• Tuesday, Jul 07, 2020
  • Last Update : 09:17 am

A vision for the blue economy

  • Published at 11:00 pm February 9th, 2020
web-south asia -bay of bengal
Photo: Bigstock

The Bay of Bengal can be so much more than just a body of water

Bangladesh has entered the global liquefied natural gas (LNG) market with much fanfare. In its first year of import, Bangladesh received 1% of global production in LNG. A report in Natural Gas Intelligence suggests that Bangladeshi demand can potentially soak up the glut in global LNG supply.

The government of Bangladesh has allocated several thousand crores in subsidies for the import of LNG. A committee in the Prime Minister’s Office (PMO) has identified LNG as a more cost-effective option than Liquefied Petroleum Gas (LPG). The PMO favours gas pipelines to supply households with “regasified” LNG than LPG canisters.

Expanding gas pipelines will also benefit the manufacturing sector.

An important question is whether the LNG terminals in Cox’s Bazar District, which are now being used for importing LNG, can be converted into terminals for exporting LNG. Bangladesh is yet to tap hydrocarbon reserves in its exclusive economic zone in the Bay of Bengal.

In 2011, the government awarded exploration rights to ConocoPhillips and Statoil for several deep sea blocks in the Bay of Bengal.

However, there was little progress towards hydrocarbon production as both companies refused to sign the Production Sharing Contract (PSC) for reportedly “poor fiscal terms.”

Multinationals are not willing to invest in expensive deep sea exploration and production unless given the opportunity to export oil and gas. For example, an undersea gas pipeline may cost over $2 billion. 

Bangladesh’s limited onshore gas reserves are expected to run dry in the coming decades. The import bill for LNG, while necessary in the short term, may not be sustainable in the long term. It is, therefore, imperative to develop the offshore hydrocarbon sector. 

The case for exports augurs well for the national interests of Bangladesh. Exports can be a source of much-needed revenue for the government to invest in upgrading infrastructure and provide improved services to the most vulnerable sections of society.

Foreign investment in the offshore sector may help stabilize and ensure reliable supply of energy in the longer term. 

Security is also an important issue for foreign investors. The Bay of Bengal faces non-traditional security challenges in combating piracy and counter-terrorism. Bilateral disputes, such as the Bangladesh-Myanmar naval standoff in 2008 over disputed maritime territory, can serve as irritants. 

Developing the blue economy requires strong defense cooperation with strategic partners. In the Persian Gulf, the United States, and to a smaller extent Britain and France, provide security umbrellas for some of the largest oil and gas producing nations in the world.

Bangladesh can emulate similar strategic partnerships and seek a strong security insurance as it seeks to develop the blue economy. 

Energy is a key element in the Free and Open Indo-Pacific Strategy espoused by the United States. In 2018, the US government announced economic initiatives to “support foundational areas of the future” -- namely, the digital economy, energy, and infrastructure.

One such initiative is Asia EDGE (Enhancing Development and Growth through Energy). Regional infrastructure connectivity is a key element of Asia EDGE, which is in sync with Bangladeshi goals of regional connectivity in South and Southeast Asia.

The Bay of Bengal can also be a source of renewable energy through tidal and wind power.  

We can strive to make the Bay of Bengal a new global hub of energy. Bangladesh can be a new pillar in the geo-economic architecture of a Free and Open Indo-Pacific.

The vision is there. It just needs to be realized. 

Umran Chowdhury works in the legal field.

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