Excelerate to sign long-term LNG supply deal with Bangladesh

US FSRU player Excelerate Energy is expected to sign a long-term deal in the upcoming period to supply liquefied natural gas (LNG) to Bangladesh, according to the company’s CEO Steven Kobos.

Bangladesh currently imports LNG via its first LNG import facility, Moheshkhali Floating LNG or MLNG, operated by Petrobangla, and via Summit Group’s FSRU-based terminal.

Both of these facilities feature Excelerate’s FSRUs.

In addition to these facilities, Excelerate is also working on another FSRU-based facility in Bangladesh, the Payra LNG project.

This year, Excelerate will supply in total four spot LNG cargoes to Bangladesh after it won spot cargo tenders from Petrobangla.

Besides spot sales, Excelerate is also expected to start suppling LNG to the country under a long-term contract in 2026.

LNG supply for 15 years

Recent local media reports in Bangladesh said that the country’s government has approved in principle the signing of two long-term LNG supply deals, one with Summit and the second with Excelerate. Both of the deals require a final approval.

Excelerate would sign a 15-year deal with Bangladesh for 1 to 1.5 million tonnes of LNG per year staring in 2026, the reports said.

Answering a question by an analyst regarding the news of the LNG supply deal with Bangladesh during Excelerate’s second-quarter results on Thursday, CEO Kobos said that, “we saw that too out of the Bangladesh market, and it’s consistent with what our team on the ground was telling us.”

He said that he company previously reported that both the Payra deal and the first supply deal were “working their way through the bureaucratic system, and we’re pleased that it’s reached that point.”

Cobos said that the company will issue a press release when it actually signs the definitive deal.

Besides the SPA, Exclerate has also completed negotiations with the government of Bangladesh for a term sheet for the Payra LNG project, which details the broad commercial parameters and framework for the deal, Kobos said.

“As is typical in the government of Bangladesh approval system, the term sheet is going through its final round of approvals with various ministries within the government,” he said.

The proposed scope of the Payra LNG project, which is located in the southwestern part of the country, involves the development of an offshore FSRU import terminal and an onshore pipeline to the city of Khulna.

Looking to buy more US LNG volumes

Earlier this year, Excelerate signed a 20-year deal to buy 0.7 mtpa of LNG on a free on board (FOB) basis from Venture Global’s Plaquemines LNG facility in Plaquemines Parish, Louisiana.

Kobos said during the call that LNG markets are expected to remain tight in the near-term, while the global supply and demand balance should improve after 2024, when about 200 million tons per annum of incremental LNG capacity begins to come online.

He said that this significant market dynamic is expected to create new opportunities for Excelerate to connect LNG to downstream customers, primarily in the Global South.

“US Gulf Coast liquefaction projects are of particular interest to Excelerate as they represent potential sources of FOB destination free volumes that are an ideal fit for our LNG portfolio,” Kobos said.

“While we continue to pursue downstream integrated opportunities, in the near-term, we are focused on strategically investing in the LNG value chain,” the CEO said.

Kobos said this includes developing Exclerate’s diversified portfolio of LNG supply, evaluating opportunities to grow its fleet, and establishing an LNG and gas marketing platform.

“In addition to the 20-year LNG sales and purchase agreement we announced earlier this year with Venture Global, we’re also considering additional SPAs with other LNG producers,” he said.

“As we execute our plan to scale the business, having a diversified portfolio of LNG supply will allow us to offer more flexible and cost-effective products to both existing and new customers,” Kobos said.

More FSRUs?

The CEO said that Excelerate is in a “strong” position today with its existing FSRUs fully utilized and contributing to the business.

“That’s additional infrastructure is needed to drive growth and maintain fleet flexibility. This remains a top priority for the Excelerate team,” he said.

The company currently operates operates ten FSRUs, one of the world’s largest fleets of such vessels, and it ordered one FSRU in South Korea last year.

“We’re also looking at conventional LNG carriers for managing our supply volumes, and we are evaluating opportunities to acquire new FSRUs to support our integrated offering,” Kobos said.

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