Natural gas supply to vast areas of the country’s western region still remains a dream. Most of the gas fields are located in the eastern region, excepting Shahbajpur Gas Field (eastern side of the Jamuna and Padma rivers). The gas transmission grid has crossed the Jamuna river in 1998 along the Bangabandhu Jamuna Multi Purpose Bridge. The grid has been extended to Bogura, Rajshahi and all the way to Khulna from Ishwardi via Bheramara, Kushtia and Jessore. GTCL is now working on a project to extend the grid to Rangpur from Bogura. But except for only some lucky ones, a vast majority of the population are not getting the benefit out of the pipeline supply of gas. Industries and businesses are also suffering from the high cost of fuel. Recently, the government has started planning to import LNG for meeting the gas demand of the western region. Experts and researchers have, however, different ideas. Given the volatile nature of the global fuel market and in view of the supply chain disruptions, experts have suggested significantly expediting the exploration of own petroleum resources at onshore and offshore for increasing contribution of the local gas to the fuel mix and revisiting the issue of exploiting the discovered coal resources. Bangladesh does not have any obligation for putting a ban on coal mining and utilization. It is not fair that some section of the privileged population would spend BDT 850-975 per month using pipeline gas while others have to account for BDT 1800-2000 for using the LPG. That does not even go with the energy vision of Bangabandhu.
Access to quality power and energy supply is the constitutional right of all Bangladeshis. Thanks to the great efforts made by the present government over the past 12 years, all the citizens have now access to power grid. Most parts of the country are now covered by the power grid while a few islands and isolated char areas are being supplied with solar power and submarine cable. Some constraints in power transmission and distribution are affecting the quality supply, but these are all identified and by 2025 all citizens are expected to get quality power supply. The issues of supplying energy at affordable cost needed to be addressed through a smart choice of fuel mix and ensuring efficiency in use. Several large power plant construction projects are at different stages of implementation in the western region which would mostly use imported primary fuel. The gas grid is also being extended to the western region along the Padma multi-purpose bridge. It is being told that the gas transmission pipeline may be built all the way to Payra in Patuakhlai.
Present Status and Perspective Plan of Gas Sector
Interactions with EMRD and Petrobangla sources suggest:
· The present recoverable reserve of discovered under-operation fields at the present rate of use would be completely depleted by 2031. Petrobangla is optimistic for adding up to 3 Tcf of new gas within 5 years through discoveries.
· EMRD is hopeful about commencing offshore exploration by 2030.
· BAPEX under Joint Venture with its partners would be able to start exploration in the Chittagong Hill Tracts prospects and deeper horizon by end 2022. By 2023, an exhaustive information database would also be developed through carrying out seismic surveys.
· Gas Sector Master Plan stated of only 500 MMCFD maximum supply from local source in 2041 despite of various initiatives being taken for exploring and developing new gas resources. The plan projects gas demand of 6500 MMCFD. Up to 5500-6000 MMCFD LNG import would be essential for meeting the deficit.
· The capacity of the two operating FSRUs at Maheshkhali have total capacity of re-gasifying 1000 MMCFD LNG. Both of them have stand by units which, if brought into operation, can increase capacity marginally to 1100 MMCFD. The maximum available supply now is 800 MMCFD. The total annual present LNG purchase from Qatar and Oman under long-term contract is 4 million tonnes. This constraints utilization of 7 million tonnes capacity utilization.
· Government responding to global LNG market volatility has suspended purchasing LNG from spot market.
· Work on setting up of a land-based LNG terminal at Matarbari is progressing. It is expected that the tender seeking EPC contract for engaging contractor of the terminal on BOOT basis can be let out among the 8 short-listed bidders by end September 2021. EMRD expects that by end 2025, the first train of LNG terminal of 1000 MMCFD capacity can start operation.
Observations
Present Gas Production and Plan
It has been observed with serious concern that exploration for new resources remained grossly neglected since 2000 despite exponential growth of the demand for energy. Over a period from 2000 to 2021, a little over 3TCF gas could be added against consumption of 14 TCF. Most of the discovered gas fields have well past production plateau. The wellhead pressure continues to deplete fast. Past proven experience suggests that by 2023 faster depletions may set in. The present production (7-8 September 2021) shows 2450 MMCFD against Petrobangla stated capacity of 2750 MMCFD. There have been no reservoir studies done over the past several years.
All concerned stakeholders know it for over a decade now that discovered gas reserve has been depleting alarmingly. State Minister for Power, Energy and Mineral Resources Nasrul Hamid stated this in the national parliament. Relevant experts and researchers time and again issued wake up call. Still, the exploration campaign for discovering new resources both at onshore and offshore remained well below the required level. There has been no major gas discovery since 2000. The BAPEX-alone policy for onshore exploration fell flat. Without making required techno-economic feasibility studies, a highly ambitious 108 wells drilling program in 5 years was entrusted to capacity-constrained BAPEX. Under the present exclusive government control, it is not possible for an exploration company functioning effectively and efficiently. Even then BAPEX did its best and managed discovering few marginal gas fields. But their contributions to national production are like trickles in the ocean. For reasons better known to government, Russian oil giant GAZPROM was engaged for drilling development wells in Petrobangla-owned gas fields. That poorly executed contract did not bring expected dividends. The GAZPROM-engaged Uzbek contractor reportedly did a poor job. BAPEX is still doing its best. But experts observed that it is well beyond the BAPEX’s capacity for carrying out the exclusive responsibility of onshore drilling. From experience, it is extremely doubtful that Petrobangla can manage to add 3 TCF of new gas in 5 years.
