Foot-dragging on gas-export issue: A blessing in disguise?
Wednesday, 15 August 2007
Shamsul Huq Zahid
It is little wonder that the strong exponents, local and foreign, of gas exports from Bangladesh to neighbouring India are no more heard or seen these days.
With the key government leaders now cautioning about the possible drying up of gas reserves by 2015 and talks about importing the same from Myanmar getting momentum, the preachers of gas exports must now be blushing in secret at the thought of what wrong they had committed.
The tactics of foot-dragging pursued by two previous political governments in the face of mounting pressure from the multilateral donors to export gas and resistance to the move by civil society members, left politicians and experts has, apparently, saved the nation from a possible embarrassment.
Had there been a deal on gas export between Bangladesh and India, the former would have faced an embarrassing situation by now. For, the availability of gas is not enough even to meet the domestic demand despite the fact the gas supply capacity recorded an increase by about 60 per cent over the last six years. Gas supply shortage is now affecting production in mills and factories and operations of power plants and CNG filling stations.
According a report published in the FE Tuesday, the power division under the power, energy and mineral resources ministry because of the uncertainty of gas supply could not sign initial agreements with at least three successful bidders for setting up small power plants having a combined generation capacity of over 40 megawatts (MW), which, though small, could be of some help in these days of severe power crisis. The power division officials also attributed the shortage of 250 MW of electricity to gas supply constraint.
The power supply shortage, ranging between 1000MW and 1200 MW, during peak hours has been taking a heavy toll on the economy for sometime and causing serious inconvenience to all types of consumers. The present interim administration, with a view to improving the situation, are now making desperate attempts to install new power plants, mainly the gas-fired ones, both in private and public sectors.
But the energy and mineral resources division (EMRD) has poured water on the power division's enthusiasm to have new gas-based power plants. The former has informed the government about its inability to supply gas to power plants beyond 2011. Under the given circumstances, the government will be left with no option other than going for another cheap fuel-coal-based power plants. The government needs to make up its mind urgently on the extraction method of coal, which is expected to be found abundantly.
Under the given gas sector scenario, one cannot but feel pity for the Indian corporate giant, Tata, which has been kept on waiting for more than 15 months to get a decision from the Bangladesh government on its $ 3.0 billion investment proposal. Tata's projects being gas-based ones would be requiring 2.14 trillion cubic feet (Tcf), which is almost a half of the country's proven reserve of gas ( according to the latest estimate of the Oil and Gas Journal).
The Tata in its revised investment proposal sought sovereign guarantee for the uninterrupted supply of gas to its proposed steel and fertilizer plants for 10 to 14 years. The FE report quoting an EMRD official said the government now is not in a position to give any gas supply guarantee to Tata.
Actually, the statistics itself speaks of the government's predicament. All the gas fields under the control of Petrobangla despite having a production capacity of about 1700 mmcf per day usually supply 1500 mmcf of gas daily, keeping many power plants, mills and factories gas-starved. The situation of late has deteriorated further following gas leakage through a crack developed in the underwater gas transmission line passing through the river Karotoa.
Meanwhile, the Chittagong region will be facing a difficult situation within four to five years unless necessary measures are taken to ensure uninterrupted supply of gas there. The region gets it gas supply from gas fields at Sangu, Bakhrabad and Feni, with Sangu being the major supplier. The Cairn Energy that operates the Sangu gas field has already cautioned the government about possible drying up of the Sangu reserve within next four years. The gas production in the field has declined by more than a half because off low pressure.
However, it would be unfair to blame solely those who advocated for gas export. The estimates on probable gas reserve in Bangladesh by domestic as well as foreign agencies might have prompted some international organizations and experts to suggest gas export. For instance, the renowned Oil and Gas Journal in January 2005 estimated the probable gas reserve in Bangladesh at 10.5 Tcf. But only after a year's time, it reported the gas reserve to be around 5.0 Tcf.
Similarly, in mid-2004, the Petrobangla estimated the proven reserve at 15.3 Tcf while the finance ministry in the same year put the reserve at 28.4 Tcf though it was not supposed to come up with any estimate on gas reserve. The US Geological Survey was at the top of all the guesstimates done by local and foreign agencies. In the year 2000, it estimated that Bangladesh had an undiscovered gas reserve of 32.1 Tcf, meaning that the country was floating on gas!
