An anatomy of the gas crisis
Saturday, 13 March 2010
Tithe Farhana
Bangladesh is floating on gas; this phrase had been notably pronounced by Unocal and other foreign oil companies as well as local experts including some BUET professors before seven years ago. Paradoxically, this prediction has proved hollow as far as the gas reserve is concerned. And Petrobangla went against such pseudo statement and a national committee on gas utilisation in 2002 painted a bleak future about gas reserve that will dwindle fast from 2012.
Gas was first discovered in Chatak. It was used as a fuel in Chhatak cement factory in 1960, when the Chatak gas field began its first commercial exploitation. However natural gas was discovered in 1955 at Haripur (Sylhet gas field).
Shell Pakistan was pioneer in gas exploration in this region, discovered five major gas field including Titas and Habigonj in 1960s. After independence, Shell handed these fields to Bangladesh for mere 4.0 million pounds sterling. Gradually the commercial and domestic consumption of gas grew.
The exploration by international oil companies (IOCs) under production sharing contact was fashioned. The country was divided into 23 blocks. During the period of 1974-77, seven exploratory wells were drilled with only one gas field discovery. In 1988, under new PSC 4 block were awarded to two IOCs which drilled 4 exploratory wells leading to the discovery of one gas field.
In the early 1990s, the model PSC of 1988 was modified and 8 blocks were awarded to four IOCs. During 1990s, exploratory drilling programme did not spur the desired momentum in spite of the presence of IOCs. BAPEX, the exploration company of Petrobangla, had not undertaken any exploration drilling since 1997. IOCs have also slowed down their exploration drilling programme. Gas production has been increasing sharply over the last decades. While only 2.3 bcm of gas was produced in 1983-84, production grew to about 7.5 bcm (265 bcf) during1995-96. Gas production reached 9.4bcm (332 bcf) during 1999-2000 and 14bcm (500 bcf) in 2005.
The supply and demand gap of gas started widening in 1998 when Unocal discovered Bibiyana gas field. That period Bangladesh could not exploit gas because of less market demand. As a result, all IOCs virtually stopped exploration. According to PSC, if a commercially viable discovery is made, petrobangla would have the first right to purchase and if they cannot purchase the gas, the IOCs can sell it to any local third party as the second alternative. In 2002, a gas utilization committee suggested that IOC should be allowed to export their share of gas from new discovery only. Hence, no concrete decision has taken in the ten years since 1998 to find new gas reserve. The result is the leanest decade of gas discovery of Bangladesh.
Experts identified four major reasons -- bureaucratic red tape, corruption culture, unequal deals and mismanagement -- as the major obstacles. They also blamed dependence on IOCs and negligence on modernization and capacity building of the companies under Petrobangla and lack of coordination between Petrobangla and energy ministry. According to a report, the government's 'fast-track' gas exploration programme involving foreign companies drilling wells in state-owned onshore gas fields is limping for bureaucratic mismanagement. State-owned Petrobangla sought EoI (expression of interest) from global firms in September 2009 opening up for the first time the country's state-owned gas fields for exploration by foreign companies.
According to a report, the gas demand in 2012-13 would rise between 2,500 million cubic feet of gas a day and 2,873 million cubic feet of gas a day and in 2014-15 between 2,669 million cubic feet of gas a day and 3,087 million cubic feet of gas a day.
The energy ministry has started staggered holiday for gas supply to ease the demand pressure. But Bangladesh Ceramic Ware Manufacturers Association (BCWMA) is opposing this. According to industry people and stake holders the gas rationing will close down all ceramic factories as the manufacturing sector needs gas 365 days a year to keep production continuing. Besides, garments & knitwear manufacturers & exporters, textile mills, and later ones might be forced to close down some of their units and put others on partial operation due to low pressure. According to BCWMA so far a total of 32 ceramic factories have been established with an estimated investment of Tk 2,500 crore. Sector leaders said Bangladesh is exporting a large volume of ceramic products to Europe and American markets.
