“A Study on the Present Status of Natural Gas in Bangladesh”
List of Acronyms and Abbreviations
BAPEX Bangladesh Petroleum Exploration Company Limited
BODC Bangladesh Superior Development Company
CNG Compressed Natural Gas
LNG Liquefied Natural Gas
LPG Liquefied Petroleum Gas
MMBBL Million Barrels
TCF Trillion Cubic Feet
Natural Gas is a vital component of the world’s supply of energy. It is one of the cleanest, safest, and most useful of all energy sources. Despite its importance, however, there are many misconceptions about natural gas. For instance, the word ‘gas’ itself has a variety of different uses, and meanings. When we fuel our car, we put ‘gas’ in it. However, the gasoline that goes into your vehicle, while a fossil fuel itself, is very different from natural gas. The ‘gas’ in the common barbecue is actually propane, which, while closely associated and commonly found in natural gas, is not really natural gas itself. While commonly grouped in with other fossil fuels and sources of energy, there are many characteristics of natural gas that make it unique.
Statement of the problem
This sector has large potentials for increase contribution to the national economic development of Bangladesh. There are number of constraints which restrict the development and proper utilization of the sector. These are enumerated below:
a. Lack of Capital. Lack of adequate capital is the main limiting factor for the development of the sector. Seismic survey, exploration, gas field development, transmission and distribution are highly technical and capital-intensive activities. Bangladesh government can not devote adequate amount of money in this field. As a result, it has not been possible to ensure balanced development of the sector. BAPEX has so far explored three gas fields in the last ten years. But at present due to lack of capital this company is unable to take any project, thus country becoming fully dependent on foreign companies for exploration.
b. Conditions of Donors. The country is highly dependent on foreign aid. The problem has increased in manifolds due to the conditions of donors for employment of consultant and other technical advice. The imposition of too many conditions by the donors at different stages credit negotiations, signing of agreement and effectiveness of credit. Bangladesh being the recipient of aid, most of the conditions of donors had to be abided by therefore it is difficult to implement true reflection of government policies/desire.
c. Dependency on Expatriate Consultants and Experts. Number of technical and professional personnel’s in different fields of gas sector are inadequate to undertake the project by the country. The problem of the sector is accentuated by the dependence on expatriate consultants. There are inadequacy of technology, which ultimately made dependence on foreign companies and expertise. Bangladesh Petroleum Institute has limited facilities to train the personnel of the sector. Therefore this sector is becoming fully dependent on foreign consultants and experts.
d. Lack of Pricing Policy. Bangladesh government periodically increases the tariffs of different types of energy with the advice from the respective utilities. But due to political sensitiveness it is always not possible for government to approve the suggestions for increasing tariffs of gas. Present average price of one thousand cubic feet gas is Taka 54. Petrobangla is authorised to increase the price of gas by 5 percent every year but it remains same since March 1994. Developed country like United States of America has Federal Energy Regulatory Commission for regulating pricing of energy source. Bangladesh have no such organization to increase the tariffs of energy source; therefore country is deprived of a huge amount of revenue.
e. System Loss: The allowable system loss is 2-5 percent in the gas sector. Presently government is loosing about 25-30 percent of total gas in the name of so-called system loss. In fact this gas is misused by a group of employee, which is a great impediment for the development of gas sector.
The aim of this paper is to analyse the present status and volumetric quantities of natural gas in Bangladesh and make recommendations for proper utilization and development of the sector.
Scope of the term paper
This paper is going to address the government policy on exploration and utilization, present system of exploration, production and utilization, private sector participation and finally the prospects and strategic implications of gas and oil in Bangladesh. Presently the reserve of oil is not very encouraging in comparison to gas thus paper will mainly cover in details on natural gas.
Methods of data collection
Natural gas is a vitally importance source of energy for all sector of the economy. Maintaining an adequate supply of this important resource is thus extremely important to preserving and improving our quality life. But in real sense there is no direct relation between stake-holder and supplier of natural gas. Moreover it needs much time to collect primary data. So I had to resort to secondary data due to shortage of time I picked up data from different natural gas related company, internet, and books maintained with NAEM and public library.
