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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 foreign drilling companies to export gas extracted from our offshore blocks?
Gas export is the second option here. The first option is that Bangladesh will extract gas. If Bangladesh buys gas, there will be no need to go for the second option. If Bangladesh says it will buy gas, then the companies will not be able to sell gas anywhere else. On the other hand, if Bangladesh does not buy gas, then the companies will be able to export it.
Critics are saying that gas export is against the interest of the country.
In what sense is this against the interest of the country? One may recall that the provision to export gas was also there in the first PSC. But the condition attached there was that it had to be exported in LNG form.
If the question really boils down to only
If Bangladesh says it will buy gas, then the companies will not be able to sell gas anywhere else. On the other hand, if Bangladesh does not buy gas, then the companies will be able to export it.
protecting the interest of the country, then a contract can be made with only one condition: that the government will buy all the gas wherever it is found. There must be a guarantee. Then the companies will not object because they want to sell the gas and they will not bother about who buys it.
The companies are taking huge financial risks in offshore exploration. If they do not get gas, everything they invest will be lost. They won't even get a penny back. And if they get the gas, then they will keep an account of the cost and get their money back accordingly.
If they didn't do the exploration, we would have to do that, in which case we would have to bear the whole cost. In the existing system, if they do not find gas, then we do not have to pay a penny. This is their risk. This is the basic aspect of the PSC. Then, since they are taking the risk, the gas that will be left after deducting their recovery costs will be divided as "profit gas" between the government and the company involved.
Many complain that if foreign companies extract gas and export their share abroad, both the gas and the profit will end up abroad. In that case, Bangladesh will get nothing.
No, this is not correct. According to PSC's gas sharing clause, they will also export Bangladesh's share of gas and Bangladesh will get that money.
Do you agree with those who say that handing over mineral resources to foreigners is not only a threat to energy security but also to national security?
No, I don't think so. Because our PSC experience so far has been very satisfactory. We have been getting gas for a long time without any problem. About 60 percent of our gas is produced by foreign companies. There is a huge capacity gap
within Petrobangla. They are not of international standards.
Can't Petrobangla's capacity be developed to meet international standards?
The management and technical know-how of Petrobangla can certainly be raised. However, there is no longer any opportunity to increase its capacity because it will involve a huge investment in hardware purchase. For example, Petronas or other companies are also not involved in many activities themselves. However, they can perform tasks such as dealing with foreign companies, supervising them etc,. They have that training. We should equip our workforce with management and supervision skills.
If foreign companies own the gas fields, will they be able to extract gas or stop extraction whenever they want?
I cannot say anything in this regard. I do not know if there is anything mentioned in the agreement on this issue. There is no detail in the agreement on how much can be exported, how long the gas will be extracted, whether it can or cannot be stopped.
What do you think are the negative aspects of this PSC? Does it have any gaps?
Overall, the deal is okay. But gaps can exist in the contract. All contracts have different kinds of gaps. I haven't read the agreement in detail yet. So, I cannot say.
What happens when the price of gas in the international market is lower than that of the gas produced here?
Whenever gas price falls in the international market, the price of high furnace oil also goes down. If the price of gas fluctuates in the international market, then the price will fluctuate here too.
LNG is being bought citing gas crisis... Listen, after extracting gas offshore, it has to be brought through pipelines. After all this, the cost of importing LNG may be lower than that cost. Then, why should I go and buy gas? Then, LNG can be bought at a lower cost with the export money. There can be many other situations. If more gas is found, then Bangladesh will not have the opportunity to make full use of it. So, will they just sit idle? I would like to say that although the contract talks about gas export to attract companies, in reality, the possibility of a circumstance of exporting gas is unlikely. If it is seen that gas is being exported against our best interests, then it can be stopped by agitation.