Whether we agree or not one of the major contributors to the present uncomfortable situation in power and energy sector is the major failure of Petrobangla and its companies performing their tasks professionally and efficiently. The proving reserve of natural gas is fast depleting in a scenario when after producing 2,750 MMCFD of gas system suffers from about 1,000 MCFD deficit. Officially there is admission for 600 MMCFD deficit but given the huge unmet demand and continuous growth the deficit is not less than 1,000 MCFD. In this situation gas supply to all end users is heading towards greater uncertainties.
We are not sure whether import of required volume of LNG as one of the replacement fuel and expanding use of LPG and Auto gas can be implanted on time. LNG import, regasification and injection to national gas grid have specific technical challenges. Appropriate pricing of gas to end users after absorbing the LNG price shock is a huge challenge. The challenges of LPG and Auto Gas are also not less in any case. Bangladesh needs implementation of a very well thought fuel utilization policy for all end users.
Pipeline gas use to domestic, commercial and less fuel efficient gas using industries need phasing out and replaced with LPG. Gas to CNG is also needs to be done away with. These tasks are not easy at all to implement. Apart from all these energy sector governance process must be microscopically reviewed and vastly improved. This write-up will attempt discussing the challenges of Petrobangla.
Petrobangla Challenges
Governance:
If we look back in retrospect we know Petrobangla was created with the similar visions and missions of PETRONAS Malaysia in 1974 for stewarding petroleum (Gas and oil) and mineral resources exploration and exploitation. Founding father of Bangladesh Bangabandhu championed Petrobangla while great Malaysian leader Mahathir Mohammad was the inspiration behind PETRONAS. Main vision of Petrobangla was to make own fuel gas and mineral resources providing the backbone for long term sustainable energy security. In early 2017 the prevailing scenario and emerging situation of almost exclusive reliance on imported fuel (LNG and coal) is an indication that nation has failed to live up to the vision of Bangabandhu. The first Chairman of Petrobangla Late Habibur Rahman concurrently was Secretary of Ministry of Energy and one of the advisors of Bangabandhu. Under Bangabandhu inspiration and administrative excellence of core group of officials Petrobangla could achieve major milestones in the shortest possible time. Five major gas fields (Titas, Habiganj, Bakhrabad, Rashidpur and Koillashtilla) owned and operated by International Oil Company Shell BV could be acquired for a mere 4.5 million Pound Sterling. These gas fields still contributes about 40% of total national production. With a very limited manpower Petrobangla managed engaging 6 leading international oil companies for Petroleum Exploration in 8 offshore blocks of the Bay of Bengal. On the course of history, we find Petrobangla rather handing over discovered gas fields like Jalalabad, Feni, Chattak and Tengratilla to IOCs mostly through controversial deals. Bangladesh and Petrobangla have walked on pathways reverse to Bangabandhu chosen path. All these are due to poor governance and many would say corruption.
After the sad episode of August 1975 Bangabandhu demise Petrobangla slowly and gradually was driven to wrong direction. The status of Petrobangla Chairman remains at Additional Secretary level. Sometimes even Joint Secretaries were sent to Petrobangla sent for lead a very important corporation which is supposed to ensure sustainable fuel supply to Bangladesgh. Instead of relying on qualified and experienced professional technocrats Petrobangla became the happy hunting ground of uniformed persons and ordinary beauracrats. Many quality technical executives of Petrobangla and the companies left job for working abroad and private companies in Bangladesh. Huge brain drain created inefficiency and void which were not addressed through fresh recruitments and arranging systematic training and capacity building. Senior executives coming from outside spend time learning lessons or idling away their stay. Petrobangla never had any home-grown individual as its Chairman. The consequence is obvious.
Petrobangla companies are supposed to work as autonomous bodies governed by respective board of directors. But the Ministry and Petrobangla exclusively dominate the company boards. Company management is dictated on day to day affairs. Very ordinary nosey beauracrats interfering in Petrobangla company affairs frustrate company executives.
Gas Demand Supply Scenario:
Over 1,000 MCFD new gas supply has been added over the past 8 years from 2009 increasing production capacity to 2750 MMCFD. These mostly came from discovered gas fields. All gas fields reached production plateau and all are in the verse of depletion. Since 2000 over the past 17 years only a little over 1 Tcf new reserve could be added through discovery of some marginal gas fields but about 9 Tcf gas from the proven recoverable reserve has been used. In this scenario the remaining reserve even at present rate of use would be exhausted completely by 2030. Efforts for discovery of new gas may not add significantly in less than 9-10 years. Why such situation has been created? Will government do any soul searching? Can avalanche of ordinary bureaucrat at the helm of affairs be the answer for turning Petrobangla around? Why Petrobangla after 43 years of its establishment has to suffer from quality senior executives? Who says that Petrobangla companies do not have quality executives?
The companies of Petrobangla are all formed per companies act. They have autonomy on paper but not in practice. The company boards are exclusively dominated by governing ministries. Company management have little or no freedom for operating independently. In such situation the existence of companies like Sundarban Gas Company and Sylhet Gas Field has already become unnecessary in the context of work loads of different companies of Petrobangla.
In view of above the governance process of Energy and Mineral Resources sector and structure of Petrobangla and its companies need urgent review. There should be over 100 very well qualified senior retired Petrobangla and Gas sector officials in Bangladesh. They have institutional memories and past proven track records. Why not Government using their services in different company boards rather than relying on ordinary bureaucrats?
