Gas exploration needs impetus

With economies of the world facing headwinds due to the European conflict, experts have predicted of tough times ahead. The war is manifesting itself through a slew of unfavourable scenarios including high inflation, power outage, steady fall of Dollar reserves and a slowing down of the economic apparatus. The country is also facing acute gas shortage.

Bangladesh has been facing a gas shortage for some time with the situation becoming severe during winter months; however, to add more woe to existing misery, electricity crisis has taken shape.

The gas shortage is also causing a crisis in power generation as the government fails to supply gas to captive power users and gas-fired power plants with the required pressure forcing the power distributors to go for power cuts.

The production data paints a grim picture with majority of sectors, apparel, textile, ceramics, and food production experiencing a drop by 50 per cent in different regions, particularly in Gazipur, Narayanganj, Mymensingh, Dhamrai and Ashulia. 

As per a TBP report, the government of Bangladesh is aiming to achieve export earnings of $100 billion by 2026. But with the ongoing energy crisis it might be difficult to achieve the target as production in most of the industries is well below their capacity due to frequent shutdowns

Bangladesh recently touched a landmark in export earnings by crossing the $50 billion mark for the last fiscal.

Overall export earnings also surpassed the set target by 19.73 per cent in FY 2021-22, despite headwinds blowing from global crunch, according to Export Promotion Bureau.

Naturally, the expectation for the coming year is higher although if the current power shortage is left unaddressed, export oriented business sectors may face difficulty in manufacturing products with the RMG sector facing significant losses.

The production and supply from local gas fields has been declining since 2015 and will continue to decline in the near future. On the other hand, geoscientific studies testify that there is more untapped natural gas in Bangladesh than what has so far been extracted.

A two-year joint study (2001) by the US Geological Survey (USGS) and Petrobangla shows that Bangladesh has a mean probability (50 per cent) of undiscovered natural gas resources to the tune of about 32 trillion cubic feet (Tcf).

The Norwegian Petroleum Directorate (NDP) and Hydrocarbon Unit (HCU) in another joint study (2001) suggested that the mean probability of Bangladesh’s undiscovered gas resources is 42 Tcf. In 2011 Ramboll, a European oil and gas consultant updated the undiscovered gas resource assessments for Bangladesh and suggested that it is 34 Tcf in 90 per cent probability.

Earlier this year, state-owned Petrobangla shortlisted four international consultancies in the process of hiring a consultant to make its model production sharing contract (PSC) more attractive to foreign investors interested in offshore gas exploration. A revised model PSC could be used to underpin the next offshore licensing round.

Wood Mackenzie, IHS Global, Gaffney Cline & Associates and PriceWaterhouseCoopers are still in the fray after being technically qualified.

Recently power, energy and mineral resources adviser Dr. Tawfiq-e-Elahi Chowdhury encouraged the US companies for oil and gas exploration in Bangladesh’s offshore areas and to look at the prospects of nuclear power modular reactors in Bangladesh.

He also urged the US government to invest more through its International Development Finance Corporation (DFC) in Bangladesh’s renewable energy sector.

However, in inviting overseas exploration firms, the impact of the war needs to be kept in mind.

With economies slowing down with predictions of recession, firms may not feel encouraged to get involved in exploration in other countries.

Therefore, the government should be prudent to call in gas exploration companies from Asia, with special attention given to India.