Chittagong, Bangladesh: A number of Bangladeshi citizens are criticizing the exploration deal made with US company ConocoPhillips, as the minimum share of Petrobangla will be 55 percent if recoverable oil or gas is found in the deep sea blocks in the Bay of Bengal, according to a highly-placed source from Petrobangla.
Petrobangla's share will be a minimum of 55 percent if ConocoPhillips produces gas of 75 million cubic feet per day (mmcfd), a very small quantity. Its share will go up close to 80 percent if gas production hits 600 mmcfd (equivalent to more than one-fourth of the present gas supply), he said.
“Given the fact that the blocks are 280 kilometres off the coast, producing 75 mmcfd gas is not viable. If the company ever finds enough gas to market, it has to be around 300 mmcfd. In that case, Petrobangla's share will be 65 percent.”
But critics claim that Petrobangla's share will be only 20 percent.
“The US Company will export all the discovered gas by putting pressure on Petrobangla to give it a very high price for the gas. And in case of the demand for a very high price, Petrobangla will have no option but to turn it down, and thus let the company will invoke the export clause,” the citizen group said.
“ConocoPhillips will never bring gas through the pipeline. It will process it in a ‘floating LNG terminal’ and export it.”
“The export option will be a very difficult one for the oil company.” The official explains that, “firstly the company will have to set up an LNG processing plant in the mainland. It will have to invest for the 280 km pipeline to bring the deep sea gas to the plant. The plant should have a minimum production capacity of 5 million to 7 million tons per year, and have a production life of 20 years, which means the gas field must have a significant recoverable reserve.”
“To our knowledge, there are presently 50 LNG processing plants in operation around the world and 30 more under construction. None of those are floating. The floating LNG terminals are for docking purposes and not for LNG production,” the Petrobangla official noted.
The critics’ group also claimed that the oil company will take out the majority share of gas in the form of cost recovery.
“Petrobangla's deals harm national interest where the PSCs have made gas costly, while gas produced by the national companies is cheap. All explorations and developments must be done by the local Bapex, instead of foreign oil companies.”
“The gas produced by local companies is cheap mainly because Dutch company Shell Oil gave Bangladesh all five of the major gas fields, including the Titas field, which it discovered in the sixties and early seventies, for a token 4.5 million pounds. In terms of oil price ($70 per barrel), the gas reserve of these fields is worth around $130 billion,” according to a Petrobangla official.
“This means Bangladesh was not required to pay the cost for exploration or development of these fields.”
“Bapex is now making its own exploration and development. We estimate that the cost of Bapex's gas will be Tk 100 per thousand cubic metres.”
“As per contract, when ConocoPhillips discovers enough gas, it will at first bring that to Petrobangla with a development plan. If Petrobangla agrees, then the company will supply gas to it,” he said. “Petrobangla will buy only the company's gas plus the company's gas share for recovery of its cost. We will get our share for free.”
The Petrobangla official also watered down excessive optimism about making huge discoveries in the bay. He mentioned that two offshore gas fields of Burma near Bangladesh have 7 tcf (trillion cubic feet) of gas, while the only discovered offshore gas field of India in Godabari has 14 tcf of gas. The problem with the Indian field is that the reserve is spread in many small segments and there is no single stream. As a result, India could not market this gas in a large way even 10 years after its discovery.
The parliamentary committee on government institutions has praised the deal with ConocoPhillips as 'visionary'. At a meeting on June19, the committee called upon different quarters to clear their misconceptions on the deal, a parliament secretariat press statement said.
At the meeting, the Energy Division told the committee that ConocoPhillips would be bound under the contract to sell all extracted gas to Bangladesh, and the contract had been signed according highest priority to national interest in order to increase energy capacity and availability, it said.
