EXCELERATE TO SUPPLY LNG UNDER ITS EXPANSION PLAN IN BANGLADESH

Excelerate Energy, a US-based company, is now planning to expand its business in Bangladesh. It would enhance the capacity of the two existing floating storage regasification units (FSRUs) operating in the country. Apart from these, the company would supply liquefied natural gas (LNG) as part of an integrated project. The company has already reached an agreement in principle with the government for an integrated project at Payra. This includes providing the natural gas volumes as the company has several options for securing that supply. The company is holding discussions about natural gas supply deals as there are plenty of growth opportunities here. Bangladesh is growing fast with more than 7% annual economic growth over the last two decades, and it offers business opportunities for almost all sectors, particularly energy and power.

David Liner, Vice President (O&M) of Excelerate Energy made the observations in an exclusive interview with Mollah Amzad Hossain, Editor, Energy & Power.

Though your company has been doing business here in Bangladesh for the last four years, it is your first visit to Bangladesh as well as the project site. How do you see business opportunities here?

There are plenty of growth opportunities. We have two FSRUs and one terminal, and we have planned for more growth. We plan to expand the capacity of one of those facilities and an additional FSRU facility for the Payra LNG project. I have learned so much in the last week about how fast Bangladesh is growing. More than 7% annual growth for the last two decades; that’s amazing. There seem to be opportunities in almost all sectors, particularly power. Not only the population is growing, but also the amount of energy consumption per person is also growing. So, it’s a great market for us and we want to continue to grow with the success that we’ve had.

According to our information, your company has already submitted a proposal to the government to increase the capacity of Maheshkhali FSRU-1. Did you get any positive response from the government regarding this issue?

Yes, we did. We have been able to secure approval in principle for the Expansion of the Maheshkhali LNG terminal as well as the development of the Payra LNG Project.

Well, how long would it take to extend this work at Maheshkhali? To what extent is the capacity to be added to the Maheshkhali plant?

The best way to increase the capacity of our current facilities is to swap the vessel. We have vessels in our fleet of various capacities. So, depending on the needs of the country, we will find the optimum solution. By replacing the vessel, we can boost throughput by as much as 60%. Some of our vessels can send out as much as 1.0 billion cubic feet per day at peak rates. So, there is room for a significant increase.

Does the present subsea pipeline support the enhanced capacity?

Yes, there are no constraints for the envisioned increase since the pipeline was built to accommodate more capacity. So, for the expansion of the MLNG facility, no additional pipeline is necessary.

How long will it take to complete the negotiations on the Payra project and the pipeline project to Khulna? Did you get any indication from the energy advisor or the state minister for energy?

That depends on the specifics of the project which are yet to be determined. I do not want to speculate, but we want to go as fast as we can and, I think, the government wants that too.

As you know, local company Summit is a giant one in the energy sector and your company has some partnerships with Summit on Maheshkhali shore. Do you have any plans shortly to do more with Summit or other Bangladeshi companies?

Right now, we have a healthy partnership with Summit LNG. However, we do not have any additional projects, which we are partnering with. But, for the development of a project like the one at Payra, we need a lot of partners and, of course, we welcome additional Bangladeshi partners. Who knows what the future holds.

You have a partnership for supplying gas to the 3,600MW LNG-based power plant in Payra. You have already signed a joint venture agreement with the NWPGCL, Siemens and CMC. But when the government approved the Payra project, how will it work for the company to supply the gas for Payra and others?

We do have an agreement in principle for an integrated project at Payra. This includes providing the natural gas volumes and we have several options for securing that supply. We have long-standing relationships with gas suppliers around the world and we are comfortable that we can provide the volumes that are needed.

We know you are already showing your interest apart from FSRU and proposed the government supply LNG too for Payra. Did you get any response to buy LNG from your company for Payra or other plants from the government?

Yes, as part of the approval in principle, we have agreed to supply gas volumes. We are in ongoing discussions about natural gas supply deals and we already have master sales and purchase agreements in place with major suppliers around the world. We can call on those agreements whenever we need to and we plan to rely on those agreements to support the project.