Offshore Exploration
The benefits of remarkable success in resolving maritime boundary disputes with neighbors could not be achieved for failures of EMRD and Petrobangla in taking smart actions on time. We cannot accept the EMRD excuse now that the outbreak of COVID in end 2019 impeded the actions for the deep water exploration.
The scenario in offshore exploration is extremely frustrating. Santos, ConocoPhillips and Daewoo Posco left one by one after failing to negotiate gas price with Petrobangla. Australian energy giant Woodside had submitted unsolicited offer for exploration in 5 deep water blocks in 2017. It could be negotiated, but not done. It is not understood why the offshore exploration cannot be started before 2030? The EMRD and Petrobangla have made extraordinary delays in letting out offshore explorations. Petrobangla signed agreement with the same company after sitting on the decision for about 4 years. The good sense has prevailed that Petrobangla database is now being opened to the interested explorers.
It is encouraging that BAPEX has let out Expression of Interest for finding Joint Venture partners for CHT prospects and deep horizon exploration. Hope the decision making process would not be affected by regional geopolitics.
We have great doubt that gas demand in 2041 would grow to 6500 MMCFD given that the present and emerging energy supply situation would not encourage major investors to set up energy-intensive industries. Even if that happens, those should be much more energy efficient. Bangladesh economy would not grow to absorb price shock of importing 6000 MMCFD LNG. The detailed techno-economic feasibility studies needed to be doing before launching any large LNG import initiatives through Matarbari window.
Petrobangla should let the existing FSRUs to expand their capacity through utilizing the standby re-gasification units. All out endeavors must be made for bringing the land-based terminal at Matarbari at the earliest. We also question as to why the present LNG purchase situation of existing long-term contracts with Qatar and Oman could not be anticipated earlier? In the present situation, RPGCL cannot extract benefits from the volatile LNG spot market. PPR is a major impediment.
Gas Supply Augmentation
Information from relevant sources suggests that there are considerations and action plans for gas supply augmentation, targeting more specifically the present and emerging market of the Western region of the country.
· The anticipated recoverable reserve of gas fields in Bhola Island is 1TCF. This is not considered enough to justify the investment required for bringing it to the main land. RPGCL is tasked to explore its alternative use. Having worked as Petrobangla representative with UNOCAL proposed WRIP, this writer cannot agree with this view. Connecting gas fields of Bhola through construction of Shahbajpur to Digholia following surveyed pipeline route and connecting with gas transmission pipeline already constructed at pressurized zone would definitely be a feasible option.
· Two Indian companies concluded MOU with Petrobangla for supplying 1000 MMCFD RLNG through pipelines. From deep insight, this writer has genuine doubt about the feasibility of this prospect.
· NWPGCL and Excelerate Energy JV submitted a proposal to EMRD for supplying LNG to Payra region and Khulna through setting up a tailor-made FSRU at 60-70 Kilometer into deep sea off Kuakata and constructing subsea pipeline and gas transmission pipeline to Khulna. We do not think that the turbulent nature of the Bay of Bengal through the extended Monsoon is not at all ideal for sustainable operation of FSRUs. Bangladesh offshore cannot be considered similar to the Gulf of Mexico, North Sea or US coasts. What would be the size of actual investment? Excelerate has submitted a proposal to EMRD after conducting route survey of the pipeline. The storage capacity of the facility would be 210,000 cubic meter and re-gasification capacity would be 1000 MMCFD. The government would not have the take or pay option.
· It would not be wise to make an observation without having a first hand view. But considering the huge investment required, the detailed techno-economic study must be done by a third party of real experts before giving go ahead. However, the experience of direct involvement in gas supply from Shangu offshore pipeline to the national gas grid would not suggest Bangladesh going for such an ambitious proposition when there are other feasible options of gas supply to the region.
It would be a huge risk if, based on such proposal, the proposed 3X1200 MMCFD LNG based power plants are allowed to go ahead.
Conclusions
Bangladesh is heading towards an uncertain fuel supply situation, more specifically gas crunch. The present situation indicates that by 2025 gas production from own fields may deplete well below 2000 MMCFD. It is highly unlikely that even the land-based terminal can come into operation by 2025. One can wonder about how the government would supply gas to three medium-to-large gas based power plants at Meghnaghat in 2022.
It is essential that the government changes its mindset towards exploitation of discovered coal resource. Unless the government can manage to start coal mining soon, it may remain buried forever. The government must also change conservative strategy for staying away from engaging IOCs in onshore exploration. For Western regions and high-pressure zones, fresh bidding rounds should be let out providing required incentives in the Model PSC. The EMRD and Petrobangla must not delay in concluding JV with intending IOCs for exploring Chittagong Hill Tracts and deeper horizon exploration. Multi-client survey should start without delays and Petrobangla should be ready in all respects for launching offshore PSC as and when the opportunity emerges. But does Petrobangla and EMRD possess required numbers of experienced technical resources for negotiating PSCs and managing PSC operation of IOCs in the offshore?
Considering the land-based LNG terminal at Matarbari a national top priority project, RPGCL must be given required authority essential for speedy approvals for expediting project implementation. The two pipelines of GTCL from Maheshkhali to Anowara can transport 2000 MMCFD. The meters installed at different intake and offtake stations adds up to 4000 MMCFD. The stalemate with 1200 MMCFD capacity metering system at Anowara must be resolved as soon as possible. If required a new pipeline from Maheshkhali to gas grid must be built as Matarbari would remain the only feasible entry point of LNG import.
It can be suggested to start the gas supply to Western region for small industries in greater Rajshahi, greater Khulna region as soon as possible using the existing infrastructure. Pipeline gas supply may grow as an election agenda for the upcoming general election as it remains a disparity.
