The gas production has depleted over the past two years, but efforts for keeping production at the present level are also continuing through exploration and development. Simultaneously, we are setting up infrastructure to increase LNG imports for meeting the rising demand for gas. We are optimistic that there would not be any issues in supplying primary fuel for supporting Bangladesh’s graduation efforts toward becoming a developed economy. However, the price pressure cannot be avoided only through improving efficiency and minimizing the system loss. The price of gas must also be adjusted gradually.
Md. Mahbub Hossain, Senior Secretary of Energy and Mineral Resource Division under the Ministry of Power, Energy and Mineral Resources, spoke about the possible energy sector scenario in an exclusive interview with Mollah Amzad Hossain, Editor of Energy & Power magazine.
The gas supply is not enough for meeting the present demand. Efforts are being made to overcome the deficit through load management. What are you planning with energy supply and limiting energy prices within tolerable limits?
We could manage to ease the deficit a bit by adjusting the demand, but not the full demand. The demand is not like that of what it was 8-10 years ago. Unprecedented growth in industries and other gas-consuming sectors over the past 7-8 years has increased the gas demand in a geometric progression. But we could not increase production to match the growing demand. That is why initiatives for importing LNG had to be taken for offsetting the deficits. Gas is such a commodity that cannot be imported instantly. The present proven gas reserve, production capacity and supply chain are way below the demand, which even exceeded the planned limits. Initiatives have been launched for increasing production from domestic sources. Exploration endeavors have been invigorated manifold. The import infrastructures are also being expanded. In addition to two under-operation FSRUs, talks on setting up a third FSRU are advancing. Work on a Land-Based LNG Terminal over a medium-term is also progressing.
There had been a sudden production glitch at Bibiyana Gas Field. Experts observed that such incidents may happen in other gas fields as well in the future. What are the plans to confront that situation?
We could manage to overcome the Bibiyana crisis through rapid actions. Such unforeseen incidents can happen at any time in any gas field. We have taken up contingency action plans to confront a similar crisis in the future to bring back gas fields into operation within the shortest possible time. Gas production companies have been advised to intensify vigilance and ensure regular maintenance of gas wells.
Mentionable success in new gas discovery could not be achieved. Experts have suggested drilling 10-20 exploration wells annually on a war footing. They also suggested providing a special allocation of US$ 1.0 billion in the annual budget over the next 10 years. Will the government entertain such suggestions?
We welcome such suggestions. Plans have been drawn for exploring areas having prospects as indicated from seismic surveys. BAPEX on its own and through outsourcing has taken initiative for a number of new exploration wells. Some additional explorations would also be done. Arrangements have been made for keeping four BAPEX rigs active round the year. No rig would be sitting idle even for a week.
The BAPEX-alone policy did not give dividends as such in the past 20 years. There have been suggestions for engaging IOCs through PSCs side by side with BAPEX in land prospects as well. What are your views?
We have already invited joint venture proposals for the CHT area. The IOCs can come there. Areas relinquished in the past by IOCs are also being opened. The limitation of BAPEX has no denial. The capacity of BAPEX would be let out for exploring the areas that would remain unexplored.
Resolutions of maritime boundary disputes with Myanmar and India were milestone achievements. But that success could not be reflected through explorations. We could not achieve successes as achieved by Myanmar and India for various impediments. What initiatives are you taking to encourage investments of foreign companies offshore?
One IOC is working offshore now. There are other IOCs, which worked offshore for some years, and have left the country finding it would not be profitable for them. The updated model PSC is being reviewed again to make it more attractive for the IOCs. Even if there is a major discovery in deep water, it would require a sizable investment to monetize that resource. Whether or not these would be profitable for the companies needs to be assessed. Taking into consideration the price of gas in the global market, necessary updating of model PSC provisions is being considered for attracting the IOCs.
In recent times, 117% gas price hike proposals by Petrobangla and its companies to BERC have been heavily criticized. Relevant experts, representatives of trade bodies and consumers’ rights associations observed that the price adjustment would not be required or imports of LNG from the spot market can be kept limited with the elimination of system loss. In the public hearing, BERC talked about a 20% adjustment. What are your views?
We have not yet received any advice from the BERC. Gas companies submitted their proposals. BERC is reviewing those according to the provisions of their mandate.
