Gas exploration: There is no time to waste
Sunday, 31 January 2010
A special bench of the High Court last Thursday vacated a nine-year old injunction on government's bid to involve the international oil companies (IOCs) in onshore hydrocarbon exploration. The same bench also discharged a writ petition challenging the official move to sign production-sharing contracts (PSCs) with the IOCs for both onshore and offshore exploration for oil and gas. Another HC bench back in 2006 partially vacated the injunction allowing the government to sign PSCs with the IOCs in the case of offshore gas blocks.
The vacation of the court injunction has come at a time when the country is reeling under the worst-ever gas crisis. The operations of mills and factories and CNG filling stations have been seriously affected by the short supply of gas. Residents in many parts of the city and its adjoining areas are not getting gas supply to their kitchen from morning to evening everyday. On the top of everything, many power plants have been running well below their capacity because of inadequate gas supplies. In such a situation, the government, following its discussion with trade bodies and associations, has recently enforced the first-ever holiday staggering programme for industries in and around Dhaka to manage the crisis somehow. But reports have it that the objective of the programme is being met, only partially, as many industrial units are not complying with government instruction.
Such flouting is not acceptable. However, one cannot, at the same time, overlook the sufferings of the gas-based industries. Many entrepreneurs had decided to go for gas-based industries because of its low cost and assured supply. They had got the impression from the successive governments, experts and donors agencies that the country was floating on gas. But the reality is now proving otherwise. The proven reserve of the existing gas fields across the country, according to experts, would be able to meet the demand for another three to four years. The reserve, actually, would not have lasted that long, had the government provided enough gas to all the existing and standby consumers. The discovery of gas and its use have helped the nation save a substantial amount of foreign exchange every year that would have been otherwise used for import of petroleum products. More importantly, it has helped the domestic manufacturers to lower the cost of their products.
However, all is not lost, it seems. Experts are hopeful about striking new gas reserves both onshore and offshore. But the situation on the ground calls for immediate actions to help translate hope into reality. The actions relate to exploration activities. Since the state-owned Bangladesh Petroleum Exploration Company (Bapex) does not have the resources to go for cost-intensive and big exploration works, the country is left with no option other than engaging the IOCs. But the progress to that effect appears to be very slow. For instance, the HC vacated the injunction partially in 2006 to allow the government to sign any deal with IOCs on offshore exploration. Four years have gone by since then, two successful international bidders are still waiting to sign PSCs with the government to get exploration rights for a few offshore blocks. However, the maritime boundary dispute with Myanmar and India could be another reason for the delay. But in the case of onshore exploration, the government is not facing any such problem. With the High Court clearing the way for onshore exploration by IOCs, the government should take immediate measures to invite international bids for exploration in the remaining prospective onshore blocks.
The vacation of the court injunction has come at a time when the country is reeling under the worst-ever gas crisis. The operations of mills and factories and CNG filling stations have been seriously affected by the short supply of gas. Residents in many parts of the city and its adjoining areas are not getting gas supply to their kitchen from morning to evening everyday. On the top of everything, many power plants have been running well below their capacity because of inadequate gas supplies. In such a situation, the government, following its discussion with trade bodies and associations, has recently enforced the first-ever holiday staggering programme for industries in and around Dhaka to manage the crisis somehow. But reports have it that the objective of the programme is being met, only partially, as many industrial units are not complying with government instruction.
Such flouting is not acceptable. However, one cannot, at the same time, overlook the sufferings of the gas-based industries. Many entrepreneurs had decided to go for gas-based industries because of its low cost and assured supply. They had got the impression from the successive governments, experts and donors agencies that the country was floating on gas. But the reality is now proving otherwise. The proven reserve of the existing gas fields across the country, according to experts, would be able to meet the demand for another three to four years. The reserve, actually, would not have lasted that long, had the government provided enough gas to all the existing and standby consumers. The discovery of gas and its use have helped the nation save a substantial amount of foreign exchange every year that would have been otherwise used for import of petroleum products. More importantly, it has helped the domestic manufacturers to lower the cost of their products.
However, all is not lost, it seems. Experts are hopeful about striking new gas reserves both onshore and offshore. But the situation on the ground calls for immediate actions to help translate hope into reality. The actions relate to exploration activities. Since the state-owned Bangladesh Petroleum Exploration Company (Bapex) does not have the resources to go for cost-intensive and big exploration works, the country is left with no option other than engaging the IOCs. But the progress to that effect appears to be very slow. For instance, the HC vacated the injunction partially in 2006 to allow the government to sign any deal with IOCs on offshore exploration. Four years have gone by since then, two successful international bidders are still waiting to sign PSCs with the government to get exploration rights for a few offshore blocks. However, the maritime boundary dispute with Myanmar and India could be another reason for the delay. But in the case of onshore exploration, the government is not facing any such problem. With the High Court clearing the way for onshore exploration by IOCs, the government should take immediate measures to invite international bids for exploration in the remaining prospective onshore blocks.