Natural gas is a combustible mixture of hydrocarbon gases. While natural gas is formed primarily of methane, it can also include ethane, propane, butane and pentane. The composition of natural gas can vary widely, but below is a chart outlining the typical makeup of natural gas before it is refined.
|Typical Composition of Natural Gas|
|Rare gases||A, He, Ne, Xe||trace|
In its purest form, such as the natural gas that is delivered to your home, it is almost pure methane. Methane is a molecule made up of one carbon atom and four hydrogen atoms, and is referred to as CH4.
Limitations of the study
Very important sector I have been given for writing research work. I was very hopeful of making this work an effective one. I went through different libraries, institutions for collecting data. But there was no research work on this topic. I had to face some limitations that are given below:
- Books are this issue is very few in number.
- No previous work on the topic.
- Very limited time while it needs much time for preparing term paper.
- I was not allowed for go out for data collection during office hours.
- No monetary allocation for this purpose.
A Brief Introduction to Natural Gas:
Bangladesh has had two and a half decades of development efforts at lifting the economy out of her abject poverty. Agriculture has traditionally remained the mainstay of its economy and contributes the lion share to the country’s gross domestic product (GDP). With the growing population and land being a finite resource, it is imperative for the country to diversify away from its dependence on agriculture. To cope up with poverty and aspiring for speedy economic development, existing gas and oil, the main resource at present can quickly energize the economy of the nation.
Bangladesh Petroleum Act 1974 authorised government to enter into petroleum agreement with any person including foreign companies. Following the act a few number of international oil companies signed Memorandum of Understanding with the government in 1974-76. Government has offered more opportunities to private investors in the Petroleum Policy 93. Accordingly, a number of international companies attended first round of bidding in 1993 for eight blocks and now working on it. Bangladesh government called for second round of bidding in 1997 for rest 15 blocks. It is now nearly for final stage of approval/decision.
Bangladesh government formulated number of development plans for energy sector till 1996, which were implemented in succession. Last year government formulated fifth five-year plan (1997-2002) for development and proper utilization of gas and oil. Current gas reserve has been estimated about 22.90 trillion cubic feet of which 13.60 trillion cubic feet is considered as recoverable. New discoveries of gas fields are likely to increase the present estimate of reserve. The oil deposit is not enough in the country rather production of oil from only oil field of Haripur was suspended since 1994. But present condition of production of oil is likely to be increased depending on availability of condense oil in the new gas fields.
Natural Gas: Exploration
Bangladesh is situated at the confluence of three major rivers—the Padma, the Jamuna, and the Meghna—that form one of the largest deltas in the world. The ongoing pressure of the Indian subcontinent tectonic plate against the Asian landmass over the millennia has created a north-south sedimentary fold-belt running the length of the eastern half of the country. This is a prime location for hydrocarbon resources.
Hydrocarbon exploration activity in this area has been ongoing since the beginning of the twentieth century. Natural gas was first discovered in Bangladesh in 1955 at Haripur. Since then, exploration of oil and gas resources has led to the drilling of sixty-four wells and discovery of twenty-two gas fields and one oil field. Petrobangla, a fully state owned corporation and its subsidiary companies, such as BAPEX, BGFCL and Titas Gas, are responsible for the exploration, production, transmission, distribution, and development of oil, gas, and other mineral resources of the country. Bangladesh Petroleum Corporation (BPC), another state-owned corporation, is responsible for the import of crude oil and other petroleum products, refining, and marketing of liquid petroleum products, including Liquefied Petroleum Gas (LPG). Recently, some private companies have been allowed to import bottles and market LPG for domestic consumption in areas where pipeline gas is not available.
