Industries in Dhaka, Gazipur and Narayanganj continue to be afflicted by an acute gas crisis, even though Titas Gas Transmission and Distribution Company, the state-owned distributor of natural gas, claims the situation has improved.

As reported in the media previously, garments and textiles firms in the industrial belt of these central districts have been suffering from an acute gas crisis for the last few months.

"The factories are in dire straits," a top top-level manager of a group of textile factories in Gazipur told our sister newsagency UNB recently.

Most of the industries in Gazipur do not get adequate supply of gas during their operational periods, the most crucial hours during which their machines need to be running. Inadequate supply manifests in the form of low pressure gas flow, he added.

Low pressure gas flow is akin to low voltage electricity - many appliances won't run, even though an electric charge is present.

The textiles group official said that due to the lack of gas supply, production in various factories is being disrupted and they are on the verge of shutting down.

In the ongoing gas crisis, important machines like generators and broilers in the dyeing section of the factories are not being run. This has been posing a great risk for the industries to continue their production and pushing them towards huge financial losses.

"Many industries would not be able to pay the salaries and festival bonuses during the coming Eid if the situation does not improve," said an industry owner.

Industry insiders said there are more than 300 factories in Kaliakoir and other areas in Gazipur. All these industries have been suffering from the nagging gas crisis and some of them have already suspended their productions.

Each of the industries has more than 1000 workers. But following the gas crisis, they have to reduce their production target while some of them use CNG at a higher cost to continue their operations.

A similar situation is prevailing in the Mirpur, Tongi and Narayanganj areas, said Mohammad Hatem, Executive President, of Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA).

He said that despite increasing the price, the government is not able to provide adequate gas.

The crisis was reportedly precipitated by the country's two floating, storage, and re-gasification units (FSRUs) ceasing operations for the first round of overhauling and maintenance since initiation of their operations around five years back.

One of the two FSRUs - the U.S. Excelerate Energy-owned FSRU - reinitiated LNG regasification from mid-January after a two-and-a-half-month hiatus due to its maintenance and capacity expansion works.

The country's second FSRU, operated by Summit LNG Terminal Co. Ltd - a subsidiary of the Summit Group - is currently under maintenance. It ceased LNG re-gasification in mid-January and is expected to re-initiate re-gasification from mid-March.

Although the government scheduled the overhauling of both the FSRUs during the winter, when the country's energy demand is usually low, the dependency on FSRUs has exposed the precarious state of Bangladesh's energy security over the past several months.

According to figures presented in parliament nearly two years ago by Nasrul Hamid, the state minister for power, energy, and mineral resources, Bangladesh had 9,06 TCF of recoverable gas left in its gasfields, enough to last 10 years with the current consumption rate of 2300 million cubic feet of gas on an average a day. Nearly two years have passed since this data was given. By the state minister's calculation, that gives the country just 8 more years of any sort of dependence on its own resources for energy. The country has 29 gas fields, including the recently found Illisha-1 in Bhola.

Since the discovery of the Illisha-1 field, and before that as well, there have been a number of voices insisting on the exploration of the country's own gas reserves instead of relying on imported LNG whose price fluctuates frequently in the volatile international energy market. Geoscientists have long been suggesting that significant gas resources still remain underground in the country, and the present gas demands may well be met through extracting our own gas. Experts opine that Bangladesh could avoid the import of LNG for several years until its own gas resources are exhausted.

There is no denying that the country's energy security would be far better served by dependence more on its own resources than on fuel imports. Today, it is well-known that the government is facing problems in paying for LNG imports due to a shortage of US dollars. This has put the government in a tight position. According to media reports Bangladesh Petroleum Corporation and Petrobangla are saddled with outstanding bills to the tune of $700 million to their global suppliers.

Super-gigantic attention

In light of the context described above, it has become imperative, experts like Prof Badrul Imam of Dhaka University insist, to make a big change in government policy and gradually move away from dependence on imports. The way to do that is through enhanced exploration, and some super-giant level good news emerged on that front this week, with the revelation that the government is planning to float an international tender in March for hydrocarbon exploration in the country's maritime areas, where it would like US oil giant ExxonMobil to participate and show its hand in the bidding round.

