Bangladesh gas find boosts supply hopes
By Syed Tashfin Chowdhury
DHAKA - A big gas discovery in northeast Bangladesh has raised hopes that the country may eventually end its severe energy supply problems. More immediately, government pricing and regulations are leaving domestic suppliers short of cash and consumers short of power.
The daily supply of gas is about 2,000 million cubic feet (mmcf) against daily demand of 2,500 (mmcf). This acute crisis has pushed the government to stop the supply of gas to new factories to ensure gas to power plants. Since April, the government has not been providing gas connections to newly constructed buildings.
Bangladesh Petroleum Exploration and Production Co (Bapex) late last month announced the discovery of a new reserve of gas with an estimated 1 trillion cubic feet (tcf) at Rashidpur in Sylhet, following a three-dimensional (3D) seismic survey on 325 square kilometers of the area.
Petrobangla, the parent company of Bapex, announced on September 26 that the survey of Rashidpur found an additional one trillion cubic feet while the current reserve was estimated to be as high as 12-15tcf.
"This is definitely a major development for our country, as this will help to reduce the gas crisis being faced at present," said Hossain Monsur, chairman of Petrobangla, to Asia Times Online on Thursday. "There is a low possibility of finding another 2.416tcf from another part of the eastern flank," he added.
"We are 80 to 90% certain that 1 trillion cubic feet of gas can be extracted. However, the reserve in the eastern zone of the field is in the high-risk category," he added.
Bapex began 3D seismic surveys on 705 square kilometers in the Rashidpur, Kailashtila, and Haripur gas fields in May 2010. The surveys, done for the first time by Bapex and financed by the Asian Development Bank, may be concluded this year. "We will survey the Titas, Bakhrabad, Shahbazpur and other gas fields during this year," said Monsur.
The latest discovery is Bapex's second success this year, after the state-run company in August discovered a gas field at Sundalpur in Noakhali, near the southeast coast, using a two-dimensional (2D) seismic survey. The gas layer was found at a depth of 1,400-meters on completion of the drilling of an exploration well.
Bapex sources said, "Initial findings indicated that around 10-12 million cubic feet per day [mmcfd] of gas could be produced from the well." With the Sundalpur field, Bangladesh currently has 24 gas fields and 80 wells, according to Bdnews24.
The discoveries and the cost effectiveness with which they were made have added to pressure on the Bangladesh government to increase Bapex's budget, while fueling criticism of international companies being given similar work. The government on April 6 floated fresh international tenders for oil and gas exploration for 23 hydrocarbon blocks on land and eight blocks in the shallow parts of the Bay of Bengal.
"Bapex has, once again, proved its credentials," said a Financial Express editorial on September 29. "This development does otherwise justify the case for providing all kinds of policy support to Bapex for harnessing the country's potential in the oil and gas sector."
Last week, Dhaka's New Age newspaper quoted Petrobangla sources as saying, "Bapex completed the 3D survey at a cost of 1.15 million takas [US$15,000] a square kilometer against the international oil companies [IOC] average cost ranging between 1.6 million and 2.6 million takas on the same fields." Bapex also matches IOCs in conducting 2D seismic surveys and drilling activity, the report said.
The government is also seen as paying international companies too much for the gas it buys from them, compared with the prices it pays local outfits.
"Besides paying almost eight times more to the IOCs than the amount the government pays to state-run companies, the difference is pushing the government to increase the gas price at consumers' level," Anu Mohammad, economics professor at Jahangirnagar University, told New Age. "At the same time, the government is facing huge pressure with the balance of payment."
Under a proposed Production Sharing Contract (PSC) 2011, Petrobangla or its affiliates would buy a contractor's share of gas at $4.157 for 1,000 cubic feet of natural gas extracted from the western zone on land and shallow sea instead of the current PSC rate that varies from $2.87 and $2.90 for the same unit. For offshore gas from the deep sea, Petrobangla would pay the contractor $4.573 per unit for its share of gas.
At present, the government buys 1,000 cubic feet of natural gas from the Bangladesh Gas Field Co and Sylhet Gas Field Ltd at 7 takas (9.2 US cents) and from Bapex at 25 takas.
The Bangladesh Energy Regulatory Commission increased gas tariffs by 11.2% on average in August 2009 with a view to generating funds for gas development,
On September 20, the government raised the price of compressed natural gas by 25%, from 25 takas to 30 takas per cubic meter, only four months after the price was increased from 16.75 takas. The latest increase came a day after Bangladesh Petroleum Corp raised petroleum product prices by between 5 and 8 takas to reduce subsidies on imported petroleum products.
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