Set to become strong player in oil and gas
Sharier Khan
Bangladesh Petroleum Exploration Company (Bapex) aims at striking around 2.5 trillion cubic feet (TCF) gas and providing an extra 200 million cubic feet gas per day (mcfd) within next seven years. The long-ignored and cash-starved Bapex has set to achieve its first operating profit from next year and become a well-paying and high-end job provider by 2013 thanks to a policy intervention and a seven-year package of Tk 3,200 crore investment promised by the caretaker government.
From now until 2011, Bapex is expected to recruit 370 officers. Till 2015-16, Bapex plans to drill 15 exploration wells and strike gas in at least six instances.
Since its inception in 1989, Bapex was given only eight projects till last year, leaving exploration and development of the oil and gas sector to foreign companies almost entirely.
As a result, Bapex now produces a paltry 40 mcfd gas, while four foreign companies — Chevron, Cairn, Tullow and Niko — produce around 700 mcfd.
Bapex was so sidelined that when it was created out of Petrobangla, it was given no producing gas fields, which could ensure its income and development.
Instead, it relied on percentage from Petrobangla against its past discoveries and assets (which were given to Sylhet Gas Field Company Ltd and Bangladesh Gas Field Company Ltd).
When it started producing gas from two small fields of Fenchuganj and Salda, it was offered a tariff of only Tk 7 per thousand cubic metres, while the foreign oil companies get close to three dollars (or around Tk 200) for the same.
Petrobangla sold the same gas at Tk 93. Bapex’s gas production cost is between Tk 25 and Tk 50 per mcf.
In August last year, the government responding to a proposal from Bapex increased its gas sales tariff to Tk 25 per mcf effective from July 2008 and assured it of a seven-year investment of Tk 3,200 crore.
Now Bapex is suddenly over-loaded with several exploration projects. The state-owned company is also recruiting a good number of officers under a new organogram to bring in fresh blood in its activities.
As there had been no fresh recruitment of officers, both Bapex and Petrobangla now lack adequate experts to look after the national interests.
Presently, Bapex employs 350 officers and 700 staffs. The new organogram aims at having 600 officers and 850 other office staffs.
Of the 850 staffs, 450 serving as peons, cleaners, etc would be outsourced as Bapex would employ only technical and professional staffs.
“Till 2011, we’ll recruit 370 officers. Of them, we aim to retain at least 50 percent,” says Bapex Managing Director Muhammad Imaduddin.
“We also intend to make Bapex job attractive and double the present salary structure by 2013. We will not depend on the government for the pay,” he adds.
“It has been well recognised that in the oil and gas sector, competent manpower cannot be retained without an attractive salary package.”
Putting importance on developing manpower, he said, “Who is going to oversee the activities under the Production Sharing Contracts (PSC) for Petrobangla? Such people will have to be developed and Bapex would do that.”
Imaduddin’s financial forecast is also clear. In 2007-08, Bapex earned Tk 46.4 crore, of which Tk 37.5 crore came from Petrobangla as “Bapex margin” and the rest from sales of 11 billion cubic feet (bcf) gas.
With an overhead expenditure of Tk 78 crore, Bapex had to rely on earnings as the third party contractor for other gas companies.
This earning will change from the current fiscal year as the government has increased the gas tariff to Tk 25 per mcf. This year, Bapex would sell 17 bcf and earn Tk 45 crore and also get Tk 37 crore from Petrobangla. There will be a revenue deficit of Tk 4.5 crore.
But from 2009-10, Bapex is likely not to face any deficit. That year it is projected to sell 24 bcf gas for Tk 60 crore and draw a Tk 41 crore Bapex margin. After its overhead expenditure, Bapex would be left with Tk 6 crore surplus.
In 2010-11, Bapex expects the government to increase its gas tariff to Tk 50 mcf as it has already been promised. It will then increase the company’s earning to Tk 183 crore by selling 36 bcf gas. It will also take Bapex margin of Tk 45 crore and enjoy a surplus of Tk 123 crore.
From 2011-12, Bapex will no longer take the margin from Petrobangla, but it would sell 50 bcf gas and enjoy a revenue surplus of Tk 136 crore. By 2015-16, it aims at selling 72 bcf gas and enjoying a surplus of Tk 184 crore.
“By 2011, we hope to supply 140 mcfd gas to the national grid. But this is only 6 percent of the total gas supply. If we continue to get support, then we will start to make profit,” Imaduddin notes.
“For years, Bapex was ignored. But now there is a sudden focus. If the government invests 3,200 crore taka by 2015, we believe Bapex will become self-reliant on drilling and exploration and have a strong manpower base,” he hopes.
Courtesy: thedailystar.net
