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The gas utilization committee heading for a new debate

Nuruddin Mahmud Kamal
***We have almost been pressured to believing that there is something fundamentally wrong with us. There isn't. We are simply suffering from a state of mental confusion created by the politico- bureaucratic tangle. We need to take a moratorium on political overreaction until we catch our breath and all the facts are in, so that we can understand what is happening and what our options are. The gas export issue, has not yet fully touched a common man because he has not derived any benefit out of domestic gas use (almost 96 per cent kitchens in the country cannot avail of the advantage of environment friendly natural gas).***
THE National Gas Utilization Committee Chairman Azimuddin Ahmed reportedly (DS13 May 2002) has drawn his conclusion to recommend limited pipeline export of gas commensurate with his earlier contemptuous advocacy, "Gas export is no more an option, it's a compulsion". Supporting this contentious views, one loyal member, who shuttles between the two committees, went a step further to say", the total payment to the IOCs in the next 10 (ten) years will be five billion U.S dollar including payment to the Independent Power Producers (IPPs)." I have no idea who is responsible for such naivete ; it is quite possible that this is their understanding. Some one should tell them a simple and even stark truth. And that truth is whatever is their stake, "gas cannot be exported to India at the pressure of United States." In any confrontation between the people and the pressure groups, the people are likely to win. Such unwarranted extension of the terms of reference of the committee simply exposes their inner motives. Besides the Production Sharing- Contract (PSC) for Block-12 (where Bibiyana gas field has been discovered), signed in 1995, has no provision for export of gas through pipeline. Instead, Article 14.6 of the PSC stipulates, "Contractor shall have the right to export natural gas in the form of LNG." Article 14.8 states, " Contractor has the options to sell contractor's share of natural gas in the domestic market to a third party, subject to Petrobangla's right of first refusal. "Article 14.9 further adds, "The parties agree to dedicate their proportionate share of natural gas and deliverability to domestic marketing opportunities, for which Petrobangla and contractor may enter into separate sales and purchase contracts with the buyer." As a conscientious citizen, I am simply at a loss to understand how the gas utilization committee is considering gas export prior to receiving the report of the gas reserve committee?
The more impelling issue, however, is the drift and distortions being created by some members in arriving at a consensus on the principles and guiding frameworks of this desk work, which can not be considered an original gas assessment. Apparently, both the committees are suffering from conjunctivitis syndrome. It took over 135 days to even consider the published USGS/Petrobangla Energy Assessment Report presented in February 2001. It is also a pity that some professionals' committee, as a last resort, helplessly falls back on the USGS study and considers the statistical mean of 32.5 trillion cubic feet (Tcf) as gas reserve! . This can at best be taken as a mere guideline for the country's gas potential to attract future exploration effort. In any case, even the USGS experts while making their presentation in February, 2001 did not claim the statistical numbers as reserves, rather they categorically mentioned them as resource (which is considered yet unknown). More importantly, the study focused on the country's undiscovered resource potential. To be, more specific, the objective of the USGS/Petrobangla study was to determine the undiscovered gas resources that might be found and recovered using advance technologies over a period of 30 years. The study provides a base upon which the nation's exploration activities may expand in future. Consequently, considering these compromised solutions proposed in the most recent Gas Assessment Committee meetings may not stand the test of time. There is also a fear that the energy sector institutional framework being governed by a small number of essentially anonymous men of power might usher in more chaotic situation with their arbitrary and ad hoc decisions. On a time-power scale of history, gas's reign in Bangladesh is relatively short and the proven reserves assessed by some internationally reputed professional organizations (during 1974-2001) is inadequate compared to the country's demand. Yet, some overenthusiastic mem-
bers of the Committees are very keen to project an inflated gas reserve figure and corresponding deflated domestic demand scenario perhaps to satisfy the Energy Ministry mughals, the international oil company (Unocal) and Tata Energy Research Institute (of India). Nevertheless, some motivated members are grappling with the wrong signals about proven gas reserves established earlier and are looking at these figures with an eye of suspicion. Thus, the committees are heading towards a new debate and new confusion.
The redeeming feature is that the men of gas in Bangladesh (not new converts) have perceptive insights into the involved nature and future of a modern social order. They are operating on a frontier of scientific and technological knowledge. Unfortunately, these knowledgeable professionals engaged in Petrobangla are not consulted -rather they have become back benchers. On the other hand, the IOCs' motivation in Bangladesh has remained entangled with selfinterest only. They do not appear to appriciate any check and balance in the system or in the market place -ensured against any concentration of economic power that might threaten the public good. Therefore, to preclude arbitrary or capricious decisions in the gas sector proper political power needs to be exercised with caution and through the right institution. Government should exist for people rather than for men of government. In between there is however a catch. The cumulative ability of the people to understand and come to terms with the policy dictates of the government is heavily influenced by the bureaucratic tangles.
