Home Bangladesh Govt to speed up oil search after election
Bangladesh - Power & Energy - December 26, 2023

Govt to speed up oil search after election

Zarif Mahmud: Elections, so the search for fuel in the sea and in the shore is stuck. However, government contracts with various companies to import high-cost LNG and build terminals are one after the other.
Last November, the government signed three separate agreements with US-based Accelerate Energy for new LNG imports, increased capacity for conversion of imported LNG and construction of new LNG terminals.
This month, the Cabinet Committee on Public Procurement approved the draft contract for construction of another LNG terminal at Maheshkhali, which has been bagged by leading business conglomerate Summit Group. The in-principle agreement reached with the Summit Group on August 9 for long-term LNG imports is likely to be finalized before the elections. Two separate deals were also signed mid-year to import more LNG from Oman and Qatar. However, an international tender for offshore exploration work was supposed to be called in September last, but it was postponed due to the election.
Experts say the new deal to import LNG will make the country more import-dependent and at risk by delaying the country’s exploration of energy resources. There will be a bigger crisis in the energy sector.
In 2014, despite the settlement of maritime boundary disputes with India and Myanmar, Bangladesh has not yet started any exploration in the Bay of Bengal. But India and Myanmar have started extracting gas from their block. Lack of emphasis on exploration and extraction has led to a gas crisis in the country. Recently, this crisis has become evident. 2600 to 2700 million cubic feet is being supplied against the demand of about 4300 million cubic feet of gas per day.
According to the Department of Energy, many foreign companies have started working in the Bangladeshi part of the Bay of Bengal despite the possibility of huge reserves of oil and gas and other hydrocarbons, citing unprofitability. The Cabinet Committee on Economic Affairs approved the Production and Distribution Agreement (PSC) on July 26 to speed up the search in such a situation. After approval Energy and Minerals Secretary Dr. Md. Khairuzzaman Majumdar said, “It is being planned to call for international tenders within a month for offshore hydrocarbon exploration.”
The energy department had hoped to invite international tenders for exploration in the Bay of Bengal by this year. That’s why there was activity. But due to the elections, all the processes have stopped.
Recently, the Prime Minister’s advisor on electricity, energy and mineral resources. Tawfiq-e-Ilahi Chowdhury told, “Now is the time for elections.” No policy decisions are taken now except for day-to-day operations. Work will start again after the election.
On July 16, in a letter to the Minister of State for Power, Energy and Mineral Resources, Nasrul Hamid, the American multinational company Exxon Mobil offered to invest at least $30 billion in the exploration of oil and gas in the deep sea of Bangladesh. The company was interested in starting the two-dimensional survey in November itself. If the process is successful, Bangladesh is expected to save $3 billion per year. But everything is on hold because of the election.
Several companies submitted Expressions of Interest (EOIs) after soliciting expressions of interest from international companies to form joint ventures with Bapex for exploration in the hills as well as the Bay of Bengal. Sources said after the shortlisting of seven companies, Russia’s Gazprom, India’s ONGC and a Chinese company have been shortlisted. As the elections are approaching, this process is also closed for the time being.
Bangladesh Petroleum Corporation (Petrobangla) signed a long-term contract with Accelerate Energy at the beginning of last month, although the process of calling for tenders for offshore exploration was stopped last September. According to the agreement, the company will supply 10 to 1.5 million tons of LNG annually from 2026 to 2040. Apart from this, an agreement has been signed to increase the capacity of Accelerate’s existing floating terminal at Mashekhali in Cox’s Bazar. Besides, a term sheet agreement has been signed with the US company to set up another floating LNG terminal at Payra port in Patuakhali.
The Cabinet Committee on Public Procurement meeting on December 6 approved the draft contract for the construction of the country’s third floating LNG terminal at Maheshkhali. Summit Oil and Shipping Company Limited (SOSCL), a Summit Group entity, has bagged the job. According to the agreement, Summit will receive regasification (conversion to gas) charges of $300,000 per day for a period of 15 years after the terminal is operational.
As one, it is seen that the total income of the Summit will be around $18 thousand crores due to regasification charges of $3 lakh per day (excluding taxes and taxes). According to the agreement, the government will give this money to the summit in dollars. If the exchange rate of the currency increases, the expenditure of the government will also increase. And if there is a dollar crisis, new complications will be created.
Before the contract for the construction of the terminal, the government took a policy decision to enter into a contract with the company for long-term LNG import in the meeting of the Cabinet Committee on Economic Affairs on August 9. They will supply LNG for 15 years at an average of 1.5 million tons per year from 2026. The agreement should be finalized before the elections.
Muhammad Aziz Khan, chairman of Summit Group, told that talks are underway with Petrobangla on LNG supply. He expressed hope that the agreement will be signed before the elections.
Since 2018, the government has started importing LNG. Currently Oman’s state-owned company OQT supplies 1 to 1.5 million tonnes of LNG to Bangladesh. Last June, Petrobangla signed a new contract with OQT to bring another 1 million tons of LNG. Initially 10-year contract. They will start supplying LNG in 2026.
Earlier, another deal to increase the capacity of LNG, which is being imported from Qatar under a long-term contract, has been signed with Qatar’s state-owned Ras Lafan Liquefied Natural Gas Company Limited. Under the agreement, Bangladesh will import an additional 1.5 million tons of LNG annually for the next 15 years from 2026. Under the agreement signed in 2017, the Qatari company is supplying 1.82 to 2.5 million tons of LNG annually from 2018.
Geologist Professor Dr. Badrul Imam told, “This is an extremely negative thing. Despite the huge potential of oil and gas in the sea and mountains, exploration is delayed due to various excuses. However, LNG import activities are moving at a fast pace. I think there is less incentive to search. This may be because no individual or group benefits from the search. But if they import, they gain. Apart from this, I do not see any reason for negligence in the investigation. There is a lot of success in the very small amount of research that is done in our country. Our country has good reserves of oil and gas.
Pointing out that domestic energy exploration activities are going on slowly due to various reasons, the energy expert said, ‘For the reason that the exploration activities in the sea and mountains have been postponed, the LNG import activities are also supposed to be delayed. But not happening. In fact, other interests are being prioritized instead of the country’s interests.

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