Mitsubishi Corporation (“MC”) has agreed to acquire a 25% interest in Summit LNG Terminal Co (Pvt) Limited (“SLNG”) and to develop a Liquefied Natural Gas (LNG) receiving terminal that uses a Floating Storage and Regasification Unit (FSRU) in Bangladesh. With the acquisition, 75% of SLNG will be held by Summit Corporation Limited (“Summit”) and 25% by MC.
Under the project, SLNG will install an FSRU 6km off the coast of the island of Moheshkali in the Cox Bazar District of Chittagong Division in Bangladesh, where it will receive and regasify LNG procured by Petrobangla, the national oil and energy company. Construction of the terminal commenced at the end of 2017 and commercial operations are expected to start in March 2019. The planned LNG import volume is approximately 3.5 MTPA.
Bangladesh, with its expanding population, and an economic growth rate of more than 6% per annum, is also seeing a rapid increase in electricity demand. While gas-based generation accounts for approximately 60% of total generation, domestic natural gas production is starting to decline. The country is therefore promoting LNG imports as part of its national energy policy. Bangladesh will start importing LNG in 2018, with a targeted import volume of 17 MTPA in 2030.
LNG receiving terminals that use FSRUs can be installed at lower cost and constructed within a shorter period than conventional onshore receiving terminals, and hence are an effective means to build LNG receiving capacity in emerging countries. The demand for such terminals is expected to grow.
MC has been providing a stable supply of LNG to the market while at the same time developing its power, energy and infrastructure business globally, particularly in Asia where there is rapidly increasing energy demand. In addition to this project, Summit and MC have agreed to jointly pursue other projects across the LNG value chain in Bangladesh(*), from LNG supply to power generation. MC intends to simultaneously generate economic, societal, and environmental value by contributing to the stable supply of energy and to further economic growth in Asian countries through business associated with LNG, which has relatively low environmental impact.
(*) On 13 March 2018, MC and Summit signed a Memorandum of Understanding to pursue jointly an integrated LNG-to-Power development consisting of onshore LNG receiving terminal with a regasification capacity of up to 1,500 million cubic feet per day, associated LNG supply and construction of 2,400 Megawatt gas-powered thermal power plant.