Petrobangla, Bangladesh’s state oil and gas company, has decided to cancel the country’s third floating storage and regasification unit (FSRU) project.
Developer Summit LNG Terminal II Co. (SLNG II), a division of the Summit Group, received notice of the termination earlier this week.
SLNG II has called for the decision to be reversed, stating that its decision to implement a FSRU on a Build, Own, Operate and Transfer (BOOT) basis secured approval in June last year from Bangladesh’s Cabinet Committee on Economic Affairs.
Summit says it finalized the terminal use agreement and implementation agreement last October with Petrobangla and Rupantarita Prakritik Gas Co., with the agreements approved by the Cabinet Committee in December.
At the end of March 2024, SLNG II says it signed the two agreements with Petrobangla and the government for the second FSRU, along with a long-term sale and purchase agreement to supply 1.5 Mm metric tons/year of LNG to Petrobangla from October 2026.
To date, the company added, it has committed to investments of about $15 million to proceed with the project.
This week’s termination was issued on the basis that the agreements signed in March had not taken effect, as a performance bond had not been submitted within the stipulated 90 days (by June 28). But according to SLNG II, the 28th was a Friday (not a banking day in Bangladesh), and it delivered the bond on the next possible working day, as acknowledged by Petrobangla.
SLNG II’s lawyers have confirmed that the company did not breach the agreements of March 30.
