Bangladesh Pays Dearly for Neglecting LNG Storage Facility

Bangladesh is paying dearly for neglecting to build an LNG storage facility, resulting in expensive spot purchases and penalties to suppliers. According to a Petrobangla official, the country's lack of storage capacity forces it to buy fuel at high prices, regardless of international market fluctuations.

During monsoons, LNG cargo vessels are often stranded at sea due to rough weather, while floating storage and regasification units (FSRUs) refuse to unload the fuel for safety reasons. As a result, Petrobangla has to pay demurrage fees to global suppliers, which can be as high as $1 per million British thermal unit (MMBtu) in addition to the contracted price.

Recently, Petrobangla had to pay $5 million to UK-based TotalEnergis Gas & Power Ltd for a delayed LNG cargo. The state corporation also canceled five spot LNG cargos and paid penalties after Summit Group's FSRU shut down due to cyclone damage.

Market insiders note that having an LNG storage facility would allow Petrobangla to store the fuel easily, buy at lower prices during low consumption periods, and ensure regasification in FSRUs immediately after operations resume. A senior BPC official mentioned that Bangladesh Petroleum Corporation has a 60-day storage capacity for petroleum products, but no similar facility exists for LNG.