Industry people said gas supply is greatly hampering production in knitwear and denim sub-sector as those depend on gas-fuelled equipment for washing and dying. Gas shortage in dying and spinning units make their captive power generator idle, they said.
Current gas shortage in the capital and adjoining districts is around 150-200mmcfd as Titas supplies around 1,450mmcfd of gas against the demand for 1,600mmcfd. The demand in the country is projected to reach a level of an average 2200 mmcfd in the 2009-2010. According to the Petrobangla, statistics of December 2009 show 91.55 MMCM gas was used in 500 CNG filling stations on an average while the total number of CNG-driven vehicles was estimated at 177555. Sources in the Petrobangla said they had been continuously making efforts to locate new gas reserves to meet the growing energy demand of the country. Leaders of the CNG filling stations claimed business will be seriously hampered if this situation continues.
Chittagong region will face a disastrous situation if the Sangu Gas field is closed down in 2012. Gas production from Sangu had slumped as low as around 35 mmcfd production from its average production from of 180 mmcfd during 2006, gravely affecting the supply situation across Chittagong. Despite setting up of the compressor of Sangu production from the country's solo offshore field would not increase gas production; nevertheless the present production level can be continued. The Sangu field in the Bay of Bengal has produced in excess of 450 billion cubic feet while production started in 1998. Sangu was one of the largest discoveries in the 1990s while cairn was one of the first international companies start operating in Bangladesh. Apart from Cairn, the joint partners in the Sangu field are Australian Santos and US based HBR energy. While the field started production in 1998, Petrobangla allowed Carin to maximize production as at that time the country was passing under gas shortage. If petrobangla was careful, it would not have allowed 160 mmcfd productions and would have settled for a conservative rate that would have given the field longer life experts opined.
The present power crisis is very closely linked with gas crisis as 85% power generation is dependent on gas as fuel. Supply of gas to labour-intensive export industries on a priority basis is the most realistic decision at this period.
The writer is a development worker. She can be reached at e-mail: tanes_of_mono@yahoo.com
Bangladesh is floating on gas; this phrase had been notably pronounced by Unocal and other foreign oil companies as well as local experts including some BUET professors before seven years ago. Paradoxically, this prediction has proved hollow as far as the gas reserve is concerned. And Petrobangla went against such pseudo statement and a national committee on gas utilisation in 2002 painted a bleak future about gas reserve that will dwindle fast from 2012.
Gas was first discovered in Chatak. It was used as a fuel in Chhatak cement factory in 1960, when the Chatak gas field began its first commercial exploitation. However natural gas was discovered in 1955 at Haripur (Sylhet gas field).
Shell Pakistan was pioneer in gas exploration in this region, discovered five major gas field including Titas and Habigonj in 1960s. After independence, Shell handed these fields to Bangladesh for mere 4.0 million pounds sterling. Gradually the commercial and domestic consumption of gas grew.
The exploration by international oil companies (IOCs) under production sharing contact was fashioned. The country was divided into 23 blocks. During the period of 1974-77, seven exploratory wells were drilled with only one gas field discovery. In 1988, under new PSC 4 block were awarded to two IOCs which drilled 4 exploratory wells leading to the discovery of one gas field.
In the early 1990s, the model PSC of 1988 was modified and 8 blocks were awarded to four IOCs. During 1990s, exploratory drilling programme did not spur the desired momentum in spite of the presence of IOCs. BAPEX, the exploration company of Petrobangla, had not undertaken any exploration drilling since 1997. IOCs have also slowed down their exploration drilling programme. Gas production has been increasing sharply over the last decades. While only 2.3 bcm of gas was produced in 1983-84, production grew to about 7.5 bcm (265 bcf) during1995-96. Gas production reached 9.4bcm (332 bcf) during 1999-2000 and 14bcm (500 bcf) in 2005.
