Petrobangla, the state-run oil, gas and mineral resources company, has opened talks on leasing out two more gas fields to US-based energy corporation Chevron in a bid to increase gas extraction in the country amid a global energy crisis.
A senior Petrobangla official, on condition of anonymity, said they were considering contracting Chevron for the Rashidpur Gas Field and the onshore Block 11.
"We have informed Chevron about Rashidpur and asked them to submit a complete bid. And, in the case of Block 11, we asked them to start making preparations."
Discovered in 1960, Rashidpur is one of the largest gas fields in Bangladesh. Onshore Block 11 is still under exploration, reports bdnews24.com.
Bangladesh Petroleum Exploration and Production Company, or BAPEX, signed an agreement with Japan's Mitsui Oil Exploration Company, MOECO, in November 2020 to jointly explore blocks 8 and 11.
Although MOECO and BAPEX are yet to release any information on Block 11, sources close to the matter believe that there are gas reserves in the block.
“Chevron has expanded operations in the field. These are old proposals. We have approved them,” said Nasrul Hamid, state minister for power, energy and mineral resources.
"They haven’t given us a written proposal for Rashidpur yet. But we are going to perform drilling in Rashidpur. If they give us an offer, we can consider it."
Chevron had earlier expressed an interest in gas exploration and extraction in Rashidpur, Chhatak and Block 11. However, Petrobangla is not currently interested in leasing out Chhatak as it remains embroiled in a legal dispute with Canadian firm Niko over the gas field, the senior official said.
"We advised Chevron to prepare for Block 11. MOECO has been told to finalise everything by November.”
"Regarding Rashidpur, Chevron has been told to submit a complete proposal. They have just shown a simple interest. It is very preliminary.”
The official said they have written twice to Chevron and had a meeting with Petrobangla. But Chevron is yet to make a full proposal.
However, Chevron's entry into the fray has raised a few eyebrows owing to the fact that BAPEX still has an agreement with MOECO on the exploration of blocks 8 and 11. Addressing the matter, the official said, “There hasn’t been any progress yet and so, MOECO has been given until November to make some headway. BAPEX signed a memorandum of understanding with MOECO. The Japanese firm has been working for 5-6 years. It won’t be right to drop them suddenly.”
"We told MOECO to hurry up and make a proposal or leave.”
"The MoU includes the entirety of blocks 8 and 11. Wherever MOECO wants to work on, they can do so with BAPEX. But we won’t give them any more time after November. Either they have to promise to work within a specified period of time, or leave.”
“We told Chevron to wait until November.”
When Chevron Bangladesh spokesman Shaikh Jahidur Rahman was asked about the issue, he did not provide a clear answer.
Highlighting the company's involvement in Bangladesh's energy sector for 25 years, he said in a statement, "In addition to ensuring today's energy security, we are always interested in partnering with the government of Bangladesh and the people of this country to explore future possibilities.”
"However, as per our longstanding policy, we are not going to comment on the specifics."
There are a total of 28 gas fields in Bangladesh, along with 48 exploration blocks on land and sea.
According to Petrobangla, a total of 2.31 billion cubic feet of gas was expected to be extracted from the 20 gas fields in the country on Monday. And, another 597 million cubic feet of LNG are imported into the country.
As much as 1.42 billion cubic feet of gas, more than 60 percent of the total output, will be extracted from the three gas fields in Bibiana, Moulvibazar and Jalalabad under the auspices of Chevron. The rest of the gas fields will contribute 40 percent of the supply.
Economic expansion in Bangladesh is increasing the demand for gas. But extraction from the country's gas fields is decreasing. To meet the demand, the government has been importing 500 million cubic feet of LNG per day under a long-term contract since April 2018. It also brought around 300 million cubic feet of LNG from the spot market.
But as the Russia-Ukraine war continued to drive up the cost of fuel globally, spot market imports of LNG were halted on Jul 1. Bangladesh entered a phase of austerity as rolling power outages were introduced in a bid to conserve power amid the gas shortage.
Earlier, energy experts questioned the wisdom of importing gas instead of focusing on extraction in the country. The government, too, is now emphasising quick extraction of gas.
China's Sinopec International Petroleum Service Corporation was awarded a contract last July to drill a well in Haripur, the country's first gas field.
Russia's Gazprom has been roped in to work on the new gas field in Bhola. Gazprom began drilling a well in the Shahbazpur Gas Field on Friday.
BAPEX Managing Director Mohammad Ali said the Russian firm will gradually drill two more wells there.
The government plans to drill 46 new exploration, development and workover wells in the next three years to increase gas output.
Despite claims from various organisations that there are large gas reserves in the sea, there hasn't been any progress in terms of exploration or extraction.
Officials said that efforts are being made to update the framework of its production-sharing contract (PSC) in order to initiate offshore gas exploration and extraction work.
According to the government, the recoverable and proven reserves of gas fields discovered in the country is 28.42 trillion cubic feet. From 1960 to December 2021, 19.11 trillion cubic feet of gas has been extracted.
As much as 675 billion cubic feet of gas has been extracted from reserves of 3.1 trillion cubic feet in Rashidpur.
Sylhet Gas Fields Limited is responsible for the extraction work in Rashidpur. It is possible to extract 60 million cubic feet of gas per day from the field.
Energy policy expert Md Tamim believes a foreign company should be tasked with extracting the gas if Petrobangla cannot do it.
“There are a lot of reserves in Rashidpur. I think Chevron should be awarded the contract quickly through negotiations. Negotiations must be carried out on the basis of the current PSC.”
Tamim, who served as a special assistant to the former caretaker government's chief adviser on energy, said: "We have been facing a gas shortage since 2007. Since then, there has been a lot of extraction within the country. It was mainly carried out by Chevron. Between 2007 and 2013, about 700-800 million of the extra million cubic feet came from Chevron. PetroBangla extracted less.”
On why Petrobangla did not increase production in Rashidpur, Tamim said, “It means that they simply couldn't."
About the matter, Petrobangla Chairman Nazmul Ahsan said, "We are trying to extract gas from onshore gas reserves with the utmost urgency. Exploration and extraction efforts are ongoing in places where there is potential. We are trying to extract gas on a priority basis and bring it to the grid line.”
