Gas hunt lacks due diligence

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Shahiduzzaman Khan
With the fast depletion of gas reserves, Bangladesh is likely to face acute energy crisis after 2015 if no new reserve is discovered immediately. The situation has gone to such an extent that all concerned seem to have accepted the likely devastating effect of the gas supply crunch on the country's economy as a fait accompli.
A report published in a national daily this week said the country has failed to undertake new gas exploration work during the last 22 months, except taking up some initiatives to increase gas production from the existing fields on a fast tract basis. On the contrary, the government is serious about power sector and has already awarded contracts to generate more than 2,500 megawatts (mw) electricity. The quest for discovering hydrocarbon by Petrobangla and its subsidiary organisations is moving at a snail's pace.
The government's plan to import Liquefied Natural Gas (LNG) from Qatar through ships is, however, a welcome move. A project to build an LNG terminal has also been taken to receive LNG containers and transmit gas to the national pipeline. It is scheduled to be completed by 2012. Yet all indication suggests that 100-kilometre pipeline to transmit the processed gas to the national grid would not be ready within the stipulated timeframe.
In fact, gas crisis is creating a 'snow-ball' effect on the country's economy, as hundreds of factories could not start operation and many power plants remain idle, hindering its industrial growth. Fertiliser production is being grossly hampered as many producing units are failing to operate due to gas supply crunch. Compressed National Gas (CNG) filling stations are being forced to remain closed for six hours daily to divert gas to such factories. Still the situation has not improved.
Lack of adequate pipelines to transmit the available gas is a stumbling block to streamlining its supply countrywide. Early last year, some contracts reportedly were awarded to transmit gas to the country's gas-deprived western zone. Until now, construction of these pipelines is reportedly going on at a snail's pace. It was scheduled to be completed by now.
Bangladesh signed a memorandum of understanding (MoU) with US oil giant CoconoPhillips for offshore exploration. There is a move to award several deep-sea blocks and a shallow water block to foreign oil companies. But the move drew protest from the members of the committee to protect oil and gas resources.
There are maritime boundary disputes with India and Myanmar as well. Both the countries lodged protest against Bangladesh's offshore bidding process held in May this year saying its (Bangladesh) bid area overlaps their maritime region. On its part, Bangladesh has taken recourse to international arbitration to settle the issue.
Geologists believe that the Bangladesh territory in the Bay holds the biggest oil and gas prospect. Apparently, the country is now exposed to a regional oil and gas politics. However, according to foreign ministry source, the maritime boundary is expected to be fixed by next year. Country's move to mark its maritime boundary has so far been limited to 'plans' to take expert help from the US, the UK and Australia for the job.
Both Myanmar and India began oil and gas exploration in their offshore zones in the Bay several years ago and both were successful in discovering large gas fields. Bangladesh lags far behind in the race and failed to find its deep sea emerging as a new frontier. Nevertheless, fixing maritime boundary is a tricky matter as the coasts of India, Bangladesh and Myanmar follow a curve, which implies overlapping of territory. As per the international practices in such a case, the neighbours should inform each other and reach a mutual understanding before exploring such areas.
More than 97 per cent of the country's total gas output comes from the onshore gas fields while only 3.0 per cent comes from the lone onshore gas field Sangu. Production in Sangu is depleting fast. International Oil Companies (IOCs) were awarded 12 hydrocarbon blocks, both offshore and onshore, since gas exploration began in the country in late '90s. But they now hold only six blocks after recently giving up rights on the rest.
All IOCs operating in Bangladesh sell their gas output to Petrobangla, which later sells it to public and private companies through state-owned distribution firms. But recently Cairn, an IOC, won the right to sell gas to private companies. On the ground of poor gas reserves in Sangu and lower price, it got the rights to sell gas directly to the private parties. Allowing such right to the IOCs may prove disastrous if all IOCs demand similar facilities. The activities of BAPEX and its subsidiary organisations may be severely constrained then. However, as most of the renowned IOCs are reluctant to take part in hydrocarbon bidding at a large scale, the government has little option to maneuver in this connection.
Unless BAPEX makes major stride for exploring gas in Netrokona-Sunamganj belt early next year, chances of overcoming the gas crisis within 2014 are very slim, according to experts. Magnama and Hatiya structures have reportedly a large presence of gas as described by Cairn after conducting 3D survey there. Gas exploration in most of the country's 46 onshore blocks remained frozen since 1998 after the High Court banned awarding the areas to the IOCs. The government is reportedly taking steps to vacate the court injunctions. This may pave the way for new oil and gas discoveries.
The situation demands extensive exploration on both onshore and offshore blocks in the wake of soaring gas crunch, caused mainly by lack of drilling in prospective fields. Harnessing gas along with power is of crucial importance at this critical time of huge energy crunch. szkhan@dhaka.net