Preparing for the 'post-gas era' economy in Bangladesh
Syed Fattahul Alim | Friday, 15 August 2008
The port city of Chittagong, which is also called the commercial capital of Bangladesh, has been facing severe gas and power crisis since long. However, the source of both the crises is again gas, since most of the power plants in Bangladesh are also fired by gas. As a result, neither the newly installed industries can go into production, nor the old ones can continue their operation. The situation has been going on for long. To solve the crisis the Council of Advisers chaired by the Chief Adviser in its latest meeting has decided to provide 20 mcf (million cubic feet) additional gas and set up a 50-MW rental power plant for immediate and short-term solutions to the acute gas and power crisis that the commercial capital of the country is going through.
The advisory council's meeting held at the Chittagong circuit house also decided to set up a separate gas distribution centre styled 'Karnaphuli Gas Systems Limited (KGSL)' to ensure smooth distribution of gas to Chittagong. The commerce adviser while briefing newsmen has assured that the 20 mcf additional gas to Chittagong will be provided through two separate supply lines from Bangura and Bakharabad gas fields.
However, it is already known that the gas crisis faced by Chittagong is due mainly to the failure of the offshore gas field Sangu to supply gas to the port city. It has, however, been further learnt that Sangu has little prospect to continue in its gas production for long, since its reserve is depleting very fast.
What is the present scenario of Sangu? According to a report, the UK-based Cairn Energy, which operates the Sangu gas field, in its latest estimate informed that this offshore gas site is at present left with a reserve of 14 billion cubit feet of gas. At present the field is supplying at the rate of 50 million cubic feet of gas per day (mmcfd). It is worthwhile to mention that early in 2006 it supplied gas at the rate of 150 mmcfd, but gradually the supply dwindled to 50 mmcfd in recent times. The latest estimate from the Sangu gas operator says that the supply will decline further to around 23 mmcfd until September 2009. and after that there will be no economically feasible reserve for extraction from that offshore gas site.
After discovery of the gas field in 1996, it was informed that the site has total gas reserve of 800 billion cubic feet (bcf) of gas. But now we are being told that the field as per 'material balance analysis' had a reserve of 490 bcf. Cairn further claims to have informed the government that according to 'volumetric calculation' the site had a reserve of 650 bcf of gas. However, since the 'material balance' method of calculating gas reserve is more reliable, reserve and supply situation should better rely on this particular method of assessment than on what it calls the 'volumetric one'.
What would then be the upshot of this disclosure about Sangu gas for Chittagong or the whole country for that matter?
In fact, the revelation from the Cairn is a deadly blow to the future prospects of the gas-based industries as well as the power generation plants of Chittagong. The government-owned gas distribution company Petrobangla has held Cairn Energy responsible for the wrong information on the actual reserve situation, which the latter, however, has refused to accept. Now, the business of holding one another responsible for the overestimation about the gas reserve position or the huge investments made on the basis of wrong prospecting at Sangu is not going solve the impending gas crunch the nation is going to face. The whole prospect is gloomy as natural gas is the only significant source of commercial energy, and accounts for almost 80 per cent of commercial energy consumption of the country. How is the country going to get out of the present predicament regarding the lifeline of its energy source? In fact, short of a miracle, there is hardly a way out under the present circumstances.
Add to the developments at Sangu the overall energy picture of the country. The world's main source of energy, the fossil-based fuel oil has gone beyond the reach of the poor countries like ours. The reason, as everyone knows, is the skyrocketing price of the petroleum products in the international market. Since Bangladesh does not produce any oil, it has to import it from the international market to meet the domestic demand for oil. However, gas, which is produced locally, has been shouldering the major share of the total energy need of the country. But now with the knowledge that the gas, too, would be around hardly for a year more, how will the nation solve its future energy need, which is growing by leaps and bounds?
