MEMOIRS

When Logic Dominates Emotion

Engr. Khondkar Abdus Saleque

Bangladesh gas sector was suffering serious crisis in 1996 when Bangladesh Awami League government assumed office. There was no integrated gas grid to evacuate gas from all the under-production gas fields. The Chittagong region depended almost exclusively on Bakhrabad Gas Field at Muradnagar, Comilla. Unimaginative gas production at much higher-than-permissible rate caused dramatic depletion of gas reserve. Production of excessive water, liquid hydrocarbon and sand caused extensive damage of surface, subsurface well infrastructure, Bakhrabad-Chittagong and Bakhrabad–Demra gas transmission pipelines. Gas production of the gas field was required to be reduced from 150MMCFD to 100MMCFD at the first phase. The immediate past BNP government mismanaged the implementation of World Bank assisted Ashuganj-Bakhrabad gas transmission loop line construction, creating opportunity for evacuation of stranded gas from northern gas fields in the Sylhet region. Consequently, the nation was suffering from 6-8 hours of power load shedding and fertilizer factories in Chittagong region were to remain shut down.

Bangladesh Awami League government took up six top priority projects as a contingency measure to confront the crisis. These were:

• Implementation of 58KM 30-Inch OD Ashuganj–Bakhrabad gas transmission loop line

• Completion of 18KM 20-inch OD Beanibazar–Koillashtilla gas transmission pipeline

• Development of Jalalabad Gas Field and evacuate gas to national grid through 15KM 14-inch OD Jalalabad Gas Field–Koillashtilla gas transmission pipeline.

• Development of Shangu offshore gas field and construction of 45KM 20-inch OD offshore gas pipeline from Shangu gas field to Bakhrabad–Chittagong gas pipeline at Fuajdarhat, Chittagong

• Development of Salda Gas Field and construct Salda Gas Field–Bakhrabad Gas Field gas transmission pipeline

• Development of Meghna Gas Field and construction of Meghna Gas Field– Bakhrabad Gas Field gas transmission pipeline.

Apart from above, government also implemented the historic project of constructing the gas transmission pipeline across the mighty Jamuna River through the Bangabandhu Multi-Purpose Bridge. For a democratic government accomplishing all the projects within cost and on time were milestone achievements.

This write up will state some of the untold stories of the implementation of Jalalabad Gas Field development by Occidental / Unocal with active assistance of Petrobangla. In 1997-98, Petrobangla officials were hesitant and reluctant to work alongside Occidental following the Magurchara blowout. Many believed that gross negligence by Occidental management and their drilling contractor was responsible for the massive blowout. Moreover, the legacy of SAIPEM Syndrome created huge challenge for any gas infrastructure implementation in the Sylhet region.

The Beanibazar–Kolliashtilla gas transmission pipeline project that went through serious impasse created over Occidental-managed Jalalabad Gas Field development project. The project had three parts – drilling and completion of development wells, setting up of gas treatment plant and construction, testing and commissioning of gas transmission pipeline and tie in it up with national gas grid. This project, if reviewed professionally, will evidence it to be the most expensive pipeline in the history of Bangladesh. For reasons unknown, a mid-stream gas transmission pipeline was designed and built as ANSI#900. All other gas transmission pipelines in Bangladesh are ANSI # 600. This was primarily due to Occidental getting away with unnecessary over-design and lack of knowledge of Petrobangla monitoring officials at the initial stage. Even the expensive gas treatment plant was grossly over designed.

Maxwell Engineering Works, a local contractor, implemented the EPC project of the pipeline. As always is the trend in Bangladesh local pipeline contractors, a syndicate with active patronage of gas system officials, got the contract at a very high rate compared to comparable contemporary projects in Bangladesh at that time. We found the project in total crisis when we took over the role of coordination. Serious ROW problem created impasse in the contraction of the gas gathering pipelines from the different wells to the gas treatment plant, the construction of gas transmission lateral pipeline also suffered a great deal despite of Occidental paying excessively high price [way above the prescribed rates of land acquisition] for the land acquired. The construction contractor was claiming idle time and Occidental land acquisition team had no clue. The works of gas treatment plant also suffered for non availability of approval of chief inspector of explosives for import of some chemicals. The CIE permission for the plant was also held up.

GTCL project manager first concentrated on getting all approvals. As most of the land in the gas treatment area belonged to tea gardens owned by relative of the then Speaker of the parliament and Ragib Ali, the matter was first resolved discussing the matter with them. The permission of chief inspector of explosives [Mr Rashid] was obtained through arranging a meeting with him at Sylhet and explaining to him the importance of the project and requirement of the particular chemical in the process. Occidental changed their project manager. Mohammad Ansari was changed with a Dutch gentleman William Schoonobeck. Deputy Commissioner of Sylhet received administrative instruction from Energy Secretary Dr Tawfique-E-Elahi Chodhury, BB for accelerating all pending issue resolution of ROW of the pipeline. The Bangladeshi construction company could not play any tricks after constant monitoring of daily activities by seasoned pipeliner. A high-powered team comprising of Additional Secretary Syed Tanvir Hussain and two directors of Petrobangla introduced this writer to senior law enforcing agencies and intelligence agencies. All impediments were confronted professionally and the works were completed strictly in accordance with contractual specifications. The pipeline was hydro-tested and commissioned in presence of the chief inspector of explosives after the Occidental project manager duly approved the construction completion in accordance with design. Prime Minister Sheikh Hasina ceremoniously inaugurated the gas supply. The background role of the Petrobangla coordinator remained unrecognized.

However, days after commissioning the facility and bringing the facility into commercial use, a dispute surfaced between Occidental and its pipeline contractor Maxwell Engineering Works. Occidental terminated the MEW contract and confiscated their Performance Guarantee. MEW sought intervention of Petrobangla. A three-member committee was constituted. But Occidental refused to accept Petrobangla intervention, terming the matter as an internal matter between Occidental and MEW. The dispute led to arbitration in Singapore, where Bangladesh has been asked to act as evidence.

The contract was signed in accordance with FIDIC Form of contract. The relevant standard clearly provided that if any contractor is allowed to complete any work and the work is brought into commercial use after accepting it on testing there is no scope of terminating the contract and confiscating the performance guarantee unless the facility fails to perform. Bangladesh in its submission mentioned this. The maximum remedy here could be imposition of liquidated damage if Occidental could establish. Bangladesh searched for the evidence up to Singapore but was never allowed to give evidence. Bangladesh heard Occidental/UNOCAL lost the arbitration. Logic prevailed. The Jalalabad Gas Field–Koillastilla pipeline never failed in transmission of gas since commissioning which itself evidences that Occidental actions of terminating the contract and confiscating the contractors PG was not justified and illogical.

Engr. Khondkar Abdus Saleque

Advisor, Ministry of Mines

Afghanistan