The energy ministry is virtually converting its Hydrocarbon Unit into a parallel of Petrobangla--giving rise to duplication of work, and discontent among Petrobangla officials.

Created in 1998 as a donor-funded one-year project and a technical arm of the energy ministry, the Hydrocarbon Unit has now been given a much greater role than envisioned in the original plan.

In February, the energy ministry decided that the unit would have its say in eight major areas: negotiating a production sharing contract (PSC), approval of PSCs, monitoring activities of oil companies under a PSC, undertaking upstream regulatory functions, formulating policies concerning

exploration and PSCs, oil and gas resource assessment, data management and production and depletion forecasting.

In these eight areas-- which had so far been handled by Petrobangla on behalf of the government--Petrobangla will have no say in approving PSCs, formulating policies concerning exploration and PSCs, and in production and depletion forecasting.

Moreover, Petrobangla and oil companies would have to provide the Hydrocarbon Unit all sorts of data and reports for resource assessment. Petrobangla would also provide data to assist the Hydrocarbon Unit in conducting its upstream regulatory functions.

Such assignments to the Unit, according to Petrobangla sources, contradicted the laws of the land. They argue that Petrobangla has

been given the responsibilities to handle all minerals including gas and oil and other natural resources underneath any land, territorial waters and continental shelf of Bangladesh under Article 143 of the Constitution and the Bangladesh Petroleum Act, 1974.

The Hydrocarbon Unit was in fact created to assist the energy ministry in analysing some aspects of the gas sector including the PSC and monitoring the activities in the sector.

In 1999, when the government undertook a project called "Strengthening of the Hydrocarbon Unit," Petrobangla had objected to its goals. A Petrobangla committee terming the Unit's certain tasks as "unnecessary duplication, redundancy and wastage" had been saying that being a government organisation and a statutory body, Petrobangla should be allowed to continue its assignments. The government should, in the fitness of things, rely on Petrobangla for data inputs, its assessment and evaluation without creating another organisation.

But since then the energy ministry went ahead with the project without seriously addressing the duplication and wastage issues.

"The main issue here is that the Hydrocarbon Unit is directly under the energy ministry, whereas Petrobangla has the powers to exercise autonomy," observed an official. "In recent years Petrobangla has become an eyesore of some oil companies, donors, policymakers and high officials because it often stands in their way."

The government undertook with NORAD a "Mid Term Review of Strengthening of the Hydrocarbon Unit" last year. The review found serious contradictory

issues in the Unit's Technical Assistance Project Proforma (TAPP) of 2000 and its work plan prepared later. The review report pointed out that the TAPP saw the Unit as a legal and regulatory entity while the work plan looked at it as a full-fledged functioning permanent body under the ministry.

Describing Petrobangla as the sole organisation to recommend actions related to PSCs, formulation of plans and processing of projects for approval by the ministry, the review says, "When the IOCs (international oil companies) describe Petrobangla as a competitor for the private sector, the companies do not properly give a picture of the real situation.

"If Petrobangla as a state-owned enterprise cannot perform the regulating and monitoring job with experienced officials and other back-up services available from the companies (nine companies owned by Petrobangla), how can a small unit within the government serve the purpose?"

In February, a meeting on "Mid

Term Evaluation Report of the Strengthening of the Hydrocarbon Unit Project", chaired by Energy Secretary (in-charge) Khandaker Shahidul Islam, admitted that there were confusions and ambiguity regarding the responsibilities of Petrobangla and the Hydrocarbon Unit.

The meeting added that while Petrobangla continued to negotiate PSCs on behalf of the government, the unit would offer views, comments and recommendations on approving the PSCs if instructed by the ministry.

In monitoring PSC activities, the unit would participate in the Joint Management Committee and Joint Review Committee, which are typically formed with representatives from the oil companies and Petrobangla-- signatories of the PSCs.

The unit would have a "mini data bank" that would have the sector's cultural, production and resource assessment data, whereas Petrobangla would be responsible for seismic and other related data.