The government now stands at crossroads regarding whom to award the production sharing contract of the Sunetra gas structure.
On one hand, international oil company (IOC) Chevron Bangladesh, who operates the adjacent Bibiyana Gas Field, has been showing a lot of interest about getting the Sunetra exploration and production contract, considering it a potential structure.
On the other hand, is state-owned Bapex, which, if awarded the contract, is likely to finish the exploration at one-third the cost that Chevron is presumed to quote.
Unlike the power sector, there is no policy that might allow local private companies to invest in the energy sector.
As a result, local company Summit Group, who has been waiting in the wings to play in Bangladesh’s hydrocarbon surface and pushing the government for a favourable policy for many years, has not been able to contribute healthy competition in the sector.
In the middle of last year, Bapex was unsuccessful in finding any gas in an exploratory well that it had dug at a cost of Tk80 crore. It then said the well was dug in the wrong location. The money was spent from the government exchequer.
Insiders said if an IOC was given the same contract, they would have charged the government at least Tk200 crore; but at the same time, chances would have been higher that they would dig the hole in the right location.
However, in case the IOC also failed to find gas, the government would not have needed to pay a single penny to the company.
Currently, US-based Chevron is extracting around 800 million cubic feet of gas per day (mmcfd) from Bibiyana. It is said that the reserve in the field will run out in eight to 10 years. That is why Chevron has been trying to get the Sunetra contract in order to continue their business in Bangladesh for some more years.
Chevron held some primary discussions with the Awami League government during the end of its previous tenure.
However, since the beginning of this tenure, the company has been doing strong lobbying and holding regular discussions with the government, expressing its interest in getting the contract to explore onshore blocks 11 and 12 at Sunetra, sources said.
On June 4, the company is scheduled to sit in a meeting with State Minister for Energy Nasrul Hamid to discuss the same issue.
The country will need 22.76 trillion cubic feet (tcf) until 2025 while the proven and probable reserve of gas is now a little over 16tcf. That means, the deficit of gas would be 6.69tcf, given the current production, says national oil company Petrobangla.
Bangladesh Petroleum Exploration and Production Company Limited (Bapex) is a concern of Petrobangla.
Professionals say the gas crisis will go through the roof if no new gas field is discovered, 10 years from now.
The country is now facing a shortage of 750mmcf per day, as it supplies about 2,350mmcf against an estimated demand for 3,000mmcf per day.
Buet Prof Ijaz Hossain told the Dhaka Tribune that the entirety of the proven and probable amount of gas might not be recovered for use.
According to Petrobangla, in the last 10 years, gas fields have been discovered in Bagrura, Sundulpur and Srikail which have a total reserve of about 600 billion cubic feet gas.
“Considering the yearly consumption of about 800bcf, the country needs 10tcf gas for the next 12 years,” Ijaj said, adding that if no new gas field is discovered during this period, “a severe problem will arise.”
“We think the government should harness private investment to find more gas, bring in technical expertise and bear some of the significant costs and risks of gas exploration,” Naser Ahmed, a director of Chevron, told the Dhaka tribune.
“Chevron would support a decision to release exploration rights to the IOCs to unlicensed acreage in additional onshore blocks, which would bring in much needed foreign investment into Bangladesh,” he said.
“Chevron does not comment on new business opportunities, as a matter of long-standing policy,” he continued.
“It will be wrong to sign onshore production sharing contracts with the international oil companies [IOCs]. We will only hire them on contractual basis. As Bapex is capable of extracting gas onshore, the IOCs should not be allowed to get PSC from there,” Petrobangla Chairman Hossain Monsur told the Dhaka Tribune.
However, former Petrobangla chairman Md Mosharraf Hossain said: “The gas we have been extracting is not enough. The present situation of the gas sector is frustrating. We need to explore gas at onshore blocks with international oil companies besides Bapex to overcome the crisis.”
He also said the country needed 10-20 new gas wells explored every year. Bapex has been exploring only two-three on an average. “If this continues we will not be able to tackle the gas crisis,” he warned.
“For exploring onshore blocks, locals firms should be encouraged to invest. Just like the power sector, strong local companies must enter the energy sector as well,” he suggested.
At present, there are 22 onshore gas blocks in the country. Out of these, 16 blocks have not yet been explored and some of these are located in the Chittagong hill tracts.
Speaking to the Dhaka Tribune, Summit Group Chairman Muhammed Aziz Khan regretted the fact that the absence of policy has not been allowing local companies to enter the sector.
“We have urged the government to enact a policy for the private sector. We have the ability to serve the country by exploring gas. We have showcased our ability in the power sector over the past 18 years,” he claimed.
State Minister for Energy Nasrul told the Dhaka Tribune yesterday: “We have yet to take steps regarding the proposals sent by the IOC and the local firms. The decisions are still in the primary stage. We are thinking about that [making a policy].”
IOC Chevron is a key player in Bangladesh’s energy sector, accounting for around 50% of Bangladesh’s national gas supply.
Summit Group of Companies is one of the leading private sector conglomerates of Bangladesh. Its business ranges from power to shipping to communications.