Mushfiqur Rahman

Bangladesh aspires to achieve 8.0 per cent GDP (gross domestic propduct) growth rate within the next five years (as envisaged in the 7th Five-Year Plan) and secure electric energy for all by 2021. The State Minister for Energy and Mineral Resources in his statement in parliament on June 28, 2015 said that the major primary energy source of the country, natural gas (58 per cent contributor to electricity generation), would be exhausted within the next 16 years. As per available information, the country now has approximately 14 trillion cubic feet (Tcf) gas reserve and the current annual production stands at approximately 0.82 Tcf.

 It may be noted here that not all the gas reserve is recoverable. In this backdrop, the inevitable option for the country is to increase energy import. Energy and Mineral Resources Division sources confirm that Bangladesh intends to secure within 2018 import of 500 million cubic feet-a-day equivalent of natural gas through LNG import. Approximately 5.35 million tonne of annual import of liquid petroleum (crude and refined petroleum) contributes significantly to the primary energy source of the country now.  Bangladesh also consumes nearly 4.0 million tonnes of coal annually (about 1.0 million tonne is produced from the domestic coal mine and the rest is imported).

The country's impressive achievement of lower middle-income country status has been made by steady economic development for several years. Bangladesh maintained average GDP growth rate at 6.3 per cent for the last five years. If we look back at the 1995 economic indexes, we find that a GDP growth rate of around 4.0 per cent with primary annual per capita commercial energy input of 130 kilogram oil equivalent (kgoe) prevailed that time. In 2015, we have GDP growth rate of 6.3 per cent with a per capita primary commercial energy consumption of nearly 220-240 kgoe.

GDP growth is directly linked to energy input. Bangladesh, so far, could avoid huge demand for per capita energy use as its major GDP growth contributors are service sector (55per cent) and agriculture sector (16 per cent). But we have been observing a stagnating GDP growth rate of 6.0 per cent-plus for several years. It is anticipated that coming out of this 'growth stagnation' will be possible by encouraging the growth of the industry sector. Surely, industry sector growth demands more energy input compared to other GDP contributors. Hence, the projected 8.0 per cent GDP growth within the next five years can only be attained with additional energy inputs.

From the country's historical trend it has become clear that approximately 2.0 per cent additional GDP growth demands doubling the primary commercial energy inputs. It implies that by the end of 7th Five-Year Plan (commencing 2015) Bangladesh will require an input of approximately 10 million metric tonnes of petroleum import and double the present (e.g. 5,000 mmcfd) daily flow of natural gas through pipelines. A heating value comparison suggests that one trillion cubic feet of natural gas is equivalent to 38 million tonne of good quality coal. Therefore, the shortage of natural gas should be substituted by increasing import of either coal or petroleum  or both.  The import challenges of huge amount of primary energy sources involve major capacity development for infrastructure and maintaining healthy balance of payments position of the country. Also, there is a need for enhancing domestic primary energy resource exploration and extraction capabilities.  

A Financial Express report (July 12, 2015) suggests that the four international oil and gas companies from China and the United States have responded to the Bangladesh Petroleum Exploration Company's (BAPEX) call for Expression of Interest (EoI) to undertake oil and gas exploration jointly with BAPEX. The companies are the Chinese CNPC, CITIC Ltd., Jeo-Jade and the IPR of the United States. BAPEX intends to form a joint venture deal with the best suitable company for carrying out exploration and if successful, the development works at Patiya, Jaldi, Kasalong and Sitapahar geological structures in the Chittagong and Chittagong Hill Tracts will commence.

 The four structures are considered potentially important for hydrocarbon exploration but these could not be tested for confirming the reserves and production potential. One of Patyia hydrocarbon structure was first drilled by Pakistan Petroleum Ltd in 1953 and recorded some indication of hydrocarbon presence. However, the drilled well failed to secure any discovery. During 1965-1970, three wells were drilled at the Jaldi structure but again no commercial discovery was made. In 1988, an exploration well was drilled up to the depth of 1,506 meters by the Shell Oil Company at the Sitapahar structure, but had to postpone the work due to local unrest. In the Kasalong structure, no exploration well was so far drilled but seismic survey results identified some potential sites for drilling. There are surface seepage records indicating hydrocarbon presence there. In 1997, Petrobangla awarded Block-22 to United Meridian, a United States company, to explore gas under Production Sharing Contract (PSC) in the Chittagong and Chittagong Hill Tracts areas including the above four geological structures. United Meridian has carried out seismic survey of Block 22 but drilled no well. Later, United Meridian transferred its rights to another company, Ocean Energy, in 2000. Ocean Energy continued its survey works but abstained from carrying out drilling mainly due to the absence of oil and gas purchase commitment (if discovered) by Petrobangla or the provision to sell them to a third party within the country. Later, Petrobangla took over the block from Ocean Energy in 2006. BAPEX, the subsidiary of Petrobangla, tried earlier to carry out exploration works in the Chittagong and Chittagong Hill Tracts area under joint venture with international companies but failed due to the absence of timely government decision.

BAPEX's own efforts yielded some success in discovering the Semutang gas field (currently produces 4.0 million cubic feet gas daily). Now, BAPEX intends to form a joint venture with an international oil company to carry forward seismic survey and exploration in the comparatively difficult onshore geological structures at Patia, Jaldi, Sitapahar and Kasalong areas. The Jaldi structure spreads over 635 sq. km area, Patiya 1,423 sq. km area, Sitapahar 946 sq. km area and Kasalong 848 sq. km area. Geologists predict the possibility of a total of 4 Tcf gas resources (with 50 per cent probability) in these four structures. Successful discovery of oil and gas in these four structures will surely bring good news, especially to the gas-starved Chittagong area.

The government has now received EoIs from IOCs to jointly explore and develop the potential geological structures in Chittagong and Chittagong Hill Tracts on mutually acceptable terms with BAPEX. Now, it is the turn of the government to convert the expression of interest to a pragmatic joint venture (JV) contract with BAPEX and expedite the exploration efforts.   

The writer is a mining engineer and writes on energy and environment issues.

Source: the financial express