The government of Bangladesh is expediting the launch of a new floating storage and regasification unit (FSRU) for liquefied natural gas, in response to a severe gas shortage that has been exacerbated by a recent fire at an existing Excelerate Energy facility.

Approval of the New Terminal

On Tuesday, the Cabinet Committee on Economic Affairs (CCEA) gave in-principle approval to a proposal from China National Energy Engineering & Construction Company (CNEE) to build the Kutubdia FSRU under an intergovernmental agreement. This marks the first official step toward establishing an additional LNG import terminal near Moheshkhali Island.

Status of Existing Facilities

The fire that broke out about a week ago on one of the FSRUs did not cause major damage, but the facility is currently under repair and is expected to require another 10–15 days for full restoration. The Excelerate Excellence FSRU has a base regasification and delivery capacity of 500 million cubic feet of gas per day, with the potential to increase to 600 million cubic feet. The vessel can receive up to 138,000 cubic meters of LNG.

While the FSRU is offline, the state-owned energy company Petrobangla has been forced to limit gas supply to power plants, industry, fertilizer producers, and residential areas.

Energy Shortage

The incident has highlighted the country's reliance on just two LNG terminals and the lack of sufficient backup capacity in its import infrastructure. Supply disruptions have worsened the existing gas deficit. According to official data, Bangladesh's daily gas demand is around 3.8 billion cubic feet, while supply has dropped to about 2.7 billion, resulting in a shortfall of over 1 billion cubic feet per day.

Infrastructure Development

The new Kutubdia FSRU is expected to enhance the country's energy security. Eight years ago, Bangladesh began importing LNG through its first FSRU, Excellence, near Moheshkhali, due to declining domestic production. A second FSRU, operated by Summit Group with a regasification capacity of 500 million cubic feet per day, was commissioned in 2019. Both facilities are located off the coast of Moheshkhali in the Bay of Bengal.

Since then, LNG has become a vital part of Bangladesh's energy mix.

Outlook for the New Terminal

The new Kutubdia FSRU is expected to strengthen the stability of the country's gas supply system by diversifying import infrastructure and reducing the impact of potential disruptions at individual terminals. Detailed technical specifications, investment costs, and project timelines for the CNEE project have not yet been disclosed.

Additional Measures

At the CCEA meeting, it was also recommended to consider a proposal from Gunvor USA LLC to supply LNG to Bangladesh under both short-term and long-term contracts within an intergovernmental procurement framework. Both proposals were submitted to the Committee of the Department of Energy and Mineral Resources of Bangladesh.