The Bangladesh Government has proceeded to conclude production sharing contracts (psc) of offshore drilling with two international oil companies (IOC) after a transparent approval process. A portion of civil society are against this government initiative for exploring and exploiting national resources. They are protesting on the streets which is creating barrier for further offshore explorations. This group which claims themselves as the National Committee for Protection of Oil, Gas & Port (OGPC) earlier staged a road march and even called a half day hartal (strike) during Ramadan and will continue their agitation program after the Eid holidays.
The Bangladeshi media have covered their agitation program well. Two newspaper headlines are quoted here under:
- Citizens’ group vows to resist offshore block lease deals. A sit-in will be staged at Petrobangla HQ on Sept 24
- Gas export issue: Nat’l body ready for dialogue with govt
These two headlines contradict. If they vow to resist then there is no point in discussion. In my opinion Petrobangla and EMRD must not delay as winter is not very far. Surveys in the offshore and any other activities can only be done from November to March. If we delay another season will be lost and we will further plunge into the energy crisis.
Now the question is why Citizens Group should resist offshore exploration efforts when we are reeling with energy shortage?
Bangladesh is suffering from the worst energy shortage in its history. The main reason for the crisis is its failure to explore and exploit its natural resources (Petroleum & Coal) to fuel its energy plants. 60% of Bangladesh population is still living without access to any form of power supply. The supply to remaining 40 % is also not reliable as national power generation capacity is only 4000MW against the demand of 5500MW. This results in massive load shedding (power blackouts) causing immense miseries to the people. The Bangladesh government does not have financial or technical capacity to explore and exploit natural resources on its own. All major gas fields (Titas, Habiganj, Rashidpoor, Kaillashtilla, Bakhrabad, Shangu, Jalalabad, Bibiyana, Moulavibazar, Feni, Sylhet, and Chatak) of the country were discovered by foreign companies. Even the lone operating coal mine was developed by a Chinese company and the other major mine Phulbari was discovered by BHP, Australia.
It is true our BAPEX could be developed into a competent company but that did not happen. BAPEX is not even competent now to carry out its own assigned responsibilities. During the past years it failed to acquire a modern drilling rig or seismic equipment. It failed to complete exploration at Srikail, further development of Salda and development of Semutang. It has absolutely no capacity to explore off shore. Bangladesh has no option but to engage IOCs for exploration in the off shore.
Our neighbor India has much more efficient and competent national exploration companies and private sector drilling companies. Still it engaged IOCs in off shore and on shore areas through several rounds of PSC block bidding. Myanmar has done the same. Thailand, Malaysia, Indonesia, Vietnam, Philippines, Brunei are no exception. Bangladesh in fact was the first country in the region to start offshore exploration in 1974. But the subsequent governments could not follow up the initiative. Bangladesh progressively lagged behind.
Taking advantage of Bangladesh inaction our next door neighbors India and Myanmar explored and discovered several large petroleum structures in the Bay Of Bengal (some adjacent to our territorial water and some may have encroached our maritime boundary). Mahamudur Rahman, the Energy Advisor to PM Khaleda Zia in 2005 first took the initiative to update PSC documents to go for fresh bidding; significant works were completed during his time. But bureaucracy was the major impediment to complete his task before the BNP-Jamat alliance government completed its tenure. The PSC documents in question were prepared by line professionals and were scrutinized and vetted by prominent Petroleum lawyers. In my opinion the documents are full-proof and many renowned energy experts acknowledged them as one of the best PSCs anywhere in the world where country’s interest has been adequately protected.
Offshore exploration is a huge gamble. Bangladesh does not have enough data and information of its deep water. The available information on shallow water is also not significant. In this scenario IOCs will have to take huge risk to invest their borrowed capital. They will undertake extensive surveys and if they find some prospective structure then upon Petrobangla approval they will go for exploration. There are significant possibilities of striking dry holes and insignificant structures which may not be commercially viable. In such cases IOCs will get no return on investment. At every stage Petrobangla will be involved in monitoring, over seeing IOC activities.
Now the question of liquid natural gas (LNG) may be discussed. If any IOC discovers any gas structure which is large enough for LNG exploration it will prepare the necessary infrastructures. Nothing in the PSC restricts Bangladesh to buy all LNG for domestic use if Bangladesh pays the price. Are not many Bangladeshi industrial entrepreneurs planning to import LNG? Bangladesh needs to set up LNG terminal, Re-Gasification plant if it likes to import LNG. If IOCs set up LNG plant in Bangladesh onshore then that Plant will not need LNG platform, Regasification plant can be built in the same premises. The PSC has enough safeguard to control export. Petrobangla has first right of refusal. Then local market has first preference.
In any case all these are things to consider 7-8 years down the line. What is the guarantee that IOCs will strike major gas structures good enough to invest for a LNG plant? The energy scenario in Bangladesh and the world may change great deal by then. Bangladesh may develop few coal fields and set up several coal based plants to meet emerging power demand. Regional energy trading may start. The situation may come where expert of Bangladesh LNG may bring more economic benefit who knows.
The National Committee for Protection of Oil, Gas & Port (OGPC) does not have any practical knowledge of any offshore exploration or offshore pipeline construction. They do not have any adviser who has ever planned any energy project, mange implementation of any energy projects or operate any energy facility. OGPC is not a political party. It is a conglomerate of some left leaning political parties and some university teachers. Offshore PSC must be discussed in the parliament, not in the streets. The parliamentary committee has invited the OGPC for discussion. They should participate and register their points but should not stop the progress.
EMRD and Petrobangla have been given constitutional rights to sign PSC with IOCs. All documents have been legally approved. Even tendering and award process were very transparent. The agitation against offshore exploration to delay this initiative will serve the purpose of our neighbors who want Bangladesh to stay away from Bay of Bengal.
Kh. A. Saleque (Saleque Sufi) is the ex-Director ( Operation) GTCL and writes from Australia.
[Read all posts by Kh. A. Saleque]