Just as we are facing such a dark energy prospect at the end of 2008, only two years back the scenario was quite the opposite. According to the Oil and Gas Journal (OGJ), the country had a reserve of 5 Trillion cubic feet of gas (Tcf) as of January 2006, whereas only a year before the OGJ's estimate of gas reserve as of January, 2005 was 10.6 Tcf. Strangely though, earlier in 2004, the state-owned Petrobangla basing on its own estimate said that the country had a net proven gas reserve of 15.3 Tcf. Even according to the estimate of the Finance ministry in 2004, the country had a total gas reserve of 28.4 Tcf, of which, 20 Tcf was recoverable. If one goes further back on the exercise of gas reserve estimates, the US Geological Survey in June 2001 had disclosed that Bangladesh had a total 'undiscovered reserves' of 32.1 Tcf of natural gas. It was exactly around this time, it was widely publicised in the local and international media that Bangladesh was virtually floating on gas. But where have all those predicted gas reserves evaporated in the meanwhile? Were then the scientific surveys conducted by such prestigious institutions like the US Geological Survey were based on a wrong method with the consequence that we had so far been planning our energy future on quite a false premise?
But it is also hard to believe that the surveys conducted by such world renowned institutions produced such results, given the fact that the methods modern geological surveys use rest on highly sophisticated scientific methods. Whatever the reasons that the results provided by the renowned survey institutes have proven to be untenable in the case of Bangladesh, the consequences for the country have been disastrous. Now that the state-owned Petrobangla, though it has recently been talking on a different note, cannot also wash its hands of the whole issue, either, given the fact that it itself did come up with a rather rosy picture about the gas reserve position of the country. It has already been noted in the foregoing.
Understandably, the nation is now faced with an energy predicament, which for all practical purposes, has caught it unawares. Unawares, because, the predictions about the gas reserve situation of the country have been so erratic and underwent so many variations within such a short time! And how can a country plan its future economic growth and development, if it lacks any strategic information about its energy source in the first place?
As one of the poorest nations on earth, Bangladesh is facing double jeopardy on the energy front. Though Chittagong now appears to be the nodal point of the crisis, in the present circumstances, the real issue on the energy front before the government should be the energy need of Bangladesh in the post-gas era. However, there should also be an effort to know the actual picture of the gas reserve situation through over available means, if only for the reason that the country has the unique as well as strange history about gas reserve predictions.
The advisory council's meeting held at the Chittagong circuit house also decided to set up a separate gas distribution centre styled 'Karnaphuli Gas Systems Limited (KGSL)' to ensure smooth distribution of gas to Chittagong. The commerce adviser while briefing newsmen has assured that the 20 mcf additional gas to Chittagong will be provided through two separate supply lines from Bangura and Bakharabad gas fields.
However, it is already known that the gas crisis faced by Chittagong is due mainly to the failure of the offshore gas field Sangu to supply gas to the port city. It has, however, been further learnt that Sangu has little prospect to continue in its gas production for long, since its reserve is depleting very fast.
What is the present scenario of Sangu? According to a report, the UK-based Cairn Energy, which operates the Sangu gas field, in its latest estimate informed that this offshore gas site is at present left with a reserve of 14 billion cubit feet of gas. At present the field is supplying at the rate of 50 million cubic feet of gas per day (mmcfd). It is worthwhile to mention that early in 2006 it supplied gas at the rate of 150 mmcfd, but gradually the supply dwindled to 50 mmcfd in recent times. The latest estimate from the Sangu gas operator says that the supply will decline further to around 23 mmcfd until September 2009. and after that there will be no economically feasible reserve for extraction from that offshore gas site.
After discovery of the gas field in 1996, it was informed that the site has total gas reserve of 800 billion cubic feet (bcf) of gas. But now we are being told that the field as per 'material balance analysis' had a reserve of 490 bcf. Cairn further claims to have informed the government that according to 'volumetric calculation' the site had a reserve of 650 bcf of gas. However, since the 'material balance' method of calculating gas reserve is more reliable, reserve and supply situation should better rely on this particular method of assessment than on what it calls the 'volumetric one'.