BAPEX, a subsidiary organization of Petrobangla, is involved with gas exploration, although its financial resources are limited. Private sector interest and foreign direct investment in the gas sector became dramatically visible in the 1990s. At that time, the government of Bangladesh divided the country into twenty-three exploration blocks and offered them for private investment by international oil companies (IOCs) under Product Sharing Contracts (PSCs). The following five companies are producing gas:
1. Bangladesh Gas Fields Company Ltd. (BGFCL)
2. Sylhet Gas Fields Ltd. (SGFL)
3. Bangladesh Petroleum Exploration and Production Company Ltd.
4. Shell Bangladesh Exploration and Development B.V. (SHELL)
5. UNOCAL Bangladesh Ltd. (UNOCAL)
Of these companies, the first three are state owned companies and the last two are IOCs involved in exploration and production of natural gas through PSCs with Petrobangla.
In the thirty-plus years since 1972, Bangladesh’s national gas industry has received government funding of approximately Tk. 60 billion. The bulk of funding has been allocated to transmission and distribution, with only 16 percent, or around Tk. 9 billion (equivalent to about US$ 300 million), expended upon exploration and development. The bulk of funding has been allocated to transmission and distribution, while the development and exploration activity are greatly underfunded for companies such as Petrobangla/BAPEX despite the discovery by Petrobangla of ten gas fields and one oil field. But the reserves of these fields are much smaller than those discovered by the IOCs. No discoveries took place after 1996 by Petrobangla. It is worth mentioning that the cessation of discoveries by Petrobangla coincides with cessation of exploration funding by the government to Petrobangla, which to some extent shows that available local expertise is not being used.
A History of Natural Gas Consumption in Bangladesh:
The production of natural gas began in 1960, after its initial discovery in 1957. At that time, the annual consumption of natural gas in the country was only 1 Bcf, but this figure has risen so that natural gas is now the major fuel for power generation in the country. From only 67 Bcf in the first decade, the consumption of natural gas rose to 279 Bcf in the following decade, and thereafter to 1,067 Bcf during 1981-90. During the last decade (1991-2000), Bangladesh’s natural gas consumption reached 2,490 Bcf.
Table 3.1: Gas Production and Consumption in Bangladesh
|Year||Gas Production/Consumption (in billion cubic feet)|
Until 1970, Bangladesh relied predominantly on oil for its energy needs. Beginning in the mid-1970s the country increasingly adapted to the use of gas. The increasingly high demand for natural gas during the 1980s reflected in Table 3.1 is clearly from fuel switching.
There are currently no exports or imports of natural gas, so the growth of domestic consumption tracks the growth of domestic production, demonstrating an overall growth rate of 7 percent per year over the last several decades. The initial level of consumption was so low that even with the rapid growth of demand; the total cumulative consumption of natural gas has only been 3.9 Tcf (trillion cubic feet).
In Bangladesh, natural gas has played a vital role in the development of both the power and fertilizer sectors, which consume almost 80 percent of total gas production. In the last decade (1991-2000), gas consumption for power was 1,103 Bcf, while the consumption for fertilizer production was 756 Bcf, out of a total consumption of 2,490 Bcf. Thus, the country’s annual fertilizer production of more than two million tons, and annual power generation of 3,500 MW (megawatts) would have been very difficult and expensive without natural gas. Other consumers for natural gas have been industry, commercial concerns, and households (mainly for cooking).
Current Consumption of Natural Gas:
During 2001-02, the average gas consumption of Bangladesh was 1,054 million cubic feet per day (MMcfd). Table 4.1 shows the sectoral distribution of daily average gas consumption of the country for the year 2001-02.
Table 4.1: Sectoral Breakdown of Average Gas Consumption of 2001-02
|Sectors||Gas consumption in MMcfd(million cubic feet per day)||%|
|Domestic and Commercial||130||12|
|Others Plus Loss||70||7|
|Total Daily Average||1054||100|
Source: Committee Report on Utilization of Natural Gas in Bangladesh.
All estimated reserve figures are associated with certain degrees of uncertainties, since exact reserves of the country cannot be precisely known until the gas fields are actually depleted.