The US oil major was conveyed the government's advice when a delegation of the company, led by its Opportunity Manager Jonathan Wilson, met State Minister for Power, Energy and Mineral Resources Nasrul Hamid at his office in the ministry on Tuesday (Feb. 20).

Nearly a year ago, in March 2023, an ExxonMobil spokesperson had confirmed to Upstream, a trade publication in the oil and gas industries, that: "ExxonMobil has held initial discussions with Petrobangla regarding Bangladesh's plans for an exploration round."

The US giant is understood to be particularly interested in the gas potential of Bangladesh's deep-water open blocks and also perhaps its onshore acreage.

Wilson had written a letter to the State Minister expressing his company's interest last year, estimating an initial investment to the tune of $30 billion.

Petrobangla chairman Zanendra Nath Sarker at the time said: "ExxonMobil has placed a primary proposal to negotiate on offshore blocks in deep sea as well as for some onshore blocks. The proposal is now under consideration."

Before the general election in January this year, ExxonMobil was trying to persuade the government policymakers to accept its offer on an unsolicited basis to allow it for exploration work. But that proposal was not accepted by the government. Now with greater clarity in the post-election scenario, the US company is once again showing its interest in exploring Bangladesh's offshore blocks, according to well-placed sources at Petrobangla.

Certainly the presence of Jonathan Wilson himself in Dhaka this week attests to that as well.

ExxonMobil is one of the handful of companies in the world that has the technical expertise and deep pockets that Bangladesh needs to boost its exploration and production sector following several disappointing licensing rounds and the exit of some other international players in recent years.

"As part of the move, the company officials met the State Minister," a source at the Energy and Mineral Resources Division, requesting anonymity due to the inherently sensitive nature of dealing with international oil companies, told UNB.

Meanwhile, the government has taken a decision to float international tender in the first week of March, for its offshore blocks.

Earlier, on July 26 last year, the Cabinet Committee on Economic Affairs approved the draft 'Bangladesh Offshore Model Production Sharing Contract (PSC) 2023' in order to invite international bidding for hydrocarbon exploration in offshore areas of the country.

The final approval for the draft Model PSC 2023 was given under a plan to invite the bidding round. It was speculated a September bid might be in the offing, but that eventually fell through as the election was too close and at that stage there was still too much uncertainty to be cleared up.

Now the Prime Minister's Office has recently given a go-ahead to the Energy Division's plan for inviting the bidding round in March. Notably the PMO's was the last approval that was missing for a September round, so the fact that it is now comfortable to give the green light signals positive engagement from the very top.

Farhana Sharon, general manager of the Petrobangla, informed that the organisation is taking necessary steps to invite the bidding round as per approval of the PMO.

According to official sources, the new Model PSC was prepared as part of a plan to invite international bidding for offshore deep and shallow water gas blocks, to make Bangladesh more attractive to international oil companies.

Under the initiative, the gas price was tagged with the price of Brent Crude in the international market to ensure flexibility.

"Under the plan, we're going to offer the price of gas at 10 percent of Brent Crude," the Petrobangla official told UNB.

The official said if Brent Crude is traded at USD $75 per barrel, the gas price would be USD 7.5 per thousand cubic feet (MCF). The gas price will always remain linked to the international oil price, he said, referring to the new provision of the Model PSC 2023.

British oil and gas consultancy Wood Mackenzie has been advising the Bangladesh government and Petrobangla on the latest PSC revisions.

Official sources said the country has a total of 48 blocks, of which 26 are located offshore. Of the 26 offshore blocks, 11 are located in shallow sea (SS) water while 15 are located in deep sea (DS) water areas.

Of the offshore blocks, 24 remain open for IOCs while two blocks - SS-04 and SS-09 - are under contract with a joint venture of ONGC Videsh Ltd and Oil India Ltd where drilling work has recently started.

Bangladesh's offshore area remains unexplored despite the settlement of its dispute with neighbouring Myanmar and India over maritime boundary almost nine years ago.

Currently, about 2300 mmcfd gas is being produced from 22 gas fields in the country, while about 600 mmcfd gas is being imported from abroad to meet the demand of about 4000 mmcfd, leaving a deficit of about 1200 mmcfd daily.

