energy consultancy Wood Mackenzie. “This is mainly driven by limited additional supply until late 2018 together with strong expected demand from China and South Korea.”
Since its arrival at Moheshkhali, an island located at Cox’s Bazar in southeast Bangladesh, in April, inclement weather has made it hard for the FSRU to dock properly, connect to the import infrastructure and offload its maiden consignment of LNG, officials said.
The FSRU initially begun to run last week but had to play a pause for a leak occurring to an onshore facility, according to Reuters.
“We have started the process of feeding the gas to the grid,” said Nasrul Hamid, Bangladesh’s energy and power minister.
“This is a first step and we are taking more initiatives to meet growing consumption needs and feed the expanding economy.”
The Excellence FSRU, which is operated by US-based Excelerate Energy Bangladesh Ltd, carried 133,000 cubic meters (CM) of lean LNG.
Bangladesh is dependent on its gas resources for 70 percent of power production currently faces, but rising domestic demand has resulted in a gas shortage of 1 billion cubic feet a day (bcfd), as compared to the actual demand of around 3.7 bcfd. Given that situation, the government inked a deal with Qatar in September, 2017 to import 2.8 million tonnes of LNG annually in the next 15 years.
The country’s second FSRU is expected to arrive in March next year, which will help to boost LNG imports to 2.9 million tonnes in 2019, versus the estimated 0.6 million tonnes for this year, said the Wood Mackenzie’s analyst Browne.