A number of studies have been conducted on the issue of gas field reserves in Bangladesh beginning in the mid-1970s. These studies have followed different methodologies, timelines, and criteria. Moreover, some of the studies conducted by various agencies/organizations were for a limited number of fields, while others were for countrywide assessment. A number of foreign countries provided technical assistance in gas sector development and in assessing the gas reserves of the country. In 1979, Petro-consultant undertook the first significant effort for a gas inventory in the country, after which many other studies were conducted. Apart from these studies, the only published data on a reserves study was from the Petroleum and Mineral Resources Engineering Department of Bangladesh University of Engineering and Technology (2001).
The Committee for Gas Demand Projections and Determination of Recoverable Reserve and Gas Resource Potential in Bangladesh, appointed by the Ministry of Energy and Mineral Resources, undertook the difficult task of reviewing all the existing studies in order to quantify more accurately the country’s gas reserves. The committee, which submitted its report to the government in June 2002, concluded that as of April 2002 the proved plus probable reserves fell between 12.04 Tcf and 15.55 Tcf for the twenty-two gas fields. The possible gas initially in place (GIIP) was estimated to be in the range of 4.14 Tcf to 11.84 Tcf. According to this study, the undiscovered gas resources of the country range from 8.43 Tcf (95% probability) to 65.70 Tcf (5% probability).
Current Contact Status:
Fig. 1. Current licence holding in Bangladesh.
Exploration activity has predominantly been conducted in the eastern onshore, with the west and the offshore remaining relatively under-explored. Only 110 exploration wells have been drilled to date 65 of which are New Field Wildcats, with only 13 being drilled in the offshore. A total of 25 discoveries has been made, giving overall a highly impressive 38% success rate.
However, exploration has been stagnant in recent years, since IOCs effectively placed a moratorium in the late 1990s, pending the development of a local gas market and a decision by the Bangladeshi Government on the politically-sensitive issue of gas export to India. The government has long been reluctant to come up with a policy on gas export, choosing not to commit itself to gas supply contracts whilst reserve estimates remain uncertain. A decision was subsequently made to retain the current gas reserve for domestic use and fulfil the rising domestic gas demand.
Fig 2. Gas production 2000 to 2005.
Current / Future Production:
Bangladesh is currently producing 1,400 MMcf/d and 3,500 bc/d (Fig 2). Oil production from the Sylhet Field ceased in 1994. The three state-owned companies Bangladesh Petroleum Exploration & Production Company Ltd (Bapex), Bangladesh Gas Fields Company Ltd (BGFCL) and Sylhet Gas Fields Ltd (SGFL) are responsible for around 950 MMcf/d from eleven fields, with three IOCs Cairn Energy, Chevron and Niko Resources responsible for 450 MMcf/d from four fields. Of the two offshore discoveries made to date, only one has been developed the Sangu Field, discovered by Cairn Energy on Block 16 in February 1996, and currently producing 150 MMcf/d.
Production levels are expected to increase significantly in the near future, when Chevron (already the country leading foreign producer with its Jalalabad and Moulavi Bazar fields) brings the Bibiyana Field onstream. Bibiyana, discovered by Occidental on Block 12 in July 1998 prior to its asset swap with Unocal the following year, is the country largest single site of natural gas to date, with recoverable reserves of 2.4 Tcf. It is expected to contribute an additional 250 MMcf/d to the national grid from late 2006. National production should increase to 500 MMcf/d by the end of 2008 the three state-owned companies also planning to undertake gas augmentation projects (aimed at delivering an additional 300 MMcf/d) on the Bakhrabad, Habiganj, Kailas Tila, Narshingdi, Shabazpur and Titas fields over the next five years.
Tullow is undertaking a long-term production test on its Bangora 1 discovery on Block 9; first gas commenced in May 2006 and stabilised at a gross flow rate of 50 MMcf/d. The well represents Tullowâ€™s first production in Bangladesh and production rates are expected to increase with the completion / tie-in of Bangora 2 and the drilling of additional appraisal wells.
Fig 3. Gas demand and supply scenarios to 2030.
