Gas import takes precedence over exploration

Md Arifuzzaman . Dhaka | Update:

Gas import takes precedence over exploration. File PhotoEnergy experts say, over the last 10 years, gas production has increased very little in comparison to demand. The ensuing crisis has led the government focus on importing LNG. This has pushed costs up in the gas sector which will eventually be borne by the consumers.

A decade ago, around 1.75b cft of gas would be produced daily from the country’s gas fields. This has now increased to 2.70b cft. However, the present daily demand for gas stands at 3.50b cft.

Experts say even if production goes up by 1b cft, demands will go up much higher to meet the requirements of the power plants and industries. Demands are soaring higher than supply.

Imported LNG costs Tk 32.31 per cft, which includes purchase price, terminal costs and VAT. And gas produced from the local fields cost Tk 7.35 per cft.

According to Petrobangla, the government energy and mineral resources organisation, over Tk 80 billion was spent on LNG in the 13 months from April last year till this May, to meet the gas crisis. Yet only Tk 18 billion was earned through sale of this LNG.

The government’s losses stood at Tk 62 billion.

State minister for power, energy and mineral resources, Nasrul Hamid has said that LNG is being sold at one fourth the price of which it was purchased. This is creating a wide deficit. The deficit will increase.

He said that efforts are being made to explore the country’s gas fields in order to avail gas at lower cost.

BAPEX and other state-run organisations extract around 50 per cent of the gas produced in the country. No subsidy is required on this gas. So unless local companies explore and extract gas from the country’s gas fields, it will not be possible to keep the spiralling costs of LNG in control.

Energy experts say that instead of using BAPEX, the government is using Russian company Gazprom to drill the gas wells. Their costs are several times higher than local companies. So that means the possibility of getting gas at lower prices has shrunk further. And the government is considering pushing the price of gas up as a solution.

Petrobangla officials say that Gazprom is being given 5 gas wells to drill. These include Mobarakpur South-1, Srikail North-1, Shailakupa-1 and Sunetra-2. Gazprom will reveal the remaining well later.

Gazprom had previously drilled 11 gas wells in the country for which it was paid around Tk 20 billion, at the rate of around Tk 2 billion per well. Yet the local company BAPEX expenditure on each well is Tk 650 million to Tk 800 million maximum. Using foreign companies for the task increases costs twofold.

According to government plans, 110 onshore gas wells will be drilled. If these are given to foreign companies, the government will face mounting financial loss. Senior officials of the energy division of the power, energy and mineral resources ministry and Petrobangla have said that BAPEX can be used to explore the existing onshore gas fields in the country.

In April last year, daily supply of 500 million cft of LNG began from the US company Excelerate’s terminal in Maheshkhali, Cox’s Bazar. And from 29 April this year, LNG supply began from the private company Summit’s terminal.

LNG import is to increase in the coming days to meet the gas crisis, increasing government expenditure.

Energy advisor of the Consumers Association of Bangladesh (CAB) M Shamsul Alam has said that the state-owned company BAPEX has been kept idle though it has a much better record than the foreign companies in oil and gas exploration and extraction.

He says that the gas crisis is being deliberately created to create scope for LNG import.

* This report appeared in the print edition of Prothom Alo and has been rewritten in English by Ayesha Kabir

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