Power Cell Stepping Beyond the Border
Why Power Cell the think tank of MPEMR for power sector is dealing with matters exclusively belonging to Petrobangla domain? Why Power Cell has to deal with Gas System Master Plan? Why it is required for updating Production Sharing Contract? Why it is working on LNG terminals? These are the works of EMRD and Petrobangla? If certain persons in EMRD and Petrobangla fail to deliver, fail to do these they may be changed but breaking the organizational discipline others of MPEMR must not encroach the exclusive domain of EMRD. These will definitely create stagnancy at some stage. Let all organization grow and perform within their assigned tasks and responsibilities.
Gas Exploration:
Will the persons working behind BAPEX adopting 108 wells drilling project in 5 years now explain the logic for it? How can a capacity handicap BAPEX even drill 25 Exploration wells in Bangladesh? The exploration history and reality is never in the favour of even planning for such a never to be achieved wild dream. Now a Russain Government Company GAZPROM which even failed to execute their previously awarded works of drilling development wells will make hay while sun shines for them. BAPEX must not be made to lose track. There is no point in turning BAPEX into an exploration company. The rigs they have should work on discovered fields for development wells and work over. Let BAPEX grow expertise in managing and monitoring all works of exploration in Bangladesh. They may even work in Joint Venture with International oil companies. Even Chevron, Shell, Exxon Mobil, Total and BP would not have dreamed for drilling 108 wells including 58 wells in 5 years in Bangladesh. These companies also are not drilling companies. They use experienced drilling companies when required.
Onshore Exploration
The exclusive reliance on BAPEX for onshore exploration for the past several years has proved counter productive. With less than bare minimum technical, managerial and financial capabilities BAPEX could not make mentionable achievements. Over the past 17 years Bangladesh could add a little over 1 Tcf new gas against a consumption of about 9 Tcf. BAPEX discovered some marginal gas fields (Sundalpur, Begumganj, Sreekail) and further developed Salda, Shabajpoor. BAPEX failed to live up to expectation despite of generous government support. It even failed to manage the contract with Russian gas giant GAZPROM through concluding effective contract.
The 108 wells mega gas well drilling project of BAPEX was poorly conceived. Experts strongly opposed it. Neither exploration history nor contemporary records evidenced clues for even conceiving such unrealistic dreams. GAZPROM is now set to take over the major portion of the massive project. Petrobangla/ BAPEX could not start further exploration in the four previously identified prospects in the greater Chittagong area.
Experts suggested for engaging IOCs through PSC for exploration in the onshore frontier areas. EMRD and Petrobangla for reasons better known to them did not pay heed to it. Consequently, the onshore prospects and leads do not be explored.
Offshore Exploration
Bangladesh achieved a very large off shore area in the Bay of Bengal consequent upon resolution of maritime boundary disputes. But unfortunately Bangladesh could not yet commence offshore exploration in the very potential deep water prospects. The model PSC2015 updated at very stages is still not considered investment friendly for attracting huge investment in deep water exploration. Bangladesh is stuck with its initiative for conducting multi-client survey. Updating PSC and managing a fresh round of PSC block bidding is one of the major challenges of Petrobangla.
Santos has started exploration in shallow water. ONGC would also start soon. All set to concluding PSC with Daewoo. Some gas from offshore may be available in 3-5 years if all stakeholders can act quick.
LNG Import
Too much is being talked about LNG import and injecting LNG converted gas for gradual replacement of local gas. But over the last 7 years since 2010 very little has been done. Only 500 MMCFD LNG converted gas may become available for Bangladesh gas market by middle to late 2018. The works of FSRU in Moheskhali is advancing. Pipeline linking FSRU to national gas grid is almost complete. Local company Summit Group and Indian Company Reliance are working on LNG import setting FSRUs in the same area. Indian company Petronet is exploring the possibility for a land based LNG terminal at Kutubdia. Power Cell and Petrobangla are working on few more land based terminals at Payera, Chittagong and elsewhere wherever feasible. Government has a plan for importing 3000 MMCFD equivalent LNG by 2030. Here the challenges are negotiating contracts for long term LNG import, managing price shock that would emanate from expensive LNG in low priced gas market in Bangladesh.
LPG Market Development
Depleting local gas proven recoverable reserve of Natural gas necessitates Bangladesh rationalising gas use. All less value added utilization of remaining gas and future own gas must be replaced with alternate fuel before LNG comes in bigger way. Government has already suspended new gas connections for domestic consumers. Gas price has been adjusted reducing the wide gap between Natural gas and alternate fuel price. LPG is set to replace local gas in domestic, commercial and small industrial use. Auto gas will replace LPG. Government must identify all challenges of LPG market development. LPG sector must get at least 5 years’ relief for all type of tax and duties. Local LPG traders in three to five years may grow to a position for widening its operation over the entire country if supported with enabling policies. Instead of several authorities (BPC, DOE and BERC) regulating LPG business one stop service for LPG entrepreneurs must be introduced. Let BERC be the sole regulator. LPG price must be competitive to local gas price . Local companies may soon achieve capacity of manufacturing LPG cylinders apart from LPG import, bottling and distribution. The LPG market development must not make messy like CNG through opening Pandora box for all. LPG market operation must be closely and meaningfully regulated for ensuring safety. But pricing must be left to market for fair competition. Government must act as facilitator only.
Pipeline Gas Import
Bangladesh must start negotiation with Daewoo and Woodside for possible gas import from Myanmar offshore block adjacent to Bangladesh. The latest discovered gas field is about 50 KM from Bangladesh. Expedited actions may lead to Bangladesh accessing this resource before it takes China route.
We are not very sure how exclusive reliance on imported coal and LNG would secure sustainable energy security for Bangladesh. Without sustainable energy security Bangladesh may not achieve national visions of mid income and developed country status. Petrobangla and EMRD has to smarten a great deal to go anywhere near its dream destination.
Saleque Sufi;
Contributing Editor, EP
