A Chinese state-owned company has secured government approval to build a third floating LNG terminal in Bangladesh's Moheshkhali amid a fuel supply crunch.

Cabinet Committee Clears CNEE Proposal

The Cabinet Committee on Government Purchase approved the proposal from China National Energy Engineering and Construction Co Limited (CNEE) at a meeting on Thursday, according to the finance ministry. Documents from the Energy and Mineral Resources Division identify CNEE as the recommended bidder.

The project will be developed at Kutubjum under a government-to-government arrangement, at a cost of up to USD 1.055 billion over 20 years. Under the terms, the government will pay about USD 0.988 billion over 15 years, or USD 1.055 billion over 20 years.

Approval Comes Without the Cost Cut

The same proposal was withdrawn from the committee about a month ago amid discussion of reducing the cost, but it has now been approved without a cut. The documents do not specify the daily fee, terminal capacity, or commissioning date.

CNEE submitted its original proposal on June 19 for an offshore terminal at Kutubjum, with a daily regasification capacity of 600 million cubic feet per day (MMCFD), expandable to 750 MMCFD.

Under the proposed 15-year deal, the company would charge USD 3,750 MMCFD and USD 42,000 a day, compared with USD 254,000 for Excelerate Energy's terminal and USD 249,115 for Summit LNG. That would make CNEE's fee 35 to 37 percent higher than the current rates.

Terminal Amid a Gas Supply Crunch

Bangladesh needs about 3,800 mmcfd of gas but normally supplies around 2,700 mmcfd from domestic production and imported LNG. The two existing floating terminals in Moheshkhali, operated by Excelerate Energy and Summit, have capacities of 600 MMCFD and 500 MMCFD, respectively, and an outage at either facility can severely disrupt supplies. A recent Summit outage cut gas supply by 491 mmcfd before the company resumed LNG supply.

The government has planned several new LNG terminals to ease the energy crisis, drawing interest from investors in China, the United States, and South Korea, and plans to set up three to four more floating storage and regasification units (FSRUs). Despite the competing interest, the Chinese proposal is the first to secure approval.

US Calls for Competitive Process

On September 7, US Ambassador Brent Christensen called for a "transparent, competitive" process at a meeting with Commerce Minister Khandakar Abdul Muktadir. Muktadir said US firms would get priority if they could demonstrate their ability to build a terminal quickly.

CNEE's latest proposal in late October envisages the terminal becoming operational by 2028.

Five LNG Import Proposals Approved

The purchase and economic affairs committees also approved five LNG import proposals on Thursday amid supply concerns linked to the war in West Asia. Petrobangla got approval for short-term direct purchases from Japan's markets, while in-principle approval was given for imports from UAE-based ADNOC Trading and Nigeria's Ojimadu and Merites Oil Marketing Limited.

The three proposals bypass competitive tenders under the Public Procurement Act, with prices and volumes to be submitted to the purchase committee later.

The purchase committee also approved three side letters for 2027 LNG cargoes from Oman's OQ Trading and the purchase of two cargoes from Malaysia's Petronas. The meeting also cleared purchases of dates, fertilizer imports, and several infrastructure projects.

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