Bangladesh on Thursday approved a proposal from a Chinese state-owned contractor to build the country's third floating liquefied natural gas import terminal, accepting a daily fee about a third higher than it pays for its two existing units as a gas shortage squeezes power plants and factories.

The Cabinet Committee on Government Purchase, chaired by Finance Minister Amir Khosru Mahmud Chowdhury, cleared the plan from China National Energy Engineering and Construction, known as CNEE, Reuters reported, citing a Finance Ministry statement. The floating storage and regasification unit, or FSRU, will be built at Kutubjom in Maheshkhali, in Cox's Bazar district, under a government-to-government arrangement.

For Asia's LNG market, the decision adds import capacity in one of the region's most price-sensitive buyers at a time when spot cargoes are costly. For Bangladesh, it is a bet that paying more for a terminal now is better than having too few places to land gas.

What the CNEE terminal will cost

The unit will be able to regasify 600 million cubic feet of gas a day (mmcfd), rising to 750 mmcfd at peak, and is expected to start operating in 2028, according to Reuters.

The government will pay 123.24 billion taka over 15 years, or 131.61 billion taka over 20 years, according to Reuters and Dhaka-based bdnews24.com. Reuters put the 15-year figure at $987.9 million. The Daily Star, a Dhaka newspaper, reported in October that a government negotiation committee valued the 15-year obligation at $1.002 billion.

Under the 15-year option CNEE proposed a service fee of $342,000 a day. That compares with $254,000 a day for the terminal run by U.S.-based Excelerate Energy and $249,115 for Summit LNG's unit, The Daily Star and bdnews24.com reported, a premium of 35% to 37%. The Daily Star said the negotiation committee had also offered a 20-year alternative at $329,000 a day.

The purchase committee had sent the proposal back in October for further review of its financial terms. It returned and was approved without a price cut, according to bdnews24.com.

The Daily Star reported that CNEE had not developed an FSRU before and was selected for talks without competitive bidding, and that the fee is above a $239,653-a-day benchmark in a 2025 feasibility study by state-owned Rupantarita Prakritik Gas Co. The newspaper said at least four international firms had offered lower fees for similar facilities.

M. Shamsul Alam, energy adviser to the Consumers Association of Bangladesh, told The Daily Star that cheaper proposals and other procurement methods had been available that could have saved public money.

A gas gap of about 1,100 mmcfd

Bangladesh needs about 3,800 mmcfd of gas and gets roughly 2,700 mmcfd from domestic fields and imported LNG combined, Reuters reported. That leaves the country increasingly dependent on imported fuel to close the gap, the news agency said.

All of that LNG arrives through two floating terminals off Maheshkhali with combined capacity of 1,100 mmcfd. The new unit would lift the total to 1,700 mmcfd, or 1,850 mmcfd at peak output.

The risk of relying on two units became clear in July. A fire on July 21 shut the Excelerate-operated terminal and halved the country's regasification capacity, The Financial Express of Bangladesh reported at the time. A week later, on July 28, the Cabinet Committee on Economic Affairs gave policy approval to process CNEE's proposal on a fast track. CNEE had submitted it on June 19, according to The Daily Star.

An earlier attempt to add a third terminal failed. In October 2024 state-owned Petrobangla terminated an agreement with Summit Group for another 600 mmcfd unit at Maheshkhali over procurement concerns, a move Summit challenged, according to Reuters.

The government plans three to four more FSRUs and has drawn interest from investors in China, the United States and South Korea, bdnews24.com reported.

More cargoes for 2027

A terminal is only useful if there is gas to put through it, and Dhaka used the same day's meetings to line up supply. The purchase committee approved changes to three LNG sales agreements with Oman's OQ Trading covering 2027 imports, and the purchase of two cargoes for 2027 from a Malaysian supplier, The Daily Star and bdnews24.com reported. The Daily Star said those two cargoes were priced at $0.18 per million British thermal units below the Japan-Korea Marker, the benchmark for spot LNG in northeast Asia.

The Cabinet Committee on Economic Affairs separately gave approval in principle for direct LNG purchases from suppliers in Japan, the United Arab Emirates and Nigeria, including a short-term deal between Petrobangla and JERA Global Markets, according to The Daily Star. Prices and volumes for those purchases will go to the purchase committee later, bdnews24.com reported.

The backdrop is an expensive market. The average price of LNG for December delivery into northeast Asia was $31.30 per million British thermal units last week, down from $31.40 the week before and near a four-year high, according to the Al Attiyah Foundation's weekly energy market review, published by Marhaba Qatar. The review said uncertainty over U.S.-Iran diplomacy and low European gas storage had kept the market tight.

Capital Times has reported separately on Asian LNG prices heading into winter and on tanker attacks near the Strait of Hormuz.

What to watch

The purchase committee's approval is not the end of the process. In September, Petrobangla was still seeking CNEE's feedback before finalizing the implementation and terminal use agreements, The Daily Star reported in October. The signing of those contracts, and whether the 15-year or 20-year term is chosen, will set the final cost.

The 2028 start date is the other marker. Until then Bangladesh will go through at least one more winter and summer with two terminals and a supply gap, leaving it dependent on how many cargoes it can afford at spot prices.