India's biggest gas importer Petronet LNG Ltd has plans to set up a Rs 5,000 crore LNG import terminal at Kutubdia islands in Bangladesh as it looks to build terminals to feed demand in neighbouring countries.
"We have proposed to construct a 5 million tons per annum capacity liquefied natural gas (LNG) import terminal at Kutubdia islands off Cox's Bazar," Petronet Managing Director & CEO Prabhat Singh said.
The terminal will be besides 3.5 MT terminal at Bangladesh is looking to set up, for which Petronet is one of the firms that has been shortlisted.
"Bangladesh has huge unmet gas demand particularly to power generation. So during the recent visit of Petroleum Minister Dharmendra Pradhan to Dhaka, we proposed to set up a 5 million tons capacity terminal on government-to-government basis," he said.
Initial response from Bangladesh, he said, has been encouraging and the company would be visiting Dhaka again this month to make a presentation on its plans.
"While we will source gas (from international market) and supply (to utilities in Bangladesh), we are seeking some kind of payment assurances to cover for our investments in an event where we have to pull out of the country," he said.
Besides Bangladesh, Petronet has also proposed to set up 1 MT LNG terminal in Sri Lanka to meet local demand.
Singh said Kutubdia islands has a natural harbor with good draft and a natural breakwater, idle for setting up LNG terminal.
The proposed terminal is besides the one Bangladesh is looking to set up at Matar Bari in Moheshkhali Island of Cox's Bazar district or Anwara, Chittagong. The terminal, to be set up on the build-own-operate basis, will supply gas to power plants.
Petronet is one of the five global energy firms shortlisted for setting up this LNG import terminal. The others shortlisted include Anglo-Dutch super-major Shell, China's Huanqiu Contracting & Engineering, Tractebel Engineering of Belgium and Japan's Mitsui.
Bangladesh is looking at importing gas to ease its energy crisis in southeastern Chittagong region, which was once almost self-reliant in natural gas but started facing a supply crisis in 2006 as output diminished from the Sangu gas field.
The country's sole offshore gas well, Sangu-11, was permanently closed in October 2013. As a result, some plants are running below the capacity and a few have been shut due to non-availability of gas.
Sources said the LNG terminal will supply gas to a proposed 1,000 MW combined cycle power plant as well as the existing power plants in Raozan and Sikalbaha through a planned pipeline.
Bangladesh is also looking at setting up a floating LNG import facility in Bay of Bengal. The Floating Storage and Regasification Unit (FSRU) of 500 million cubic feet a day capacity can however meet only a part of the growing demand for gas in power, fertiliser, factory and industry.