Summit Group has urged Petrobangla to reconsider its decision to cancel the country's third floating storage and regasification project.

The termination was invalid and warned that any delay in the project could exacerbate energy insecurity in Bangladesh. Summit has already invested around $20 million in the project, the company said in a statement. 

Petrobangla notified Summit on October 7 last year that the project in southeast Bangladesh would be terminated, followed by a final termination notice on January 14.

Summit said the termination was based on claims that a performance bond for the project was submitted by its local parent, Summit Corporation Ltd, rather than Summit LNG Terminal II Co Ltd (SLNG II), a Dhaka unit of Summit Power International Limited based in Singapore. 

Also, Petrobangla claimed the bond did not comply with an agreed template and was not submitted within the stipulated 90-day deadline.

As a result, Summit stated it had sought legal advice from international and local firms—Herbert Smith Freehills and Kamal Hossain & Associates—which confirmed the termination was invalid under the terms of the terminal use agreement.

Summit engaged with Petrobangla and the government based on the agreement to reconsider the decision. The company added that Petrobangla had previously acknowledged receipt of the bond submitted in the form of a bank guarantee, which Summit said offered the same level of security.

"Under the agreement, if any condition precedent was not met, either party could submit a written notice within the stipulated 30-day period. However, Petrobangla did not do so and therefore lacks the right to terminate," as per the statement.

Nevertheless, SLNG II expressed its willingness to replace the performance bond with a bank guarantee issued in its name as a gesture of goodwill.

The company highlighted that it has already spent approximately $20 million on long lead items, metocean and geophysical studies, and administrative and legal fees for the project.

Petrobangla and the former Awami League government signed the agreement and implementation agreement for the third FSRU on March 30 last year. The FSRU is designed to regasify 600 million cubic feet of LNG per day.

Summit, the largest private sector power generation and energy infrastructure company in Bangladesh, estimated that the project would require $550 million in foreign direct investment.