Although a tripartite agreement was signed by the respective Governments of Bangladesh, Myanmar and India in January 2005 paving the way for the construction of a US$1 billion, 290km natural gas pipeline from the Shwe Field in Myanmar to the Indian states of West Bengal / Bihar across Bangladesh, the project appears to have been shelved for the foreseeable future. It is understood that Bangladesh and India reserve the right to access the pipeline under the agreement, including injecting and siphoning off their own natural gas, thereby providing an opportunity not only for isolated gas reserves in the north eastern states of India (Tripura) to be injected into the pipeline, but also for Bangladeshi gas to be distributed nationally â€“ particularly to the energy-starved south-west. Bangladesh also stands to gain in the region of US$125 million in annual transit fees.
Little progress has been made to date, however. As a pre-condition for the proposed pipeline, Bangladesh is demanding the signature of a separate and highly contentious bilateral agreement with India, granting the right to access to hydro-electricity from Nepal and Bhutan via the Indian power grid, and also the opening-up of a trade corridor with the two Himalayan countries.
As things stand at present, India is pursuing an alternative means of bringing gas in from Myanmar a pipeline through the north eastern corridor (by-passing Bangladesh) being the preferred option; transportation of compressed natural gas (CNG) by tanker is another. The high cost and security concerns with the former, however, are a huge concern, and Myanmar may well choose to abandon these ideas and to finalise a deal for the supply of LNG to South Korea, Thailand or Japan or alternatively pursue the option of supplying gas by pipeline solely to China.
Government Policy on Exploration and Utilization:
Petroleum Exploration and Utilization Policy: The exploration activities have started in the territory since the early days of the 20th century. During 50’s and 60’s foreign oil companies started to involve themselves more in this sector on the onshore area. The Bangladesh Petroleum Act was promulgated in 1974, which is the basis for exploration of gas and oil in Bangladesh. Under this act the government exercises exclusive right to any of the petroleum operations within the territory, the continental shelf and the economic zones of Bangladesh. Later on Bangladesh Petroleum Policy and National Energy Policy was formulated in 1993 and 1995 respectively. These policies provided for the facilities for international investors to explore for hydrocarbons under attractive terms and with almost no restriction. These act and policies are considered as a reference document consisting of major strategies and guiding principles for future energy exploration, development and utilization.
Pricing Policy: At present Bangladesh government has no pricing policy for gas. Traditionally the government, on the basis of past experiences fixes consumer’s price of gas on an ad hoc basis. This price is mostly influenced by political decision. The government fixed present consumers price of natural gas since March 1994.
Present System of Exploration, Production and Utilization:
Exploration of Gas: Before independence of Bangladesh a total of twenty- eight wells were drilled but only eight fields were discovered in the territory. During the period of 1973-96 drilling of twenty-seven exploratory wells including eight offshore wells was completed. National organization, Bangladesh Petroleum Exploration Company Limited (BAPEX) has discovered nine gas fields and foreign oil companies discovered three gas fields of which one is in the offshore area.<href=”#_edn1″ name=”_ednref1″ title=””>[i] So far the discovery is concerned; the exploration of gas in Bangladesh is one of the highest in the world, i.e., 20 gas fields.
Production of Gas: First gas production in Bangladesh commenced from Chatak gas field in 1960. Presently gas is being produced from 8 fields, namely Titas, Bakhrabad, Habigonj, Rashidpur, Kailastila, Sylhet, Narsinghdi and Feni. Chatak and Kamta gas fields have been suspended owing to various technical reasons. Gas production increased from 83 billion cubic feet in 1983-85 to about 265 billion cubic feet in 1996-97. It has increased significantly due to new discovery of fields and involvement of international oil companies under production sharing contract. Presently two production companies under Petrobangla are responsible for production of gas through out the country.
Transmission and Distribution: During the last few years, the operational network of the transmission and distribution companies have been considerably expanded through the construction of gas pipelines and associated district regulatory stations and meter regulatory stations. There are four transmission and distribution companies distributing the natural gas in different parts of the country.
