Gas prices leapt up 32 per cent this June and the government says it is obliged to import LNG due to the gas crisis. Hence the price hike.
Interestingly, our geologists said nothing about any shortage of natural gas over the last few decades. On the contrary, they spoke of deltas all over the world being rich in oil and gas. And proper exploration in such a large delta as Bangladesh has potential of revealing massive gas reserves. With proper planning there should certainly be no gas crisis in the country.
A UNICOL survey in 2004 indicated that there was a around 3 TCF of gas reserves in Bhola alone. This was revealed in a recent 3D survey of BAPEX too. With the addition of Barguna and Patuakhali, there is about 4 TCF of gas reserves in the southern region of the country. That alone is enough for 4 years.
If this huge reserve of gas could be tapped, then there would be no need to import liquefied natural gas or LNG. The few millions of taka that will be spent on importing LNG over the next 10 years could have been saved. Then if we didn’t mete out shares of the 8 TCF gas reserves (US Geological Survey) in the offshore blocks to foreign companies, that would have been an invaluable resource for the country.
After independence, Bangladesh Petroleum Exploration and Production Company (BAPEX) was supposed to have extracted gas from our own fields and meet the public’s gas demand. Malaysia’s Petronas and India’s ONGC, simply with state sponsorship and proper planning, were able to even extract offshore gas within just a few decades. Yet our sole state-owned oil and gas exploration and production company has been intentionally kept ineffective. Instead, foreign companies and their local agents are lapping up the profits.
In 2012, Russia’s state-owned Gazprom was given approval to drill 10 gas wells in Bangladesh, bypassing any tender procedures. Approval was given for another 5 fields in 2015, again without tender. Gazprom officials visited Bangladesh just before the last election and, in the meantime, there has been all sorts of negative campaigns against BAPEX.
BAPEX has been dubbed as inefficient and cumbersome. It has been accused of being unable to discover gas and of wasting money. How absurd!
Over the last 30 years BAPEX has carried out surveys on thousands and thousands of kilometers, has discovered one gas field after the other, but has only been given a handful of fields to explore. The multinationals are simply grabbing the all the fields. It is more than obvious that the government cares little about BAPEX. It is more interested in the foreign companies.
BAPEX drew up a master plan to drill 108 wells by 2021, but the energy ministry has handed over a significant number of these wells to Gazprom. BAPEX MD Atiquzzaman had opposed this decision, but he was transferred in no time.
Former directors of BAPEX have been complaining that the energy ministry has been forcing BAPEX’s drilling division to remain idle, while the foreign companies, for double the price, are drilling the wells discovered by BAPEX. Readers, if there was a minimum amount of integrity and love for the country, could this have been possible?
In 2014, after drilling two wells in Srikail, BAPEX asked for permission to extract gas from the Srikail 4 well, but were refused. Yet KrisEnergy of Singapore were given permission to extract gas from four wells in Bangura located on the same level. BAPEX could have done that for one tenth of the cost.
BAPEX has also been accused of not being able to get gas from the wells it recently drilled, incurring huge losses for the government. Firstly, BAPEX till date has an enviable drilling record. Internationally where the success ratio of drilling gas wells is taken as 5:1, for BAPEX it has been 3:1. It gets gas in one well for every three it drills.
Secondly, a foreign company undertaking the task instead of BAPEX means looting public money, BAPEX take Tk 800 million to drill a well, and Gazprom on average takes Tk 1.54 billion. If there was the slightest bit of integrity, it simply would not have been possible to sidestep a local organisation in favour of foreign ones, incurring mammoth losses.
Thirdly, what is the state of the wells which were given to Gazprom? Gazprom got Tk 17 billion for drilling 10 wells from 2012 to 2016. Within just a few months of drilling, extraction was halted at the Semitang, Shahbazpur, Titas-21 and Begumganj wells due to excessive flooding of water and sand. Why did the water and sand come up with the gas? Whose fault was that? Gazprom is at the root of all this. They used sub-standard cement to construct the safety layer and now the wells are shut down, work has come to a halt and the money has gone down the drain. And yet how many instances are there of BAPEX creating such a debacle. Not a single one.
In 1997 in Magurchhara and in 2005 in Tengratila, there were three massive explosions during drilling by foreign companies. Around 550 billion cft of gas was destroyed in those explosions. BAPEX even has Niko’s written admission of its fault for the Tengratila explosion. In its 30 years of drilling, BAPEX has not has even a single explosion.
After facing losses in billions of taka, the ministry had to finally given those wells back to BAPEX. BAPEX has carried out repairs of two wells at Titas-21and Shahbazpur and has resumed extraction. The people lost billions of taka for nothing.
The bottom line is, BAPEX runs surveys mile after mile to discover gas, but the extraction contract is given to foreign companies. The foreign companies drill at double the cost of BAPEX and sell the gas at three times the price that BAPEX sells it. The foreign companies ruin the gas wells with their shoddy work and BAPEX has to carry out damage control. Even then no investment is made in BAPEX. They are not given approval to drill the well. On the contrary, public burden is being exacerbated with the import of LNG, literally at 10 times the price.
In 2016 a deal was signed to set up an LNG terminal in Maheshkhali. It hardly took even two years for the terminal to be set up, all shiny and new! Within just another year, a 91km pipeline was laid from Maheshkhali to Chattogram and 30km one from Anwara to Sitakunda. Just imagine the speed of the work when it comes to facilitating purchase of LNG from abroad!
Why is there no such speed and efficiency when it comes to investing in an important state-owned organisation for gas extraction? In 1999 BAPEX had applied for the purchase of a rig. It took 11 long years for the approval to come through, the budget to be passed, the tender floated, and finally for the rig to arrive.
In whose interest are these local institutions being crippled? Why are foreign companies being paid double for a task that BAPEX can do for just Tk 800 million? Why should the public have to bear this burden? Who stands to gain? Who gets the commission? Who are these influential local agents?
* Maha Mirza is a researcher of development economy. This piece appeared in the print edition of Prothom Alo and has been rewritten in English by Ayesha Kabir