Bangladesh News

On August 9, 1975, Bangladesh government made a deal with the world’s oil giant Shell Oil that turned out to be the best deal the country has ever made, long forgotten documents show.
For a meagre 4.5 million pound sterling, the country that day purchased from Shell Oil the gas fields of Bakhrabad, Habiganj, Kailastila, Rashidpur and Titas with 65 percent of the discovered recoverable gas reserve of the country.

In terms of today’s oil price ($70 per barrel), gas reserve of these five major fields would be worth around $ 130 billion, experts say.

In terms of on-shore gas price paid to international oil companies at the rate of $2.65 per thousand cubic feet, the reserve is worth around $35 billion.

Again, the government paid this negligible sum to Shell Company of Pakistan (Scop) in instalments from 1975 to 1985. And it took over these fields under Bangladesh Industrial Enterprises (Nationalisation) Order 1972.

The agreement never drew public attention due to political turmoil that began with the coup and killing of Bangabandhu Sheikh Mujubur Rahman on August 15, 1975. The gas field operators themselves are unaware of how they came to own these fields, sources said.

Shell Oil that explored and developed these fields in the sixties owned these even after the independence of the country.

An official of Petrobangla told The Daily Star that Shell oil did not see the gas market potentials in Bangladesh and it just wanted to leave the country. Back at that time, the country barely consumed a couple of hundred million cubic feet per day (mmcfd) gas.

According to the March 2005 Hydrocarbon Unit Reservoir and Production Report that puts the country’s total recoverable gas reserve at 20 trillion cubic feet (tcf), these five fields have 13 tcf gas.

Habiganj field had a reserve of 3.85 tcf (after consumption for decades, the recoverable reserve in March last year stood at 2.27 tcf), Bakhrabad 1.04 tcf (now 0.4 tcf), Titas 5.12 tcf (now 2.78 tcf), Kailastila 1.9 tcf (now 1.56 tcf) and Rashidpur 1.4 tcf (now 1.05 tcf). The country’s remaining 17 fields offer 7 tcf reserve.

Since discovery, these five fields have produced 5.6 tcf gas. In terms of gas price charged by the oil companies, it is worth $14.97 billion and in terms of current oil price, it is worth $56 billion.

“We have been unbelievably lucky with that deal. These five gas fields are serving Bangladesh as the energy lifeline and we did not have to spend anything like Shell Oil did to discover the fields and then develop them,” commented a top official.

Titas gas field has been the biggest energy supplier in the country. It is now producing over 470 mmcfd against the country’s total demand for over 1,450 mmcfd.

With a recent drilling and development of two wells, Titas field now has 16 wells. While the total task required an expenditure of less than Tk 60 crore, Bapex charged only Tk 18 crore for the drilling of two wells. “In contrast, Irish company Tullow drilled a single well in Bangora for $4 million (Tk 28 crore),” noted a Bapex official.

“With small but regular investments, except for Bakhrabad which is nearly exhausted now, these gas fields will continue to energise Bangladesh. The government should always give top priority to these fields,” he added.