Petroleum Organization and Infrastructure: After the independence Petrobangla was formed to promote and regulate exploration, production and distribution of petroleum. Organization of Petrobangla is shown at annex A.<href=”#_edn2″ name=”_ednref2″ title=””>[ii] Later in 1976 Bangladesh Petroleum Corporation (BPC) was set up for importing, refining and marketing of petroleum, oil and lubricants. Presently two productions companies meet a total of 750 million cubic feet of demand of the country and two transmissions and distribution companies distribute to the user end.
Petroleum Market Scenario: Gas is being utilized for generation of power; fertilizer factories as feed stock, other industrial, commercial and domestic uses. Among them power and fertilizer sector use 80 percent of the whole supply. Category-wise gas consumption during 1996-97 is shown at annex B.<href=”#_edn3″ name=”_ednref3″ title=””>[iii] Present demand of gas in Bangladesh is about 900 million cubic feet per day. The demand is increasing at a rate of 13.4 percent every year and expected to reach 3500 million cubic feet per day by year 2015.<href=”#_edn4″ name=”_ednref4″ title=””>[iv]
Prospects of Natural Gas:
Review of Past Performance (1973-1996): Bangladesh government made a number of development plans since 1973 for the exploration, proper utilization and development of oil and gas. The need for development of natural gas as a source of energy was recognised in the First Five-Year Plan (1973-1978). Later on more three Five-Year Plans and one Two-Year Plan were formulated for energy sector. Under these plans priority was given on the gas transmission and distribution related works with a view to accelerate the use of natural gas as fuel and industrial raw material. During the period of 1993 to 1996 major development took place, where emphasis was given on the development of the private sector in the gas and oil exploration activities mainly through production sharing contract. Activities undertaken during this period (1993-96) related to seismic survey, exploration, and expansion of gas transmission and distribution network throughout the country.
Present Development Plan – Fifth Five-Year Plan (1997-2002): During this period geological and geophysical surveys is intensified to discover and delineate new hydrocarbon bearing structures and to determine the extent and potential of existing gas fields. Transmission and distribution of gas is also intensified in the western part and southern part of the country.
Potentials of Natural Gas: Natural gas is currently the main indigenous energy source of Bangladesh. The gas reserve is going to increase on the availability of new gas field. Potential of oil is comparatively less than the gas.
Natural Gas: Currently about 90 percent of power generation are based on natural gas and the whole of the urea fertilizer requirements of the agricultural sector is met by using gas as feed stock. Current gas reserve has been estimated at about 22.90 trillion cubic feet of which 13.60 trillion cubic feet is considered as recoverable. So far 2.72 trillion cubic feet has already been consumed. Presently eight gas fields are producing about 750 million cubic feet per day from 35 wells. Productions in two gas fields have been suspended and waiting for further appraisal. Other eight gas fields are expected to come into production from the year 1998-99. Gas fields of Bangladesh are shown at Annex D. New discovery in Shangu (offshore), Shahbazpur, Saldanadi and other fields will certainly increase the present gas reserve to several times. A brief description of some of the newly discovered gas fields is given below:
(1) Saldanadi Gas Field. The structure was selected for exploratory/ appraisal drilling after evaluation of seismic data collected during 1991-92 by BAPEX. Accordingly, drilling was undertaken in 1996 and a prospective gas reserve was discovered at a depth of 2,511 meters. After reviewing the data a preliminary estimate of gas reserve was given at 0.202 trillion cubic feet.
(2) Shahbazpur Gas Field. The location was selected for exploratory drilling after evaluation of seismic data collected during 1986-87. Drilling was undertaken in 1993 by BAPEX, initially encountering of over pressure, the well had to be abandoned after flowing gas through cell tubing. Later on it was decided to drill a side track hole, now estimated in place reserve is at 0.5138 trillion cubic feet.
(3) Shangu Gas Field. In 1994, Bangladesh government signed an agreement under Production Sharing Contract with international Oil Company, Cairn Energy. Accordingly company conducted a comprehensive seismic survey in the Bay of Bengal in 1995 and discovered reserve located 40 kilometres away from Shangu estuary. Present estimate of the gas reserve is expected to be 0.848 trillion cubic feet. In Shangu gas field delivery of gas has started since July 1998.
