Strategic Energy Partnership: Bangladesh’s Vision For A Sustainable Future – Analysis

Bangladesh has embarked on a strategic initiative to fortify its energy diversity through a transformative collaboration with Excelerate Energy, a prominent entity specializing in energy solutions. This monumental undertaking entails a comprehensive 15-year sales and purchase agreement, scheduled to commence in 2026, geared towards the acquisition of liquefied natural gas (LNG).

The agreement, formally inked on November 8, 2023, signifies a momentous leap towards enhancing the energy security of the second-largest economy in South Asia. It paves the way for an annual procurement of 1 million tonnes of LNG from Excelerate Energy, setting the stage for a significant shift in the country’s energy landscape. The signing ceremony, graced by officials from both Excelerate Energy and Petrobangla, also witnessed additional accords related to the Moheshkhali LNG Expansion and the Payra Term Sheet.

Under the terms of this agreement, Excelerate Energy commits to an annual supply of LNG ranging between 1 million and 1.5 million tonnes. The pricing framework is intricately set at 13.35 percent of the price of crude oil per unit, supplemented by an additional USD 0.35. This proactive initiative underscores Bangladesh’s forward-thinking approach to energy security, underscoring its dedication to diversify its energy portfolio and reduce dependence on a single source.

In conjunction with this functional agreement, Excelerate Energy has made substantial contributions to Bangladesh’s national grid by injecting 102.86 billion cubic feet (Bcf) of LNG. Further reinforcing this effort, SUMMIT LNG Terminal Co. (Pvt) Ltd. has bolstered the national supply by incorporating an additional 100.02 Bcf since April 2019. Bangladesh’s venture into LNG imports commenced in 2018, facilitated exclusively through government agencies. Currently, the nation engages in LNG imports from Oman and Qatar through long-term contracts, with two additional agreements inked this year to expand LNG imports, slated to commence in 2026. Moreover, ongoing procurement of LNG from the open market persists, with recent approval granted for the acquisition of an LNG cargo ship from Singapore’s Vital Asia Pvt.

Steven Kobos, President and CEO at Excelerate Energy, conveyed his acknowledgment of Bangladesh as one of the most dynamic LNG markets globally in a video message. He highlighted Excelerate’s substantial role since the country’s initiation of LNG imports and expressed the company’s eagerness to contribute to Bangladesh’s burgeoning energy needs through its strategic partnership with Petrobangla. In his welcome speech, Ramon Wangdi, Vice President (Asia Pacific) at Excelerate Energy, announced that the 15-year contract would become effective in 2026. Excelerate Gas Marketing Limited Partnership is poised to supply 0.85 million tonnes per annum (MTPA) of LNG in 2026 and 2027, followed by an annual supply of 1 MTPA from 2028 to 2040.

The extension of this agreement holds the promise of enabling the Moheshkhali LNG terminal to contribute an additional 100 million cubic feet per day (mmcfd) of gas, thereby augmenting its existing capacity of 500 mmcfd. Excelerate Energy currently owns and operates the Moheshkhali LNG Terminal, the country’s inaugural Floating Storage and Regasification Unit (FSRU), which became operational in August 2018. Subsequently, a second FSRU, owned by Excelerate Energy and operated for the Summit Group, commenced operations in April 2019. Collectively, these two FSRU terminals presently supply approximately 25% of the country’s natural gas. As the chief guest at the event, Tawfiq-e-Elahi Chowdhury, the prime minister’s Power, Energy, and Mineral Resources Affairs Adviser, underscored the remarkable growth witnessed by Bangladesh over the last 15 years. He emphasized the imperative for global support, including from the United States and its companies, in sustaining this growth trajectory. State Minister for Power, Energy, and Mineral Resources Nasrul Hamid, speaking as a special guest, accentuated the significance of uninterrupted and affordable energy as a cornerstone for economic growth. Hamid expressed gratitude for the USA’s assistance and highlighted the increasing interest of American entrepreneurs in Bangladesh, citing the existing billion-dollar investment and the nation’s commitment to fostering further collaboration.

This collaborative initiative is a testament to Bangladesh’s commitment to sustainable and diversified energy sources, setting a positive precedent for global partnerships aimed at creating resilient and secure energy ecosystems. As the nation continues to navigate the complexities of a dynamic energy landscape, this collaboration with Excelerate Energy stands as a beacon of innovation and strategic foresight, ensuring a brighter and more sustainable energy future for Bangladesh.