Leading oil companies Shell Oil and Unocal have reiterated that gas export would be profitable for Bangladesh and brushed aside the contention that high transmission cost would mar prospects of profit.

Executives of the companies told The Daily Star that in case of large volume of gas export, transmission cost could be as low as 10 to 20 cents.

Earlier last week. Shell oil presented to the press a set of recommendations on utilisation of Bangladesh gas. It emphasised that by exporting gas. Bangladesh could earn three dollars per unit of gas sold. It, however, did not pinpoint what would be the transmission cost

Local energy experts later

gave their reaction to the media saying that gas transmission cost could be as high as two dollars per unit. So an earning of three dollars per unit would not cover the production cost.

Requesting anonymity, some officials of international oil companies (lOCs) agreed with the local energy experts that Shell Oil’s recommendations were over-simplified. They admitted that profitability of gas export could not be precisely calculated as easily as it was projected in the recommendations.

The officials said that for calculating the profit margin, a thorough technical and financial scrutiny into the gas export components including production and transmission should

be undertaken. And the follow up findings must be acceptable to Petrobangla.

Shell officially projected last week that Bangladesh could earn 800 million dollars a year by exporting six trillion cubic feet (TCF) of gas to India. The company said cost of gas production by lOCs in Bangladesh is 1.2 dollars per unit and, therefore, Bangladesh should seek a gas price more than that to make a profit. It also said that Petrobangla’s gas production cost was as low as 20 cents |)er unit.

Some local energy experts told the press that Shell’s calculations were unilateral and vague.'

A liigh official of Shell later Stold this correspondent that Shells estimate of three dollars per unit earning from gas export excluded transmission cost.

But he added that real cost of the export would depend on various contracts among the governments concerned, the pipeline operator and other authorities involved.

He admitted that the profit margin would also depend on who was the gas exporting authority — Petrobangla or the lOCs themselves.

"Yes. of course there are many issues which should be addressed first before we can draw the real picture.' the Shell official added.

A Unocal official said that the proposed Unocal pipeline under the Western Region Integrated Project (WRIP), which was designed to take huge 3uantities of gas up to the borering district of Kushtia. sought a supply- based tariff. Tarin would De very low when higher volume of gas would be transmitted through this pipeline, he explained.

"For the initial gas supply, tariff would be as high as 90 cents per unit. But when you are transmitting large volume of gas. tariff can come down to as low as 10 cents per unit.”

The official further said. "So when you are talking about export. you are talking about large volume of gas transmission. In this way. for the sake of argument, I can say that the transmission cost through WRIP pipeline may be as low as 10 cents. Transmission through other pipelines might cost the same way. he added.

"What we are trying to do is to show that Bangladesh can consider earning huge amount foreign currency by exporting S;as. That way. the gas market or Bangladesh would expand and oil companies would feel comfortable about investing more to discover and develop more gas fields.” said another Shell official. "But whether Bangladesh should export its' gas or not is entirely its’ own decision.”