Offshore gas exploration

The Nation
February 7, 2008

GAS has been the prime source of energy in Bangladesh. It is used for power generation, as an alternative to petroleum in the transportation sector, in industries such as brickfields and many others including fertiliser industries as basic raw material and in households for cooking and heating. But the recoverable reserves of gas are dwindling down.

This is the outcome of lack of farsightedness on the part of previous governments in giving high priority to exploration to find and develop new gas fields. BAPEX, the lone publicly owned organisation for exploration of oil and gas, was sidelined for long and new reserves could not be located by it through systematic exploration activities. International oil companies (IOCs) operating in Bangladesh also did not do their work with zest for various reasons that meant further slowdown in finding new gas deposits and exploitation of the same.

The cumulative effect of all these is that a crisis like situation now exists in the supply of gas in relation to its fast growing demand. Thus, in this backdrop of fast depleting gas resources, it has become imperative to quickly find out new reserves of gas and produce and supply the same to the national gas grid.

It was learnt recently that government was about to embark on a bidding process to award blocks in its offshore areas to foreign companies for the exploration of gas and oil. The bid documents and all other formalities were reportedly completed and the bidding was expected to start this month. Fast completion of the bidding for offshore blocks and start of operation in them by the foreign companies may lead to substantial production of gas sooner rather than later and ease the conditions which have been created from gas shortages.

The government has reportedly finalised the model of production sharing contracts (PSCs) to ensure that Bangladesh gets better benefits from them compared to the one that was signed for other fields in the past. New difficulties that are reportedly arising in going through the bidding process for the offshore areas like - India and Myanmar laying claims on parts of the exclusive economic zones (EEZ) of Bangladesh in the Bay of Bengal - should be sorted out at the earliest.

However, there is no reason to withhold the bidding process for these dubious claims from India and Myanmar. A large area in the Bangladesh EEG falls outside the disputed zones and this can be immediately awarded to IOCs on a block basis for start of exploration activities. Simultaneously, the issue should be taken up bilaterally with Myanmar and India for the fastest resolution.