Petrobangla scraps Summit LNG supply deal a year after FSRU project cancellation

Highllights

• Bangladesh's Petrobangla cancelled its 15-year LNG supply contract with Summit Group's SOSCL, originally set to begin in October 2026
• The deal was tied to Summit's second FSRU, which was cancelled in 2023 due to failure to provide a performance bond
• Summit appealed the contract termination, but Petrobangla upheld the cancellation
• Petrobangla cited limited capacity at existing terminals and future LNG commitments as reasons for not needing additional supply

Bangladesh Oil, Gas and Mineral Corporation (Petrobangla) has cancelled its long-term liquefied natural gas (LNG) supply contract with Summit Group, almost a year after scrapping the company's second floating storage and regasification unit (FSRU) project.

Summit Oil and Shipping Company Limited (SOSCL), a subsidiary of Summit Group, was notified about the cancellation on 1 September this year, according to official sources.

Under a 15-year Sale and Purchase Agreement (SPA) signed on 30 March 2024, SOSCL was to supply 1.5 million tonnes per annum (mtpa) of LNG, about 24 cargoes annually, at $10.428 per million British thermal units (mmbtu) starting in October 2026.

Earlier, on 7 October last year, Petrobangla cancelled the second Summit FSRU deal, citing failure to deposit the performance bond within 90 days as stipulated in the agreement.

Engineer Md Rafiqul Islam, director (Operation and Maintenance) of Petrobangla, confirmed the development yesterday.

Speaking to The Business Standard, he said, "The long-term LNG supply deal with Summit Group has been cancelled and the decision has already been communicated to the concerned authorities."

Petrobangla said the supply deal was tied directly to the commissioning of Summit's second FSRU, for which the Terminal Usage Agreement (TUA) and Implementation Agreement (IA) were cancelled last year over failure to deposit the performance bond.

"Since the TUA and IA with the second Summit FSRU have been cancelled, Article 3.3 of the LNG Sale and Purchase Agreement is no longer binding," it stated.

Following the cancellation notice, SOSCL appealed against the decision, however, it was rejected and the cancellation remains in effect.

The state-run corporation further explained that Bangladesh currently has two operational FSRUs. Given their usable capacity and projected LNG imports under existing long-term contracts and spot purchases between 2026-27 and 2040-41, processing additional volumes would be impossible without another terminal.

When contacted for comments, Summit Power International's General Manager (PR and media) Mohsena Hassan did not respond to calls or messages.

Bangladesh had signed four long-term LNG supply deals effective from 2026 – with Qatar Energy Trading LLC, Oman's OQ Trading Ltd, US-based Excelerate Gas Marketing Limited Partnership, and Summit Oil and Shipping Company Ltd.

Together, these agreements were to deliver 88 cargoes a year, equivalent to around 1,000 mmcfd of gas, at an average of $10.396 per mmbtu. 

Summit's cancelled deal covered 24 of those cargoes.