You know after the invasion of Ukraine, all the energy buyers are going very crazy, Bangladesh too. Bangladesh is now trying to diversify its sourcing. And, you are a North American company. Nowadays, North American LNG suppliers are very keen to supply LNG to Europe and Asia. The Bangladesh government is also trying to find partners for signing long-term contracts for LNG supply. Did you receive any request from the Bangladesh government or energy division for supplying LNG on a long-term basis?

The discussions for gas supplies have been based on long-term deals. It has not been specified exactly where the volumes will come from, but, logically, some of those volumes would come from the Middle East.

Nowadays the prices of LNG and fuel oil are a bit higher. The price of Welding LNG is also high right now. That’s why a lot of new investments are coming up in North America. Do you think it is feasible for Bangladesh to look for LNG purchasing opportunities from the North American producers?

It is not necessarily my area of expertise, but it is possible. However, for Eastern markets like Bangladesh, it’s usually more cost-effective to bring LNG from the Middle East or greater Asia.

I would like to come back to Payra again. Some of the pipeline experts or sector experts sometimes raise questions about building a terminal in the deeper sea, especially 70 KM off the coast, and building a subsea pipeline. It will not be cost-effective. But, I learned from the energy division that your proposal is pretty attractive. Can you tell us some little details in this regard? How will you be competitive after building the long subsea pipeline and building infrastructure in the deep sea?

We want to bring the most cost-effective solution to the country. We have several different alternatives; a shallow water case, a medium water case and a deeper water case, and we are evaluating all three. As you go deeper, it gets more difficult to maintain the subsea equipment. Shallow water is easier for maintenance but there are tradeoffs, primarily related to the environmental conditions. So, there are several different factors we have to evaluate and we’re in the process of site selection.

As an energy company, you are doing some CSR. We know you do afforestation in Maheshkhali coast and recently under your leadership, you are cleaning up the beach. What will be your future CSR plan in Bangladesh?

We have multiple initiatives consistent with our strategic CSR pillars of health, education, and climate. We will continue to work to improve the ecology and local communities where we operate. We are also working to recruit more Bangladeshis to work on our vessels, and we already have many Bangladeshi seafarers, including the current Captain of the FSRU Excellence. We are partnering with the HOPE Foundation for Women and Children of Bangladesh to build a maternity hospital in Maheshkhali that will provide essential health care to mothers and expecting mothers in the area. We have positive feedback from the local community about the services that the hospital will provide. In 2021, we also collaborated with the US-Bangladesh Business Council and US-based NGO Project C.U.R.E. to airlift medical supplies to help the medical colleges in Bangladesh cope with COVID-19 cases. This makes me proud to work for Excelerate Energy and I am hoping the people of Bangladesh benefit from the health services we’re bringing to the country.

In every country where any energy company works, they try to develop their counterpart manpower. Do you have any program or plan to help strengthen the Bangladeshi manpower, especially from Petrobangla or RPGCL for the future operation of FSRU or land-based LNG terminals? Do you have any programs?

Our programs are focused on building the skills for the workers to improve their socioeconomic status and provide them with more fulfilling and successful jobs. We do not have any ongoing programs to embed Excelerate employees into RPGCL or the government, but we would welcome such discussions. Our onshore staff is 100% Bangladeshi and we’re quite proud of that.

I think you have some good reading regarding Bangladesh and there is a growing market. We are targeting 2041 to become a developed country. So we need a lot of energy. Do you, or your company, plan to explore other segments of the energy sector in Bangladesh other than LNG?

Bangladesh is going to need a mix of energy sources to meet the high demand. Whether it is natural gas, solar, blue hydrogen, or something else, you’re going to need it. Excelerate Energy’s focus is on downstream natural gas, and we have every intention of being part of the solution. But we want to bring to the table ideas that help the country move towards meeting its 2041 goals.

You have already met our honorable energy advisor, Tawfiq-e-Elahi Chowdhury, as well as the state minister for energy, Nasrul Hamid. How do you evaluate your discussion for future work or partnering with the government?

Our experience working with the government has been extremely positive and I’ve learned that first-hand during this trip. We have shared interests, we’re moving in the same direction and it is a very healthy relationship. Bangladesh is extremely important to Excelerate and I think Excelerate is extremely important to Bangladesh. So, we plan to continue to build on that relationship.

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