Petrobangla failing to increase gas supply next year as per forecast; crisis to remain during next election; LNG tender delay, Chevron’s gas cut kills hope
In April last year, Petrobangla made a rosy forecast that by June 2013, it would be able to almost double the country’s gas supplies. But now it has drastically revised its prediction, saying the increase would be way less than one third of last year’s projection.
This massive difference would leave the country reeling under a gas crisis like the one in early 2009 — when the Awami League came to power — because of a fast growing demand for gas.
It also means the government plan for increasing gas-based cheaper power and helping industries grow further or lowering energy prices will not be a success by the time the country goes for the next national election.
At a press conference in April last year, Petrobangla Chairman Hussain Monsur said gas supplies will rise by 1,785 million cubic feet per day (mmcfd) in June 2013. By December 2015, due to the programmes taken up by Petrobangla and its subsidiaries, another 680 mmcfd gas will be added, exceeding the country’s demands.
Back then, Petrobangla could supply maximum 2,000 mmcfd while there was a shortfall of 500 mmcfd, which had been affecting power generation, industrial and commercial activities as well as domestic burners. To tackle this gas crisis, the government was compelled to restrict giving new domestic and industrial gas connections, which remains in effect till today.
But then Petrobangla failed to perform.
Last year’s gas growth projection included 500 mmcfd gas by importing liquefied natural gas (LNG) from the Middle East by setting up an LNG terminal in Maheshkhali by December 2012. As of today, Petrobangla could not award a contract to a terminal builder because the chairman insisted that the interested bidders must complete the job within the tenure of this government, which the bidders declined. Petrobangla became flexible later but meantime it lost valuable time.
“If it could award such a contract now, it would take no less than two years to build the LNG terminal,” said a Petrobangla official.
The 2011 projection also included US oil company Chevron’s promised gas supply of 600 mmcfd incrementally from this year from its three gas fields in Sylhet region. But it did not happen. Chevron last month announced it would supply 300 mmcfd — instead of 600 –from 2014, from the Bibyana gas field.
Chevron in mid-2010 promised to bring in 940 mmcfd gas from the three producing fields of Bibiyana, Moulavibazar and Jalalbad. But as it failed to find new reserves in Moulavibazar, it slashed the forecast to just 600 mmcfd last year.
To bring this extra gas, the gas transmission company Ltd under Petrobangla floated a tender for construction of a 190 km 36-inch pipeline. The tender offers opened recently drew prices double the originally estimated prices. This tender may now be cancelled.
“Besides, now that Chevron has slashed its promised supplies to 300 mmcfd, we think installing this new pipeline is a waste of money. We can bring this extra gas using the existing North South pipeline and the Muchai gas compressor along with two new compressor stations (being set up now),” said the Petrobangla official.
The remaining gas as in the forecast is supposed to be ensured by Bangladeshi exploration company Bapex and other drilling companies from various national gas fields.
But, as both LNG and Chevron hopes have faded away, the Petrobangla chairman on August 30 gave the energy ministry a revised picture of what may be possible to achieve.
This revised forecast entirely talks about new gas supplies from drilling and work-overs of Bapex and Russian company Gazprom in the existing national gas fields. The chairman now says, by December next year, these will be able to add 550 mmcfd gas.
A high official of Petrobangla, however, says that during this period, it may at best be able to add only 400 mmcfd and that this forecast uses over-estimated figures.
The chairman’s forecast says that in the next 15 months, Bapex will drill eight wells and conduct three work-overs of existing wells. Under an unsolicited and costly deal, Gazprom will drill another eight wells in different fields at the same time. Their efforts combined are expected to add this 550 mmcfd gas unless some of the attempt fails to hit gas in the existing fields.
“This is an enormous challenge for Bapex. It is almost unrealistic to expect that Bapex will conduct so many work,” said the official.
Since 2009 till August this year, Bapex drilled five wells and conducted eight work-overs helping it to add 125 mmcfd gas. Some of its work are set to bring more gas in the next few months. But all of these quantities are small, given the level of energy crisis.
“But, to downplay such a grim situation, Petrobangla in recent months is frequently announcing new discoveries in the existing gas fields,” noted the official.
“You don’t discover gas in an existing field where gas has already been found. What Bapex is doing in old fields presently is called appraisal of a field. It is a standard practice in the gas industry to drill new wells to get better and clearer ideas about the size of an old field. Once you find a new deposit, you correct your previous reserve figures … Unfortunately this old process is now being shown as discovery to give the government a false sense of success.”
Since the Awami League came to power, different efforts succeeded in increasing gas supplies up to 2,240 mmcfd from 1,760 mmcfd of early 2009. Despite the increase, the shortfall remains unchanged due to a spiralling demand for gas.
Courtesy of The Daily Star