Prospects of the Sector:
Bangladesh government is earning a huge amount of revenue from gas sector, which is increasing every year. Year-wise revenue statement is shown at annex E. Currently the two dominant consuming sectors of gas are generation of electricity and urea fertilizer production. Presently about 80 percent of natural gas is utilized in power and fertilizer sectors. Other users are industries, commercial, domestic, tea estates and at times by brick fields. National Energy Policy 1995 has recommended distributing the natural gas in a manner so that all the user groups may benefit from this sector. The likely fields of prospects are mentioned below:
a. Power Generation. This sector consumes the lion share (50.19 percent) of natural gas. Currently there are twelve power stations fuelled by national gas. As per National Energy Policy the consumption of natural gas should be limited to 45 to 50 percent for power generation. But due to increasing demand of electricity in the country this sector may have to be devoted more percentage of gas.
b. Production of Urea Fertilizer. This sector consumes 26.64 percent of total gas that is second largest consumer. Six fertilizer plants presently using gas as feed stock. Government decided to allocate 25 to 27 percent of gas for fertilizer production. Bangladesh being the agriculture dependent country can utilize gas for this sector to meet domestic demand. In addition export of fertilizer may be considered after fulfilling the demand of country.
c. Industrial Sector. A total of 2362 industrial units of the country have been provided with natural gas connection. These industrial units consume about 12.08 percent of total consumption. After correct statistics of gas reserve government can plan for long term gas based industry. As per National Energy Policy government has decided to allocate 13 to 18 percent of natural gas for industrial sector.
d. Commercial and Domestic Sector. The use of natural gas in these sectors has started in 1968. Since then till September 1996, 8347 commercial holdings and 698180 domestic holdings have been provided piped gas connection. This figure will increase once connection is extended in western and southern part of the country. Government planned to allocate 8 to 10 percent for the commercial and domestic sector.
e. Compressed Natural Gas (CNG). To develop and popularise CNG Rupantarita Prakritik Gas Company Limited was formed in 1991. Now it operates few CNG filling stations. Therefore conversion of fuel supply system and establishment of new CNG fuel station can encourage its use in larger scale and will reduce import of petroleum products. In addition, use of CNG will reduce pollution from environment.
f. Cylinder Liquefied Petroleum Gas (LPG). Rural people are dependent on firewood and kerosene for their cooking. Bangladesh government established a LPG plant at Kailashtila, which estimated to produce 5000 tons LPG every year. This plant started production and supply to user on 21 October 1998. This cylinder LPG can be made in large-scale use in the rural area. It will therefore reduce deforestation, reduce import of kerosene and also reduce electricity consumption.
Chapter – 13
Gas Fields of Bangladesh:
|Cumulative Production (TCF)||Net
|Recover-able MMBBL||Cumulative Production (TCF)||Net Rec. MMBBL|
|PR O D U C I N G|
|P R O D U C T I O N S U S P E N D E D|
|N O N P R O D U C I N G|
. Bangladesh has great opportunities for the development of the country from gas and oil sectors. Exploration activities have started in the territory since early days of this century. The progress in this field was not encouraging till independence. Bangladesh Petroleum Act 1974 gave opportunities for exploration, production, transmission and development of gas and oil. Later on Petroleum Policy 1993 and Natural Energy Policy 1995 facilitates further for the development of the sector. Presently no gas pricing policy in vogue in the country, therefore the pricing of gas is mainly decided politically by government.
First gas production commenced in 1960 from Chatak gas field. During the period of 1973-97 a total of 27 exploratory wells were completed out of which 8 gas fields were discovered including a offshore gas field. The exploration of oil is not significant in comparison to gas; oil was discovered from only Haripur field, which is suspended since 1994. Gas associated condense oil likely to improve the state of oil in future, once international oil companies will explore the wet fields in full swing. Petrobangla is the legal authority under Ministry of Energy and Mineral Resources for gas and oil sector. Four transmission and distributing company under Petrobangla distributing natural gas at different parts of the country. BAPEX under Petrobangla is the only exploration government company in the country. The demand of gas is increasing at a rate of 13.4 percent every year. Presently main consumer of gas is the power generation and urea fertilizer industry, which consumes almost 80 percent of total gas.
