Gas from new shallow-water blocks can't be exported

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M Azizur Rahman
The government will not allow natural gas export from the new shallow- water offshore gas blocks in the Bay of Bengal set to be on offer under a new bidding round, a top official has said.
All sorts of natural gas export - be it piped gas or in liquefied form - would be barred under the planned bidding round for hydrocarbon exploration in the Bay, he said Thursday.
State-owned Petrobangla has finalised a model production sharing contract (PSC) for the planned bidding round excluding the provision of gas export from the new offshore gas blocks, the official said.
"We have kept the gas export issue outside the purview of the planned bidding round," Petrobangla Chairman Dr Hussain Monsur told the FE.
He said unlike the previous rounds, the government had planned not to allow any international oil company to export natural gas from the shallow-water blocks in the Bay of Bengal.
Mr Monsur said natural gas had never been exported from Bangladesh, although there were options to export it in the form of LNG in the previous bidding rounds.
Currently international oil companies (IOCs) are the major contributors to the country's overall gas production, as their overall output is hovering around 1,070 million cubic feet per day (mmcfd), which accounts for 53 per cent of the country's overall production.
State-run gas companies are producing the remaining 980 mmcfd, or 47 per cent of the total output of around 2050 mmcfd.
The IOCs have never approached the authorities for exporting natural gas from Bangladesh in liquefied natural gas (LNG) form.
In October 2001, Chevron's predecessor Unocal, however, proposed to export piped natural gas from its Bibiyana gas field in northeastern Bangladesh to India.
Unocal's gas export plan was later abandoned following local protest and rising domestic demand.
Under the provisions of the previous production-sharing contracts, exporting gas was the third option, said the Petrobangla official.
He said Petrobangla had the first right to purchase the gas from the contracting companies under the PSCs.
If Petrobangla cannot buy it, the IOCs must sell the gas in the domestic Bangladesh market.
In case of non-availability of customers in the domestic market, the companies have the right to export natural gas in the form of LNG.
Mr Monsur said allowing the IOCs to export natural gas at a time when the country was importing LNG would be viewed as double-standard.
The government is now working to build a floating LNG import terminal with a capacity to handle 5 million tonnes of LNG per year, re-gasification capacity of at least 500 mmcfd, and berthing and mooring facilities for LNG ships with a capacity of 138,000-260,000 cubic meters.
It has also signed a memorandum of understanding (MoU) in January 2011 to import 4 million tonnes of LNG per year from Qatar Petroleum.
Officials, however, said the ban on export of natural gas from Bangladesh would not discourage the interested IOCs from taking part in the next bidding round.
The government has planned to allow a higher sales price for natural gas discovered in the shallow-water blocks which the country plans to offer in its next bidding round in an effort to spark interest from international oil and gas companies.
The government is eyeing to launch a new bidding round by April next offering eight dispute-free shallow-water oil and gas blocks in the Bay of Bengal.
This will be the country's fourth bidding round following tenders in 2008, 2001 and 1997.
Currently, the government is struggling to meet the growing domestic natural gas demand having a shortfall of 500 mmcfd in supplies.
State-run Petrobangla has stopped new gas connections to industries since June 2009 and households since July 2010. Hundreds of industries remained shut and many cut down on manufacturing due to short supply of natural gas.
Gas rationing in industries is also rampant and the compressed natural gas (CNG) filling stations are maintaining four-hour closures every day to cope with the short supply of natural gas.