Govt moves to lift HC ban on onshore exploration

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M Azizur Rahman
The government has stepped up a move to open up onshore hydrocarbon blocks for exploration by international oil companies (IOCs) in a desperate attempt to meet the country's mounting energy demand.
Gas exploration in most of the country's 46 onshore blocks remained frozen since 1998 after the High Court (HC) banned awarding the areas to the international oil companies (IOCs).
Petrobangla Chairman Jalal Ahmed told the FE Saturday that a move was underway to vacate the court injunction, which would pave the way for new oil and gas discoveries.
"We have already lodged a petition with the High Court bench to lift the ban on assigning foreign companies for onshore hydrocarbon explorations," he said.
Eminent lawyer Dr Kamal Hossain, an expert in mines and mineral litigation, has been tasked to expedite the process, he added.
The ban has stood on the way to striking fresh production-sharing contract (PSC) with foreign companies for more than a decade at a time when the demand for energy trebled, putting strain on existing discoveries.
The High Court gave the ruling immediately after the government launched its second round exploration bidding process, offering both onshore and offshore blocks to IOCs.
Because of the ban, in the past decade the government could sign only one PSC with a foreign company, but that's last year and was limited to only offshore blocks.
The Petrobangla chairman said the country needs extensive explorations in both onshore and offshore blocks in the wake of soaring gas supply crunch, caused mainly by lack of drilling in prospective blocks.
Experts said the gas crisis has created a 'snow-ball' effect on the country's economy, as hundreds of factories could not start operation and half a dozen power plants remain idle, dragging down industrial growth.
A Petrobangla official said the government would keep some blocks reserved for exploration by the state-owned Bangladesh Exploration and Production Company Ltd (BAPEX) to lessen dependence on IOCs.
"We need the IOCs because gas exploration is a highly capital intensive work. But we would also engage Bapex in some of the exploration work to lessen over-dependence on the IOCs," he said.
More than 97 per cent of the total gas output, amounting to 1850 million cubic feet per day (mmcfd), comes from the onshore gas fields while only three per cent, or 56mmcfd, comes from the lone onshore gas field at Sangu.
The IOCs were awarded 12 hydrocarbon blocks --- both onshore and offshore --- since gas exploration began in the country in late 1960s. But they now hold only six blocks after recently giving up rights on the rest.
"Fresh exploration in the onshore blocks would require huge investments. We can't do without the IOCs due to our limited resources," said the Petrobangla official.
Petrobangla projected that the country will need a further 24 trillion cubic feet (tcf) of gas and investment worth US $ 7.7 billion in the next 16 years to maintain seven per cent economic growth rate.
The country's proven reserve of 8.39 tcf gas would start drying up from 2011. If proven and probable reserves of around 14.4 tcf are taken together, the country's gas stock will be emptied by 2015.
After 2015, the country will require new reserves to meet the growing demand.