To most of the people in Bangladesh, it has now become clear that they are not getting all the goods, services and rights they deserve. They perceive a sizable gap between society of scarcity and a society of abundance, between what is and what might be. And the effort to close this gap, cheap and plentiful high production energy is necessary. Currently, we consume about a nine million tons oil equivalent of indigenous natural gas (and save almost Taka 8500 crore annually), while for only 3.3 million tons of imported oil the country spends Tk. 3100 crore per year. Together with an insignificant amount of water power at a rate equivalent to burning slightly over 84 kilogram of oil equivalent (kgoe), out of the total consumption of energy (240 kgoe), the country's total energy use is almost equal to two days consumption in the United States. Yet, some of our political bosses lose their sense of proportion to meet their own personal agenda and appear to conduct their actions to private interests and foreign government's interests.
Nevertheless, a facade of
national prosperity depands on, among other things, adequate and timely development of indigenous energy for substituting the expensive imported ones. The decades of 1980s and 1990s have gone through the process, which must be expanded to increase the access of natural gas as primary energy throughout the country particularly in the western zone across the river Jamuna to facilitate enhanced generation of electricity and production of fertilizers. The spotlight must be carefully placed on technological advances and also on meeting the domestic energy needs. There has been a good deal of lobbying and informal pressure by the International Oil Companies (IOCs) and their trade associates, the press and civic groups for the past two years. Besides some academics, retired bureaucrats and businessmen have ganged up with the IOCs to sell out a substantial quantity (about one third of the proven + probable) of present recoverable reserves transposing fictitious gas resource (not reserve) position without substantiating their claims on a scientific basis. For instance, Unocal's gas export proposal has some deceptive information on gas supply. Bibiyana gas field (in Block-12) has been properly assessed as per international oil field practice through an internationally reputed certifying agency (Degolyer and Mc Naughton of USA) at 2.4 Tcf (reserve). But the company in their proposal mentioned supply of 500 million cubic feet per day (MMcfd), which would mean a commitment of 3.65 Tcf in 20 years (500 x 365 x 20years). Why did the company suppressed the facts? There is also another important aspect to the proposal. Unocal mentioned that the Government/ Petrobangla would earn as their share of profit US $ 3.7 billion from the proposed gas sale to India. One can easily calculate that the total income for 20 years should be US $ 10.5 billion (at US$ 3 per MCF), 50 percent of which should be US$ 5.25 billion for Bangladesh. Incidentally, Petrobangla purchased gas from Sangu gas field in 20002001 @ US$ 2.9 per MCF).
There are indications, on the other hand, that the chairman of the Gas Utilization Committee knows what he wants to do over the next week or so prior to submission of the report. He has begun by indicating that the draft made specific recommendations for export giving first preference to Pipeline export to India (The Financial Express, 13 May, 2002). Electricity export, according to him, is viable, but depends on the desire of India. I am quite surprised that the former bureaucrat- chairman Azimuddin Ahmed does not know that India is very keen to set up in Bangladesh about 1000 MW power plant in two stages (a proposal lying with the Power Development Board since
1999) and would like to import surplus power after consumption in Bangladesh. On top of everything , the western zone of the country (across the river Jamuna) is an energy hungry area. At least 1000 MW (new generation) electric plants should be installed by 2005 using natural gas that has already reached the western zone through a 30 inch dia gas pipeline. This pipeline is fully dedicated for domestic gas supply. The Gas Utilization Committee should understand that a 20 or 30 inch dia pipeline cannot be laid at every weekend, even for limited sale of gas to India.
On gas reserves, those not mindful of the people's interest usually quote two study reports, one, "USGS / Petrobangla joint study on Energy Resource Estimation (2001)", and the second, Bangladesh Petroleum Potential Resource Assessment (2002) prepared by the Norwegian Petroleum Development / Hydrocarbon Unit. Both these reports are not specifically Reserve Estimates. Yet, the pseudo- professionals and vested interest groups try to use them as pressure tactics and public relations through free-loadings by the IOCs operating in Bangladesh. The HCU/NPD study also tried to provide updated knowledge of the reserve of the existing gas fields and also about the undiscovered resource potential of the country through computer simulation and not through any field investigation. They however, carried out a Reserve Estimate by arbitrarily enhancing the average recovery factor from 60 per cent to 70 percent without substantiating any scientific basis for upgradation.
Thus, we are being harassed by vested interests almost six days a week. The private enterprise system is threatened by the hostility and suspicion which has been generated against business. Consumer groups tell the government that they are being held hostage by business. Politicians capitalize on this to try to restore some gloss to their tarnished images by promising to protect the consumers. Some so-called investigative news media flits back and forth, giving us bits and pieces of sensationalism and shorthand about everything. We are emotionally bruised and disillusioned by crime, violence, the deterioration of our moral fabric, and rise in price of everything. We have almost been pressured to believing that there is something fundamentally wrong with us. There isn't. We are simply suffering from a state of mental confusion created by the politico-bureaucratic tangle. We need to take a moratorium on political overreaction until we catch our breath and all the facts are in, so that we can understand what is happening and what our options are. The gas export issue, in my opinion, has not yet fully touched a common man because he has not derived any benefit out of domestic gas use (almost 96 per cent kitchens in the country cannot avail of the advantage of environment friendly natural gas).
Nuruddin Mahmud Kamal is former Additional Secretary to the Government and former Chairmen, Power Development Board.