Bangladesh Petroleum Act 1974 authorized the government to enter into petroleum agreement with any persons for the purpose of petroleum operations. Following the act, six agreements were signed with foreign companies but only one gas field was discovered. After formulation of the Petroleum Policy 1993, six Memorandum of Understanding was signed with the international oil companies for eight blocks. Later on second round of bidding was called in 1997. Government is about to finalize the agreements with calling companies.
Bangladesh government made a number of development plans since 1973 for exploration and development of natural gas and oil. Total five plans were formulated till 1995. Presently Fifth Five-Year Plan (1997-2002) is enforce. After the first round of bidding a good numbers of new gases fields are discovered. These gas fields indicate huge quantities of reserve available in the country, which is estimated about 22.90 trillion cubic feet. Oil is available in condense form in some of the new gas fields which likely to improve present reserve of oil in the country.
The present estimated reserve of gas is likely to increase intensifying exploration under production sharing contract by the foreign companies. After accurate estimation of gas reserve government need to formulate long-term plan for utilization and development of the asset. For proper utilization of natural gas and to foster the national economy following suggestions may be made:
a. A long term plan should be formulated after accurate estimation of gas reserve that will integrated the country’s future development plan and user sectors objectives and policies.
b. Gas pricing policy must be formulated immediately, taking into account the economic cost of gas supply plus government revenue. An independent regulatory authority under Ministry of Energy and Mineral Resources or Petrobangla should be formed to handle the matter without political influence.
c. Share of Bangladesh Petroleum Exploration Company Limited (BAPEX) should be ensured with international oil companies during production sharing contract for exploration and production, particularly in the important blocks.
d. Adequate number of experts and skilled manpower should be employed in the Ministry of Energy and Mineral Resources and Petrobangla in order to monitor and supervise foreign companies activities and pilferage/system loss in the gas sector.
e. Bangladesh Petroleum Institute should be provided with adequate facilities for training of gas and oil sector personnel. Conditions should be imposed on international oil companies to employ certain percentage of personnel in phages.
Natural gas is the invaluable asset of the country. Presently this is mainly utilized in the power generation and urea fertilizer industries. National Energy Policy 1995 recommended proportionate distribution of gas for all utilities. Gas can be utilized to establish new fertilizer and other gas based industries. Compressed natural gas can be utilized in vehicle thus import of petroleum can be reduced to great extent. In addition cylinder liquefied petroleum gas can be used in mass scale for cooking purpose in rural area, where gas is not available. Natural gas can play an important strategic role by making the gas trade internationally, provided huge availability of gas reserve and after fulfillment of country’s long term requirements. It can also develop human resources and solve unemployment problem to some extent. Natural gas can also reduce pollution from environment. In addition gas can strengthen the regional co-operation once it is exported in exchange of hydro electricity and coal with SAARC/SAGQ member countries.
Natural gas being the most valuable energy source of the country requires to be given special attention. Therefore a well thought long-term plan need to be formulated for development of the sector, which conforms the development policies of user end. Gas based industries can be planned after accurate estimation of long term reserve so that these industries do not become layoff once gas reserve finished within short span of time. Gas pricing policy required to be formulated considering the economic cost of gas supply and government revenue. An independent regulating authority under Ministry of Energy and Mineral Resources or Petrobangla likely to solve the problem of gases pricing.
1. Annual report 1996-97, Titas Gas Transmission and Distribution Company Limited.
2. Fifth Five Year Plan, Chapter XVI, Ministry of Planning,
Government of the People’s Republic of Bangladesh.
3. Petroleum exploration opportunities in Bangladesh, Government of the
4. People’s Republic of Bangladesh and Petrobangla.
5. Reports of the Task Forces on Bangladesh Development Strategies
for the 1990’s, volume III, Table 6.14
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