Dollar crisis may hit gas supply from domestic fields
The government stopped the import of liquefied natural gas (LNG) from the open market in July last year due to shortage of dollar reserves in the country. Imports have resumed since last February after seven months. Now the supply of gas from domestic gas fields is at risk. Gas bill dues have been increasing due to the dollar crunch. According to the contract, the US multinational company Chevron can stop the gas supply anytime.
Sources from Bangladesh Oil, Gas, Mineral Resources Corporation—Petrobangla and presently the country's largest gas producer, Chevron, say that according to the contract, the gas bill must be paid within 30 days of submitting bills. If the bill is late, a penalty of 4.5 per cent per day will be charged. Chevron can stop gas production if the bill is overdue for 6 months.
Chevron now supplies more than 60 per cent of the gas generated from domestic fields. The company is supplying this gas daily by producing it from three gas fields of the country. Chevron started gas production in the country as a contractor in 1995. Bills started to overdue from last September. As of last month (February), the arrears amounted at 170 million dollars (about 18 billion taka).
A responsible official of Petrobangla told Prothom Alo that Chevron receives about 50 million dollars in bills every month. The country has been grappling with dollar crisis for a year. Considering this, Chevron has requested to make regular payments of at least 25 million dollars a month to cover operating costs. But the required dollars are not available in the bank. So 10 to 15 million dollars is being paid currently per month. Dues are increasing every month. Added to this is a 1 per cent penalty and 3.5 per cent Libor (London interbank offered rate). Multinational companies will not waive this penalty. After payment of the bill, Chevron will inform Petrobangla about the penalty.
The daily demand of gas in the country is 4 billion cubic feet. The maximum supply is 2.9 billion cubic feet. Out of this, the maximum 2.17 billion cubic feet gas is produced from different gas fields of the country on Tuesday. Chevron has provided 1.32 billion cubic feet from three gas fields in Bibiana, Jalalabad and Moulvibazar. Chevron's role is now the most important to maintain the country's natural gas supply. Therefore, Petrobangla is in regular contact with Bangladesh Bank, Energy and Mineral Resources Division to procure dollars. It is also negotiating with Chevron not to stop gas supplies for outstanding bills.
Sources say Chevron has not said anything yet about stopping gas supply due to outstanding bills. But to increase the production, this company is regularly doing various upgradation works in the gas field. They are still working on well no. four of the Bibiana gas field. Such works may stop if the bills remain due. This may also affect the production of gas.
However, Chevron Bangladesh spokesperson Sheikh Zahidur Rahman told Prothom Alo that Chevron has been investing for more than 25 years to meet Bangladesh's energy needs. According to company policy they do not comment on any commercial matter.
The Ministry of Power, Energy and Mineral Resources is preparing to ensure the supply of electricity and energy in advance of the summer season. This created a demand of $6 billion in the five months from February to June. Meanwhile, the price of fuel oil and gas has come down in the world market. Despite the demand has declined, banks are still not able to supply the required dollar.
Chairman of Petrobangla Zanendra Nath Sarker told Prothom Alo that the matter of dollar crisis is not in the control of Petrobangla. Bangladesh Bank is trying to supply dollars. Chevron is an old partner. They will not stop gas production for dues. Soon their gas bill will be paid.
Sources in the Energy and Mineral Resources Division said that the Russia-Ukraine war broke out in February last year after two years of Covid pandemic. The prices of all commodities including fuel increased in the global market. Import costs increased while remittance flow declined resulting in dollar crisis in the country. Availability of dollars has become the main problem of the energy sector.
Bangladesh Petroleum Corporation (BPC) is in trouble for buying fuel due to shortage of dollars. Foreign fuel suppliers are threatening to cut fuel supply during peak season. The Power Development Board (PDB) is struggling to meet the power plant bills. Bangladesh Bank is supplying dollars to Petrobangla one time and to BPC the other. Neither of the agencies is able to pay regular dues this way.