Bangladesh News

Lack of timely and proper government decisions on gas pipeline and exploration activities will cause an acute gas supply crisis with a shortfall of at least 200 million cubic feet a day (mmcfd) this year and the situation will continue to worsen, sources said.

Gas crisis is already acute in Chittagong region with about 50 mmcfd supply shortfall.

One hundred mmcfd gas can generate around 500 megawatt power.

Though experts last year had proposed a simple solution to gas crisis costing about Tk 50 crore, no step was taken in this regard. Instead, the government is considering a massive project involving more than Tk 1,400 crore to build a new pipeline and install gas compressor devices.

Besides, for the last one year the government is talking about allocating funds for Bangladesh Petroleum Exploration Company (Bapex) to begin drilling of exploratory gas wells in different prospective areas but there has been no allocation.

Even, maintenance work of Titas gas field, one of the biggest, cheapest and accessible gas fields in the country that was facing serious gas leakage problems for the last two years, progressed at unbelievably slow pace. The leakage already caused loss of gas worth hundreds of crores of taka.

Sources said that assigned by the energy ministry in January last year, a Petrobangla committee in February recommended a small pipeline project, costing between Tk 40 crore and Tk 50 crore, to transmit high pressure gas from Titas field to Ashuganj-Bakhrabad (AB) pipeline. The proposal was highly appreciated by all affiliates concerned of Petrobangla.

The 14-kilometre long and 20-inch wide pipeline could transmit 200 mmcfd gas from the field to the AB pipeline at a high pressure — 1,000 pressure per square inch (PSI). The work would take just one winter to complete.

This would have solved the gas crisis in Chittagong, which has been hit hard for the last few years ever since gas production from the off-shore Sangu field dropped to the present level of only 50 mmcfd from 120 mmcfd. In addition to Sangu as a source, Chittagong’s gas demand is being met with 70 mmcfd from Bangura (Tullow), 30 mmcfd from Bakhrabad and a small quantity from AB pipeline.

The Petrobangla proposal says that supply of 200 mmcfd gas from Titas to AB Pipeline would mean that there would be a supply deficit in Dhaka region. Taking additional gas from Bibiyana gas field in Sylhet can easily meet this deficit.

Titas presently supplies 200 mmcfd gas towards Dhaka through the North-South Pipeline by reducing gas pressure down to 200 PSI. Meanwhile, Chevron, operator of Bibiyana field, says that it is ready to supply additional gas, but the lack of infrastructure is not allowing it to do so.

But this simple plan remains shelved.

Instead, the Gas Transmission Company Ltd (GTCL) is pursuing a project to install a 150-km long 30-inch wide pipeline to Ashuganj from Chittagong. The pipeline alone will cost around Tk 1,200 crore. Plus, the GTCL wants to install two gas compressors worth another 40 million dollars in this pipeline. It will take approximately three years to install this system, sources said.

The government is currently negotiating with the Asian Development Bank (ADB) over this pipeline project.

“The pipeline project is just one example of how casually the government is dealing with gas sector,” noted a highly placed source.

Officially, if no new discoveries are made, gas sector is set to face a crisis from 2011. But poor decisions or lack of those have already brought the crisis nearer.

“Another example of poor decision is about allocating funds for Bapex,” the source said.

Every year proposals are prepared and sent to the energy ministry to allow Bapex to drill one or two wells. But approval of such proposals comes after several years, making Bapex’s activities least effective. Since its inception in 1989, Bapex was hardly given any project to help it grow. Bapex only has a couple of producing gas wells which supply only 31mmcfd gas.

In October last year, the energy ministry planned that Bapex would be given eight projects, plus it would be given a new price for gas it produces to implement a financial order so that the company can make profits.

While international oil companies get close to three dollars (or around Tk 200) per thousand cubic feet (mcf) gas, Bapex gets an unrealistic low price of Tk 7 per mcf. The government’s bulk sale price of gas is Tk 115 per mcf.

The government was considering a number of projects for Bapex. These include developing Semutang, Begumganj and Shahbazpur gas fields and drilling exploratory wells in Kapatia, Srikail and Sundalpur gas structures. Besides, the government is considering drilling of two development wells in Salda river gas field.

But till date no decision was taken.

“The government should immediately allocate funds for drilling two wells in Semutang and Begumganj. Because we have no new exploration activity for quite some time,” said an official.

The Semutang field development proposal aims at gas production from June next year. Located in Khagrachhari, this field would probably produce about 30 mmcfd gas at a cost of Tk 65 crore.

The Bapex under a joint venture with Bangladesh Gas Field Company Ltd (BGFCL) and Sylhet Gas Field Company Ltd (SGFL) proposes to develop Begumganj field in Noakhali under a self-financed project worth Tk 205 crore. Initially, this field would produce 20 mmcfd. This project was given finance ministry’s clearance in August-September last year.

Lack of attention is also blamed for the declining performance at Titas field, which was dogged by heavy gas leakage from Well Number-3. Some other wells of this massive field also require maintenance work which are pending for quite some time. “For instance, gas production from Well Number-14 remains suspended for many months. It needs to resume production,” the official added.

This field, which has been serving as the energy lifeline of the country since the sixties, also needs to have two more new wells to enhance gas production.

“We hear a lot of promises from decision makers but nobody gives timely and correct decisions. If gas crisis continues, the power sector will suffer heavily and that will affect industrial expansion, affecting the national economy,” said the official.

Development activities in Chittagong are already being affected.

A source in Karnaphuli Export Processing Zone (KEPZ) said that due to lack of gas supply commitments, the new EPZ has shelved a plan to set up a power plant at the site to supply electricity to new industrial units.

“We need at least 40 mmcfd gas within this year,” said the source. “If there is no gas supply shortfall in the next five years, we are ready to install a 1,000 megawatt power plant at the KEPZ and supply power to the national grid as well as the industrial units. We alone are ready to consume more than 400 mmcfd gas in the next five years,” he added.