It is little wonder that the strong exponents, local and foreign, of gas exports from Bangladesh to neighbouring India are no more heard or seen these days.
With the key government leaders now cautioning about the possible drying up of gas reserves by 2015 and talks about importing the same from Myanmar getting momentum, the preachers of gas exports must now be blushing in secret at the thought of what wrong they had committed.
The tactics of foot-dragging pursued by two previous political governments in the face of mounting pressure from the multilateral donors to export gas and resistance to the move by civil society members, left politicians and experts has, apparently, saved the nation from a possible embarrassment.
Had there been a deal on gas export between Bangladesh and India, the former would have faced an embarrassing situation by now. For, the availability of gas is not enough even to meet the domestic demand despite the fact the gas supply capacity recorded an increase by about 60 per cent over the last six years. Gas supply shortage is now affecting production in mills and factories and operations of power plants and CNG filling stations.
According a report published in the FE Tuesday, the power division under the power, energy and mineral resources ministry because of the uncertainty of gas supply could not sign initial agreements with at least three successful bidders for setting up small power plants having a combined generation capacity of over 40 megawatts (MW), which, though small, could be of some help in these days of severe power crisis. The power division officials also attributed the shortage of 250 MW of electricity to gas supply constraint.
The power supply shortage, ranging between 1000MW and 1200 MW, during peak hours has been taking a heavy toll on the economy for sometime and causing serious inconvenience to all types of consumers. The present interim administration, with a view to improving the situation, are now making desperate attempts to install new power plants, mainly the gas-fired ones, both in private and public sectors.
But the energy and mineral resources division (EMRD) has poured water on the power division's enthusiasm to have new gas-based power plants. The former has informed the government about its inability to supply gas to power plants beyond 2011. Under the given circumstances, the government will be left with no option other than going for another cheap fuel-coal-based power plants. The government needs to make up its mind urgently on the extraction method of coal, which is expected to be found abundantly.
Under the given gas sector scenario, one cannot but feel pity for the Indian corporate giant, Tata, which has been kept on waiting for more than 15 months to get a decision from the Bangladesh government on its $ 3.0 billion investment proposal. Tata's projects being gas-based ones would be requiring 2.14 trillion cubic feet (Tcf), which is almost a half of the country's proven reserve of gas ( according to the latest estimate of the Oil and Gas Journal).
The Tata in its revised investment proposal sought sovereign guarantee for the uninterrupted supply of gas to its proposed steel and fertilizer plants for 10 to 14 years. The FE report quoting an EMRD official said the government now is not in a position to give any gas supply guarantee to Tata.
Actually, the statistics itself speaks of the government's predicament. All the gas fields under the control of Petrobangla despite having a production capacity of about 1700 mmcf per day usually supply 1500 mmcf of gas daily, keeping many power plants, mills and factories gas-starved. The situation of late has deteriorated further following gas leakage through a crack developed in the underwater gas transmission line passing through the river Karotoa.
Meanwhile, the Chittagong region will be facing a difficult situation within four to five years unless necessary measures are taken to ensure uninterrupted supply of gas there. The region gets it gas supply from gas fields at Sangu, Bakhrabad and Feni, with Sangu being the major supplier. The Cairn Energy that operates the Sangu gas field has already cautioned the government about possible drying up of the Sangu reserve within next four years. The gas production in the field has declined by more than a half because off low pressure.
However, it would be unfair to blame solely those who advocated for gas export. The estimates on probable gas reserve in Bangladesh by domestic as well as foreign agencies might have prompted some international organizations and experts to suggest gas export. For instance, the renowned Oil and Gas Journal in January 2005 estimated the probable gas reserve in Bangladesh at 10.5 Tcf. But only after a year's time, it reported the gas reserve to be around 5.0 Tcf.
Similarly, in mid-2004, the Petrobangla estimated the proven reserve at 15.3 Tcf while the finance ministry in the same year put the reserve at 28.4 Tcf though it was not supposed to come up with any estimate on gas reserve. The US Geological Survey was at the top of all the guesstimates done by local and foreign agencies. In the year 2000, it estimated that Bangladesh had an undiscovered gas reserve of 32.1 Tcf, meaning that the country was floating on gas!