What would then be the upshot of this disclosure about Sangu gas for Chittagong or the whole country for that matter?
In fact, the revelation from the Cairn is a deadly blow to the future prospects of the gas-based industries as well as the power generation plants of Chittagong. The government-owned gas distribution company Petrobangla has held Cairn Energy responsible for the wrong information on the actual reserve situation, which the latter, however, has refused to accept. Now, the business of holding one another responsible for the overestimation about the gas reserve position or the huge investments made on the basis of wrong prospecting at Sangu is not going solve the impending gas crunch the nation is going to face. The whole prospect is gloomy as natural gas is the only significant source of commercial energy, and accounts for almost 80 per cent of commercial energy consumption of the country. How is the country going to get out of the present predicament regarding the lifeline of its energy source? In fact, short of a miracle, there is hardly a way out under the present circumstances.
Add to the developments at Sangu the overall energy picture of the country. The world's main source of energy, the fossil-based fuel oil has gone beyond the reach of the poor countries like ours. The reason, as everyone knows, is the skyrocketing price of the petroleum products in the international market. Since Bangladesh does not produce any oil, it has to import it from the international market to meet the domestic demand for oil. However, gas, which is produced locally, has been shouldering the major share of the total energy need of the country. But now with the knowledge that the gas, too, would be around hardly for a year more, how will the nation solve its future energy need, which is growing by leaps and bounds?
Just as we are facing such a dark energy prospect at the end of 2008, only two years back the scenario was quite the opposite. According to the Oil and Gas Journal (OGJ), the country had a reserve of 5 Trillion cubic feet of gas (Tcf) as of January 2006, whereas only a year before the OGJ's estimate of gas reserve as of January, 2005 was 10.6 Tcf. Strangely though, earlier in 2004, the state-owned Petrobangla basing on its own estimate said that the country had a net proven gas reserve of 15.3 Tcf. Even according to the estimate of the Finance ministry in 2004, the country had a total gas reserve of 28.4 Tcf, of which, 20 Tcf was recoverable. If one goes further back on the exercise of gas reserve estimates, the US Geological Survey in June 2001 had disclosed that Bangladesh had a total 'undiscovered reserves' of 32.1 Tcf of natural gas. It was exactly around this time, it was widely publicised in the local and international media that Bangladesh was virtually floating on gas. But where have all those predicted gas reserves evaporated in the meanwhile? Were then the scientific surveys conducted by such prestigious institutions like the US Geological Survey were based on a wrong method with the consequence that we had so far been planning our energy future on quite a false premise?
But it is also hard to believe that the surveys conducted by such world renowned institutions produced such results, given the fact that the methods modern geological surveys use rest on highly sophisticated scientific methods. Whatever the reasons that the results provided by the renowned survey institutes have proven to be untenable in the case of Bangladesh, the consequences for the country have been disastrous. Now that the state-owned Petrobangla, though it has recently been talking on a different note, cannot also wash its hands of the whole issue, either, given the fact that it itself did come up with a rather rosy picture about the gas reserve position of the country. It has already been noted in the foregoing.
Understandably, the nation is now faced with an energy predicament, which for all practical purposes, has caught it unawares. Unawares, because, the predictions about the gas reserve situation of the country have been so erratic and underwent so many variations within such a short time! And how can a country plan its future economic growth and development, if it lacks any strategic information about its energy source in the first place?
As one of the poorest nations on earth, Bangladesh is facing double jeopardy on the energy front. Though Chittagong now appears to be the nodal point of the crisis, in the present circumstances, the real issue on the energy front before the government should be the energy need of Bangladesh in the post-gas era. However, there should also be an effort to know the actual picture of the gas reserve situation through over available means, if only for the reason that the country has the unique as well as strange history about gas reserve predictions.