The supply and demand gap of gas started widening in 1998 when Unocal discovered Bibiyana gas field. That period Bangladesh could not exploit gas because of less market demand. As a result, all IOCs virtually stopped exploration. According to PSC, if a commercially viable discovery is made, petrobangla would have the first right to purchase and if they cannot purchase the gas, the IOCs can sell it to any local third party as the second alternative. In 2002, a gas utilization committee suggested that IOC should be allowed to export their share of gas from new discovery only. Hence, no concrete decision has taken in the ten years since 1998 to find new gas reserve. The result is the leanest decade of gas discovery of Bangladesh.
Experts identified four major reasons -- bureaucratic red tape, corruption culture, unequal deals and mismanagement -- as the major obstacles. They also blamed dependence on IOCs and negligence on modernization and capacity building of the companies under Petrobangla and lack of coordination between Petrobangla and energy ministry. According to a report, the government's 'fast-track' gas exploration programme involving foreign companies drilling wells in state-owned onshore gas fields is limping for bureaucratic mismanagement. State-owned Petrobangla sought EoI (expression of interest) from global firms in September 2009 opening up for the first time the country's state-owned gas fields for exploration by foreign companies.
According to a report, the gas demand in 2012-13 would rise between 2,500 million cubic feet of gas a day and 2,873 million cubic feet of gas a day and in 2014-15 between 2,669 million cubic feet of gas a day and 3,087 million cubic feet of gas a day.
The energy ministry has started staggered holiday for gas supply to ease the demand pressure. But Bangladesh Ceramic Ware Manufacturers Association (BCWMA) is opposing this. According to industry people and stake holders the gas rationing will close down all ceramic factories as the manufacturing sector needs gas 365 days a year to keep production continuing. Besides, garments & knitwear manufacturers & exporters, textile mills, and later ones might be forced to close down some of their units and put others on partial operation due to low pressure. According to BCWMA so far a total of 32 ceramic factories have been established with an estimated investment of Tk 2,500 crore. Sector leaders said Bangladesh is exporting a large volume of ceramic products to Europe and American markets.
Industry people said gas supply is greatly hampering production in knitwear and denim sub-sector as those depend on gas-fuelled equipment for washing and dying. Gas shortage in dying and spinning units make their captive power generator idle, they said.
Current gas shortage in the capital and adjoining districts is around 150-200mmcfd as Titas supplies around 1,450mmcfd of gas against the demand for 1,600mmcfd. The demand in the country is projected to reach a level of an average 2200 mmcfd in the 2009-2010. According to the Petrobangla, statistics of December 2009 show 91.55 MMCM gas was used in 500 CNG filling stations on an average while the total number of CNG-driven vehicles was estimated at 177555. Sources in the Petrobangla said they had been continuously making efforts to locate new gas reserves to meet the growing energy demand of the country. Leaders of the CNG filling stations claimed business will be seriously hampered if this situation continues.
Chittagong region will face a disastrous situation if the Sangu Gas field is closed down in 2012. Gas production from Sangu had slumped as low as around 35 mmcfd production from its average production from of 180 mmcfd during 2006, gravely affecting the supply situation across Chittagong. Despite setting up of the compressor of Sangu production from the country's solo offshore field would not increase gas production; nevertheless the present production level can be continued. The Sangu field in the Bay of Bengal has produced in excess of 450 billion cubic feet while production started in 1998. Sangu was one of the largest discoveries in the 1990s while cairn was one of the first international companies start operating in Bangladesh. Apart from Cairn, the joint partners in the Sangu field are Australian Santos and US based HBR energy. While the field started production in 1998, Petrobangla allowed Carin to maximize production as at that time the country was passing under gas shortage. If petrobangla was careful, it would not have allowed 160 mmcfd productions and would have settled for a conservative rate that would have given the field longer life experts opined.
The present power crisis is very closely linked with gas crisis as 85% power generation is dependent on gas as fuel. Supply of gas to labour-intensive export industries on a priority basis is the most realistic decision at this period.
The writer is a development worker. She can be reached at e-mail: tanes_of_mono@yahoo.com