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The country's profit-loss debate on gas exports

Recently, the government reintroduced a new production sharing contract (PSC) with the provision to export gas explored from Bangladesh's offshore blocks in the Bay of Bengal. This was apparently done to persuade international oil companies to extract gas from the offshore blocks. Robab Rosan of The Daily Star talks to Prof Anu Muhammad, member-secretary of the National Committee to Protect Oil, Gas, Mineral Resources, Power and Port, and Prof M Tamim, a former adviser to the caretaker government, to know their thoughts on the issue.
How do you view the new PSC that reintroduced the provision for the foreign drilling companies to export gas extracted from Bangladesh's offshore blocks?
I have seen that every time a new PSC is drawn, transparency, national interest, and the longterm results or consequences of a PSC are not considered. In most cases, it is seen that the PSC is drawn based on the model proposed by companies that will be its beneficiaries.
We have always argued that this model of PSC is not in line with the national interest of Bangladesh. The export provision was kept in the 2008 model of PSC as well. We had then demonstrated that 80 percent of gas would be exported to foreign countries through the drilling companies, using the opportunities provided in many of the clauses and the export provision. The export provision was suspended in the face of our protests. However, later it was seen that the opportunities for
Bapex is very powerful onshore. Still, onshore work is given to foreign companies instead of Bapex. Capacity cannot be created in a day. It needs time and budget. Unfortunately, budget allocation for mineral resource exploration and extraction is very limited.
multinational companies were expanded in other areas. It was seen that it would cost more to buy gas from the extraction companies than to import gas.
You'll see that LNG is being imported citing the gas crisis in Bangladesh. This so-called crisis is also used to build coal-based power plants and nuclear power plants. Now they are also using the excuse to draw gas export deals. This cannot be acceptable in any way.
What is needed for Bangladesh is to increase national capacity and strengthen institutions like Bapex. This institution should be given the opportunity to explore offshore blocks by further expanding the skills that Bapex has shown onshore. If there is a deficiency somewhere, we can subcontract some of the work or hire foreign experts. But ownership should be 100 percent in the hands of the country. There is no alternative to increasing national capacity to ensure that 100 percent of gas is being used within the country.
Another thing is: the price we will get or the benefit we can derive if the gas fields are owned by the country, will not be available in case of foreign ownership. With foreign ownership, the price of gas rises, competitiveness is reduced, and insecurity is created. Gas and mineral resources are part of national security—having national control and ownership over it is essential not just for our energy security, but also for national security.
In your opinion, which of the clauses of the new PSC seem to contradict our national interest? The export provision in this PSC is dangerous. For a long time, we have been saying that we will have a seismic survey. We have the ability to do this survey. Or a company can be hired to do so. According to domestic and foreign surveys, the Bay has a good amount of gas reserves. This gas can be used to
generate low-cost electricity.
However, an assessment of the prices charged through PSCs shows that it is more reasonable to import gas. This means that our gas will increase the profits of foreign companies and their partners. It will not be of any use to Bangladesh. Moreover, we will have to import LNG at a very high cost while coal-based power plants will be built, doing great harm to the country including the Sundarbans. It is quite unmistakable that this PSC is a trap that we are being thrown into.
In this PSC, it has been said that Petrobangla will be asked first to buy gas. If they do not buy gas, it will then be exported. If Petrobangla buys gas, then there will be no reason for export. Why are you protesting then?
This clause was there too before. It's just an eye-wash. Whether Petrobangla will buy gas or not will depend on those who are in the energy ministry. Sadly, the main role of those involved with Petrobangla is to provide services to foreign companies rather than to strengthen the organisation. That is why it is seen that despite Bapex's onshore ability, foreign companies are given the task of exploration for offshore blocks at a cost two-three times higher than the cost at which Bapex can do the work.
In fact, the role of the energy ministry has largely become that of the spokesperson of foreign companies. Many ministry officials are playing the role of their public relations officers in Bangladesh. That is the danger. It is likely that after the PSC is signed (with a foreign company), the cost of extracting gas or the price of gas that will be set will not be economically profitable for us. Then they will argue that it is better to export that gas. Then again, that export money is not likely to come to Bangladesh. The (gas production) sharing provisions will be set in a way that foreign companies will even receive that money eventually. This model should be completely rejected, since it serves only the foreign companies and their local collaborators.
Tell us more about the potential of Bapex. Bapex is very powerful onshore. Still, onshore work is given to foreign companies instead of Bapex. Capacity cannot be created in a day. It needs time and budget. Unfortunately, budget allocation for mineral resource exploration and extraction is very limited. Moreover, the gas development fund or other funds are not allowed to be used for Bapex's work. The money is controlled by Petrobangla or the energy ministry. There is no accountability of any sort. Bapex's capacity is not being utilised.