System loss is there in different forms. There exist illegal lines and connections. Many users are not paying bills for their consumption. Gas distribution networks are dilapidated. We cannot increase efficiency amid this poor condition. Replacement and rehabilitation are being done. SCADA is being set up. The situation would improve when all these initiatives would be accomplished. Price adjustment in the interim period is a dire necessity. But it is not right that a mere elimination of system loss would be enough to resolve the situation. If the price is not adjusted with the international market, the situation cannot be overcome only through increasing efficiency.
The price of liquid fuel has been adjusted once during COVID Pandemic. BPC is still incurring losses. The Ukraine war has further compounded the crisis. The State Minister for Energy has stated that the price would not be increased now. The situation would be managed through increasing subsidies. Is there any thought of adjusting the liquid fuel prices?
We are closely monitoring the situation. We are assessing how far the price shock can be absorbed. No decision for adjusting the prices has been taken yet.
There is a plan to supply RLNG to a few under-construction power plants. The gas supply crisis would only deepen further when these plants and the ones in the pipeline would come into operation. How would you address that situation?
We have launched combined action plans on a priority basis for increasing LNG imports and overcoming gas transmission and distribution constraints. Monitoring for timely implementation of these has been intensified. We expect that the situation can be managed when all these will be implemented simultaneously.
We are aware that five LNG import initiatives are under consideration now. What is the present status of these, including those at Payra?
The technical committee is now evaluating the proposals of two FRSUs at Payra. Decisions would be taken as soon as reports are available. Work is in progress on the Land Based LNG Terminal at Matarbari. Negotiation for the 3rd FSRU at Maheshkhali is at the final stage.
There are allegations of inefficiency and poor governance at Petrobangla and companies. Company boards are under the exclusive dominance of EMRD officials. There are no initiatives for enhancing efficiency. How would you react to these?
There should be representations from different relevant experts on the board of directors. Companies and the sector could be benefitted from real experts having past proven experience. But this did not happen for some companies. We are reviewing these.
Officials of the power sector are working under separate pay structures. The salaries and benefits are almost double that of Petrobangla companies. Will you take initiative for introducing a pay structure similar to the power sector for retaining quality professionals in the energy sector as well?
Two divisions of the same ministry should have a similar pay structure as the nature of the job is almost similar. This is not fair. But this was not brought to my notice. I thank EP for bringing it up now. We would take initiative to introduce an appropriate pay structure for the Petrobangla companies.
Our gas production is fast depleting. BAPEX informed that the situation can be somehow managed by 2025. But over the past two years, the production continued to deplete. There may be a major crisis between 2024-2027. What actions are you taking to manage this for the interim period?
We are aware and conscious of it. We are in constant dialogue with local production companies and IOCs about contingency measures for increasing production. We have identified a few fronts. We are expecting to discover some gas fields soon. In the next three years, production may increase from the present level. The results of increased LNG imports may be visible within two years.
There exists a discovered gas resource in Bhola. But that remains stranded. When could it be brought to the national grid?
The feasibility study has been completed. A long sub-sea type pipeline below the bed of the Meghna River can connect it to the national grid. The technical aspect has been assessed and now financial viability is being examined. Some alternate routes are also being examined.
Due to the Ukraine war, importing LNG under long-term contracts has become increasingly difficult. The State Minister for Energy and the Prime Minister are constantly trying it. There have been talks with Qatar. EP is aware that the possibilities for importing LNG from Australia and North America are also being explored. What would you say about these initiatives?
All options are being explored. The Ukraine war has created issues with gas supply. Russia is a major supplier of gas to Europe. The crisis has been created as Europe has focused attention on LNG imports from Asia.
The vision for supplying quality energy to all at an affordable price is a prerequisite for achieving developed economy status by 2041. The essence of Bangabandhu’s energy dream was to make Bangladesh self-reliant. But now in 2021, the reliance on imported fuel is 48%. There is apprehension that business-as-usual may take it to 80-90% by 2030. How do you look at it?
The development over the past 8-10 years is phenomenal. The energy demand has also increased in geometric progression. We have to accept reality. The dynamic leadership of the Prime Minister has made these possible. But these developments have also created challenges as well. It has made meeting the increased energy demand extremely challenging. Not only the sector-wise demands but also the energy demands of individuals would also increase. We are working relentlessly under the leadership of the Prime Minister to confront the emerging challenges. Initiatives were taken to keep energy prices within the affordable limits. We need to gradually get out of subsidies now being generously given for keeping the price affordable.