Giant gas discoveries have been made in the Bay of Bengal offshore Myanmar and in India's territorial waters, but Bangladesh has not yet enjoyed such success, and recent licensing rounds held by the Dhaka administration have proved lacklustre. Bangladesh's deep-water blocks reportedly share similar geology to the stratigraphic traps where ExxonMobil has enjoyed great success offshore Guyana.

In addition to the new PSC, Norwegian firm TGS, a global provider of energy data and intelligence, in partnership with SLB (formerly Schlumberger) and Petrobangla, completed the first phase of a 2D seismic acquisition program in April 2023. Phase 1 comprises 12,636 kilometres, and the fast-track processed products are now available to the industry.

Will Ashby, EVP of Eastern Hemisphere at TGS, commented: "The approval of the new contract marks a significant milestone event that will help drive exploration offshore Bangladesh. With limited data available in the region, the new seismic data in combination with the Production Sharing Contract are key components that will enable companies to evaluate open acreage and support the launch of a new offshore License Round for the country."

The Bengal Fan is one of the world's largest deep-water fans with good evidence of working petroleum systems. It is widely considered one of the most extensive unexplored frontier areas. The improved PSC aims to generate further interest and, fundamentally, attract more international oil and gas companies to explore offshore Bangladesh.

Not so fast?

Dr Imam is used to casting a critical eye on the business model often adopted by the giant IOCs in developing countries like Bangladesh, but has come out in full support of the development, and is rooting for it to go ahead. Given the level of expertise and experience required to explore for oil and gas in the deep seas, we may have no other choice but to simply 'sit' on them.

"Look we all know the IOCs can be very aggressive in their business practises in how they try and extract every opportunity to their advantage, but here we have potentially vast resources lying unexplored, and the imported LNG bill is getting higher and higher," he told Courier.

"ExxonMobil is one of the world's leading companies in this sector, and so given the overall circumstances, this represents a good opportunity for us," he added.

"We have to let the ball start rolling," he repeats, for emphasis.

ExxonMobil, which was formed out of a merger between two of the original 'Seven Sisters', denoting the seven leading oil companies in the world at the time, is also in talks with government officials to secure exploration rights over all 15 deepwater blocks situated in the Bay of Bengal, according to a senior official of the Ministry of Power, Energy and Mineral Resources who spoke to S and P Global Commodity Insights.

The US firm in its proposal is seeking to first sign off on a production-sharing contract before carrying out 2D seismic surveys within two years and then completing 3D seismic data acquisition, processing and interpretation within the next three years.

According to sources from the energy division though, the government is not willing to allow any company to work in sea blocks under special provisions without tenders. Reportedly, the government does not want to allocate more than two to four blocks to a single entity.

Petrobangla has completed all the work to invite international bidding to allocate 26 blocks for offshore oil-gas exploration in the sea.

Petrobangla Chairman Zanendra Nath Sarkar said, "The tender will be issued by next month with a span of six months for submissions."

It may be mentioned here that ExxonMobil's unsolicited offer, another US firm, Chevron, which is already operative in Bangladesh, also expressed interest to explore Bangladesh's deep offshore blocks that have so far remained unexplored despite having high potential to discover hydrocarbon resources.

"ExxonMobil expressed its interest in exploring oil and gas in 15 blocks within the deep sea. We've advised them to participate in the bidding process. The American company's decision to participate in the bidding was not immediately known. They will inform us later," Nasrul Hamid told the media, the day after his meeting with the ExxonMobil team.

Then speaking on Thursday (Feb. 22), Prime Minister Sheikh Hasina stressed on extracting marine resources from Bangladesh's vast maritime zones to tap the potential of the "Blue Economy" for the country's socio-economic advancement.

"We have to explore the marine resources from the maritime areas we attained. I believe the announcement of the blue economy will be implemented. We have to use the vast marine resources for the socio-economic development of Bangladesh," she said.

She made the remarks at a programme marking the golden jubilee of enacting the law titled "The Territorial Waters and Maritime Zones Act, 1974" by the government of Bangabandhu Sheikh Mujibur Rahman.

She also urged the overseas companies to come up with investment to explore oil and gas resources in Bangladesh's maritime zones.

Let the bidding begin.

Additional reporting by Sadrul Hasan.

Leave a Comment

Recent Posts