Bangladesh and gas and oil

From Global Energy Monitor

The government of Bangaladesh is promoting the expansion of the gas and oil sector.

Government policy

On May 16, 2011, the government approved a plan to allow U.S. oil company ConocoPhillips to explore oil and gas in two deep-sea blocks in Bangladesh, despite widespread protests. The energy ministry's proposal on signing a production-sharing contract (PSC) was approved at the meeting of the cabinet committee on economic affairs, with finance minister A M A Muhith in the chair. The American firm would be awarded hydrocarbon blocks 10 and 11 in the Bay of Bengal to explore oil and gas. ConocoPhillips won the blocks in 2008, but could not sign the PSC with state-run Bangladesh Oil, Gas and Mineral Corporation, or Petrobangla, as part of these blocks was also claimed by India and Myanmar. The latest agreement prohibits Conoco from exploring the areas of the blocks claimed by Myanmar or India. ConocoPhillips will invest about $111 million and has offered a bank guarantee of the same amount for the two blocks.[1]

Bangladesh currently produces gas of around 2,000 million cubic feet (mmcft) per day against demand of more than 2,500 mmcft. The proven gas reserves are 7.3 trillion cubic feet (tcf) and probable reserves are 5.5 tcf. The government has recently inked a deal with Santos-Halliburton, who are now working in the offshore Sangu gas field in block 16 after Cairns left it to them. Santos owns 75 percent of the block, with Halliburton controlling the remaining one-fourth. According to the agreement signed on May 16, the foreign firms will be allowed to sell gas to third parties in high price.[1]

ConocoPhillips gas deal finalized

On June 16, 2011, the government signed a deal with ConocoPhillips for petroleum exploration in two deep-sea blocks in the Bay of Bengal, keeping export option open in the contract for the first time. According to the Production-Sharing Contract (PSC), ConocoPhillips will get 80 to 85 percent of the lifted gas at the cost-recovery stage. The gas could be exported if Petrobangla does not purchase the fossil fuel.[2]

Gas exploration with China

In October 2011, Bangladesh's state energy firm Bangladesh Petroleum Exploration and Production Company Limited (BAPEX) said it expected to enter a joint venture with Sinopec Shengli Oil-field Services of China to explore for gas in southeastern Chittagong. Sinopec will have a 30 percent stake in the project and BAPEX 70 percent. The joint venture firms will develop four gas structures in the region, located in block 22 that covers around 13,900 square kilometers of area. BAPEX now produces about 60 million cubic feet of gas per day out of the country's total production of around 2 billion cubic feet (bcf) per day. Bangladesh's daily gas demand is 2.5 bcf.[3]

Citizen action

A citizen committee, the National Committee on Protection of Oil, Gas and Mineral Resources, Power and Ports, has long been protesting against the agreement claiming it would allow the foreign company to plunder natural resources. The agreement provides for giving Bangladesh only 20 percent of the extracted gas, and allows the company to sell the rest to the government at a fixed price or export it if the government is unable to buy. Professor Anu Muhammad, member secretary of the citizen platform, has protested the government move, as Bangladesh will lose its ownership on the block.[1]

In July 2011, law enforcers detained over 150 picketers in Dhaka and barred protestors of the National Committee to Protect Oil, Gas, Mineral Resources, Power and Ports, who were demonstrating against the gas exploration deal with ConocoPhillips. Members of the citizen committee backed by the left-leaning parties staged protests at the headquarters of Communist Party of Bangladesh (CPB) at Purana Paltan in the face of police interception. During the hartal, Prof Anu, who teaches economics at Jahangirnagar University, told that the government was trying to thwart the shutdown forcibly: "Police and RAB are torturing our activists and arresting them. Vehicles are being run with the help of party cadres, which proves that the government signed a bond with the US company." He demanded the release of those held during the hartal.[2]

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  1. 1.0 1.1 1.2 "Govt clears ConocoPhillips deal", May 23, 2011.
  2. 2.0 2.1 "Over 150 detained during hartal", July 3, 2011.
  3. "Bangladesh-China joint venture to explore gas-BAPEX" Reuters, Oct 27, 2011.

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