The international oil company, Chevron, plans to set up a liquefied petroleum gas (LPG) bottling plant in the Bibiyana Gas Field area, an official said.
“We have sent a draft project proposal to the Energy Division for its approval,” Naser Ahmed, director (external affairs) of Chevron Bangladesh, told the Dhaka Tribune recently.
Naser said Chevron had already discussed the project several times with officials of Petrobangla, the state-run oil, gas and mineral corporation.
Director (PSC) of Petrobangla, Muhammad Imaduddin, said they welcomed the initiative to set up an LPG bottling plant – the first initiative by the IOCs operating in Bangladesh.
“We have been examining the proposal and trying to reach a decision on whether the plant should be developed under PSC (production-sharing contract), or in the private sector,” he said.
Currently, Bangladesh consumes about 100,000 tonnes of LPG, which is mostly used for cooking by residents in the district towns where piped natural gas connection is not available.
The state-owned LPG producers now supply 20% of the total market demand, while the private sector imports the remaining 80%.
Md Eunusur Rahman, chairman of Bangladesh Petroleum Corporation (BPC), also the monitoring agency for LP gas, told the Dhaka Tribune that private firms were importing 80,000 tonnes of LPG, while the government produces 20,000 tonnes a year against the annual demand of 300,000 tonnes.
Industry insiders, however, claimed that the demand is not less than 500,000 tonnes per year.
Demand for LPG is increasing rapidly, following a recent government policy to stop providing piped natural gas connections to household users due to a shortfall in production.
Besides household users, a good number of small commercial entities, like restaurants and tea-stalls, also use LPG.
The government has already exempted import duty on LPG, LPG cylinders and other accessories to encourage its use and reduce price, which has been on the rise in the local market over the past three years.
While a residential user pays a fixed amount of Tk450 monthly for 24-hour gas supply through a pipe line, a 12.4 -12.5 kg LPG cylinder costs around Tk1,650-1,750.
The cylinders are available from four sources – state-owned LP Gas Limited and privately-owned TOTALGAZ Bangladesh, Bashundhara LP Gas Ltd, Jamuna Spacetech Joint Venture Ltd, Linde Bangladesh Ltd and Kleen Heat Bangladesh.
Chevron has interests in two PSCs in Bangladesh, covering Block 12 (Bibiyana field) and Blocks 13 and 14 (Jalalabad and Moulavi Bazar fields) in northeastern Sylhet region.
The company sells the gas it extracts to the government under long-term sales agreements. In 2012, net daily production averaged 550 million cubic feet (mcf) of natural gas and 2,000 barrels of condensate.
The Bibiyana Expansion project, meanwhile, got a final investment decision in July 2012.
The project includes a gas plant expansion, additional development wells and an enhanced liquids recovery unit.
It is expected to increase the total maximum daily production by more than 300 mcf of natural gas and 4,000 barrels of condensate.
First production is expected in 2014, and the project’s economic life will last for the duration of the PSC.