HC clears way for onshore gas exploration

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M Azizur Rahman
A special High Court bench Thursday vacated an injunction over leasing out the country's onshore gas blocks paving the way for much-needed exploration by foreign companies to cope with the mounting energy demands, said officials.
The bench comprising Justice Anwarul Haq and Justice AHM Shamsuddin Chowdhury also discharged the writ petition challenging the government move to sign production-sharing contracts (PSCs) with foreign companies for onshore oil and gas exploration.
"It would help the government to launch a fresh bidding round for hydrocarbon exploration in onshore gas blocks," Energy Secretary Mohammad Mohsin told the FE Thursday.
He said launching of new onshore bidding is necessary to ensure that the industrial units, power plants and other gas-guzzling factories do not face sudden halt in gas supply amid fast depletion of local reserves.
Leasing out onshore hydrocarbon blocks to foreign companies has remained halted for almost a decade (since 2001) following the HC order not to sign any PSC with the international oil companies (IOCs).
The local court issued the injunction and asked the government to refrain from signing any PSC and awarding any hydrocarbon block, be it onshore or offshore, to IOCs following a public interest litigation case filed by a top government official.
The government official filed the case one year after the massive Magurchhara gas field explosion in the country's north-eastern Moulvibazar of 1997.
The field was then operated by the US oil giant Occidental.
The ban stood on the way to striking fresh PSCs at a time when the demand for energy trebled, putting strain on existing discoveries.
The HC gave the ruling immediately after the government launched its second round exploration bidding process, offering both onshore and offshore blocks to IOCs.
In 2006, the state-owned Petrobangla moved to vacate the court order but the court withdrew a portion of its injunction allowing signing of PSCs with the IOCs only for offshore gas blocks.
After vacating the ban on signing of PSCs for offshore gas fields, Petrobangla in 2007 floated international tender only for offshore gas fields.
US oil giant ConocoPhillips and Irish Tullow came out as successful bidders for eight and one offshore blocks respectively.
Both the IOCs, however, have been waiting for signing the PSCs for their respective blocks.
Former secretary Shah Abdul Hannan filed the writ petition with the HC as public interest litigation in 1998.
Eminent lawyer Dr Kamal Hossain moved Petrobangla to vacate the court injunction pronounced in 2001.
Currently, more than 98 per cent of the country's gas output, amounting to 1,940 million cubic feet per day (mmcfd) comes from onshore gas fields, while only 2.0 per cent or 35 mmcfd comes from the lone offshore Sangu gas field.
Gas output by the foreign oil companies as on January 28, 2010 accounted for 1,069 mmcfd or over 53.5 per cent of the total generation of around 1,980 mmcfd, while the state-owned local companies produced 920 mmcfd.
The IOCs have been 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 having given up the rest.
The country's gas crisis had created a cascading effect on the economy, as hundreds of factories had been unable to start operations and half a dozen power plants remained idle.
The government Wednesday enforced the country's first-ever holiday staggering in industries to cope with the mounting gas demand.