Indonesia wants more time to sign the "Term Sheet Agreement" on one metric tonne of LNG export to Bangladesh as it disagrees with the pricing formula presented to them, authoritative sources told the Daily Observer.
"We were ready to sign this, we signed a letter of intent (LoI) with the State owned Pertamina, which is almost the same thing, however, we both the parties will discuss the issue in next one week to fix up the "Terms," a senior official of the Energy Division said.
Bangladesh and Indonesia signed the LoI with Indonesia to import one million tonne of Liquefied Natural Gas (LNG) per year on Sunday. Secretary of Petro Bangla Syed Ashfaquzzaman and Indonesian state owned oil and gas company Partamina's Vice President of Pertamina Wiko Migantoro signed the sales and purchase of LNG Under G2G.
"Petrobangla and Pertamina will fix the major three terms of this agreement (i) price (ii) volume and (iii) tenure of the contract as soon as possible, later we will sign the final agreement," a senior official of the Energy Division told the Daily Observer on Sunday.
The instrument was inked in presence of Bangladesh Prime Minister Sheikh Hasina and visiting Indonesian President Joko Widodo after the official talks between the two countries at the Prime Minister's Office.
Meanwhile, in addition to this contract Bangladesh and Indonesia on Sunday signed five instruments, including two memorandums of understanding (MoUs) aiming to enhance bilateral relations, trade and investment and boosting cooperation in different sectors between the two countries.
According to a joint statement, both the side agreements on launching negotiations for preferential trade agreement for the respective sides in Bangladesh and Indonesia, MoU on Establishment Foreign Office Consultations, MoU on development of the integrated gas infrastructure and independent power producer, MoU on cooperation to combat illegal, unreported and unregulated fishing and promote sustainable fisheries governance.
A joint communiqué on 'Cooperation to Combat Illegal, Unreported and Unregulated Fishing and to Promote Sustainable Fisheries Governance' was also signed on Saturday.
According to the Energy Division, Bangladesh is choosing a formula of per unit LNG which has been set at around 12.65% of the three-month average Brent crude prices plus $0.50/MMBtu. According to the given formula, the price of LNG stands around $7.50/Mcf, which was not acceptable to the Indonesian company Pertamina, although this price is almost three times the weighted average price of natural gas price in Bangladesh (which is at $2.19/Mcf).
In September 2017, State Minister for Power, Energy and Mineral Resources Nasrul Hamid inked a memorandum of understanding (MoU) with Indonesia's Energy and Mineral Resources Minister Ignasius Jonan in Jakarta for LNG import. A negotiation was also going on between the two countries in this connection.
To meet the growing demand of energy, the government continues to seek out supplies RPGCL short-list around a dozen of LNG suppliers from the expressions of interests submitted by 39 global firms in 2017. Bangladesh needs to import around 30 million mt/year of LNG to meet the demand from various sectors including industries, power plants and fertilizer plants by 2041 as domestic gas reserves are depleting fast, Petrobangla's annual report said.
Bangladesh also sought more cooperation of Indonesian investors in energy sector in upcoming days as Bangladesh is exploring low cost fuel options to meet its energy demand.
