Summit Group has urged the Bangladesh Oil, Gas and Mineral Corporation(Petrobangla) to reconsider a notice to terminate the country’s third Floating Storage and Regasification Unit (“FSRU”), know as LNG Terminal, project.
In a press release, it said any delay in the project implementation, for which Summit has already invested approximately USD 20 million, could result in further energy insecurity in Bangladesh and the termination notice is invalid.
It mentioned that Summit LNG Terminal II Co. Ltd. (SLNG-II), a Dhaka subsidiary of Singapore-based Summit Power International Limited (SPIL), wrote to Petrobangla to raise its objections to the notice.
Petrobangla and the Bangladesh Ministry of Power, Energy and Mineral Resources on 14 January 2025 issued a letter notifying that certain conditions under the Terminal Use Agreement (TUA) signed earlier with SLNG-II had purportedly not been fulfilled and as such the TUA is terminated.
SLNG-II had signed the TUA and implementation agreement (IA) for the 3rd FSRU on 30 March 2024 with Petrobangla and the Government of Bangladesh respectively.
The TUA and IA were legally vetted and approved by the Cabinet Committee on 12 December 2023.
The 3rd FSRU, the second such project in Bangladesh undertaken by Summit Group, has a planned regasification capacity of 600 million standard cubic feet per day, which would require investment of about USD 550 million coming in as foreign direct investment (FDI).
However, on 7 October 2024, Petrobangla notified that the project in southeast Bangladesh would be terminated.
Since then, Summit Group has obtained legal advice from both local and international legal firms which affirmed that such termination is invalid pursuant to the terms of the TUA.
Based on such advice, Summit Group engaged with Petrobangla and the Government of Bangladesh to reconsider the decision.
Petrobangla’s notice of 14 January 2025 states that the decision to terminate was on the basis that a performance bond (PB) for the project was not submitted by SLNG-II but by its local parent, SCL; that the submission of the PB did not comply with an agreed template; and that the PB was not submitted within a 90-day stipulated deadline.
In response, Summit Group said, the SPIL, citing advice from renowned law firms Herbert Smith Freehills of Singapore and Dr Kamal Hossain & Associates, said Petrobangla had earlier acknowledged receipt of the PB submitted in the form of a bank guarantee, which does not provide any less security.