The government considers reviewing onshore Production Sharing Contracts (PSCs) to allow international companies for country’s oil and gas exploration, officials said.
According to Energy Division, state-owned Bangladesh Petroleum Exploration and Production Company Limited (Bapex) has been working solely for exploration of oil and gas since 2009.
However, some foreign companies worked in gas blocks as contractors, but not as partners.
The government is contemplating on the issue, an official said.
State Minister for Power Energy and Mineral Resources Nasrul Hamid told reporters that in the current fiscal year they are going to float new bidding for oil and gas exploration in the Bay of Bengal’.
“However, we also have a plan to review the existing onshore Production Sharing Contracts (PSCs). It will be seen whether Bapex can work jointly with other world renowned companies,” he said.
An ex official of energy division said if the government allows foreign companies, it will set a bad example. BAPEX is able to do their job in onshore areas independently both in terms of quality and finance, he said. “There is no need to amend the PSCs to explore gas onshore for justifying the entry of foreign companies”, he continued.
“BAPEX discovered many gas fields in the country. They are also doing better. They should not remain idle without working,” the minister said. It is also alleged that some of foreign companies are getting more priority than Bapex. That is why, the Bapex is not showing their performance properly.
On December, 15 last year, State Minister for Power Energy and Mineral Resources Nasrul Hamid came down heavily on the top executives of Petrobangla and Bapex for their ‘failure’ to work out any effective plan in the last several years.
He told a seminar that this is unfortunate that Petrobangla and Bapex were asked to give plans for their future works but both failed to do so.
“Petrobangla and Bapex have to think in a wider perspective and engage themselves accordingly. But the biggest challenge is their human resources who’re not ready to think out of the box,” he said. Nasrul further said the government may ‘revisit’ the exploration company, also dubbed as Bapex, if it keeps failing to perform as expected to help the country overcome its growing energy crisis.
According to Bapex, currently 116 million cubic feet of gas is being produced by Bapex daily from its 7 gas fields, in addition to oil and gas exploration activities in the awarded areas by the government.
Bapex has drilled a total of 45 wells, including 30 development wells and 15 exploratory wells. Workover activities of 38 wells have successfully been completed alongside discovering of 6 gas fields after drilling of 15 exploratory wells.
Bapex has also completed 2-D and 3-D seismic survey for oil and gas exploration in different areas across the country. The company is continuing its all drilling activities with own six rigs.
An official of Petrobangla said, currently the International Oil Companies (IOCs) are producing 61 percent of total domestic gas in the country.
However, the state-owned companies are producing only 39 percent of gas. If the government allows IOCs to work in onshore areas then the scope to work will remain meagre for local companies.
Bangladesh is already facing a massive gas supply shortage of 1,200mmcfd, against the daily demand for 4,000 mmcfd.
The short supply of natural gas has pushed the government to ration energy supplies to industries, power plants and fertiliser factories for around a decade.
In order to mitigate the crisis, the government started importing expensive liquefied natural gas (LNG) from April 2017, as the exploration of onshore gas fields has been very poor for the last five-six years
The country is currently dependent on onshore fields for its entire natural gas output. The price of gas, in terms of per thousand cubic feet, has been increased from $6.50 to $7.25.
But the annual increase of the price has been brought down to 1.5 percent from 2 percent previously, said a senior official of Petrobangla.
Bangladesh needs to go for hydrocarbon exploration massively to meet its rising energy demand, as the current gas reserves of 11.47 trillion cubic feet will run out by the next decade at the current rate of consumption.
Bangladesh has not offered any onshore oil and gas blocks to international oil companies since 1997. Rather, seven new onshore blocks have been awarded to Bapex recently, according to Bapex’s annual report for 2018.
There are 22 onshore blocks in Bangladesh and most of them have been earmarked for Bapex to explore. There are still nine onshore blocks that have not been awarded, according to Petrobangla’s annual report for 2017.
