In recent developments, Petrobangla, Bangladesh’s state oil and gas company, has decided to cancel the country’s third floating storage and regasification unit (FSRU) project. The move has been met with resistance from Summit LNG Terminal II Co. (SLNG II), a division of the Summit Group, which is challenging the cancellation and seeking to reverse the decision.
The cancellation notice was issued to SLNG II earlier this week, citing the non-submission of a performance bond within the stipulated 90-day period. According to SLNG II, however, their team delivered the performance bond on the next possible working day after June 28, as acknowledged by Petrobangla. This timing discrepancy has raised questions about the basis for the cancellation.
SLNG II emphasized that their actions complied with the agreements finalized in March between the company, Petrobangla, and Rupantarita Prakritik Gas Co. These agreements, which included a terminal use agreement and an implementation agreement, received approval from Bangladesh’s Cabinet Committee on Economic Affairs in December last year.
Moreover, SLNG II highlighted its significant investment commitments to the project. By March 2024, the company had already committed to invest approximately $15 million to proceed with the implementation of the FSRU, which is intended to supply 1.5 million metric tons per year of liquefied natural gas (LNG) to Petrobangla beginning in October 2026.
The company’s lawyers have confirmed that no breaches of the agreements signed in March have occurred, further solidifying their stance against the cancellation. This dispute underscores the complexities involved in large-scale international projects like the one proposed for Bangladesh.
Despite these contradictions, the fate of Bangladesh’s third FSRU remains uncertain. As the situation unfolds, one thing is clear: the termination has sparked a crucial debate about contract enforcement, timing protocols, and commitment in the oil and gas industry.
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