Bangladesh is in desperate situation with its natural gas. All knew that such situation may arrive by now.

But none were serious for approapraite actions in time to confront this. From a position of surplus in 2001 the national grid has now about 400 MMCFD deficit in 2009. This has happened although production increased by 600 MMCFD over this time mostly from Gas fields discovered in late 1990s. IOCs in block 5, 7 & 10 were allowed to hibernate. PB or Government did not support Bapex to explore effectively. But marketing companies allowed mushroom growth of medium to large gas using industries without bothering for gas availability. Possibly to justify its ill conceived perception that our gas reserve would run out by 2015 it did not go for required development of own reserves. This is what happens when politically favored non professionals are allowed to run highly technically sensitive energy sector. Very uncertain gas situation has already become a pain the neck for the government. Natural gas unlike many other resources remains underground. Like other surface resources it is not so easy to measure them. Natural gas engineering, especially reservoir engineering is not so easy. True not a rocket science but it needs commitment and dedication to learn it, takes years of active experience to talk about it. Bangladesh is among the fortunate countries of the world which has substantial volume of natural gas resources. Part of it is discovered, again only part of discovered resources has been proven. Still that proven reserve still dominates our energy scenario. Gas industry in this part of the world is about 60 years old. Our industry is much older than immediate neighbours.But still the skills and capacity have known grown over the years. Rather days after days capacity is getting thinner and thinner. For a natural gas prone country like ours we should have a dynamic institution now which could be self sustaining in planning, implementing and operating all infrastructure development projects. But look at our gas situation. People still are confused about our gas reserve resource. We have no definite exploration policy, no depletion policy. There is a reservoir monitoring cell but no senior experienced petroleum or reservoir engineers. We do not follow any integrated reservoir management , no plan for regular reservoir pressure survey , no third party independent technical auditing of production management. One after another major gas field reservoirs are getting damaged due to over production. There seems to be no lessons learnt. We can not say with confidence as to what should be safe and economic production rate of specific wells or a maximum daily rate of a gas field. In absence of depletion plan there is no action for secondary or tertiary recovery from producing gas fields through setting up of well head booster compressors. The drive mechanism of gas fields is not ascertained. Some sketchy or partial works have been done on reserve resource assessment. There is educated guess that our proven reserve is 13 TCF of which till December 2008 we have used about 7 Tcf. With the remainder at the present rate of use people apprehends that our reserve would run out by 2015. How Natural Gas Sector Evolved: Gas exploration activities started in this region in the 50s when some multinational companies we active after oil find in Assam following world war two. Pakistan Petroleum Ltd discovered gas at Chiknagul, Haripoor Sylhet. Unfortunately Sylhet 1 was a blow out .There is a crater and a pond around burial of the drill rig where gas is still bubbling out for almost 60 years. Sylhet 2 was a relief well drilled to contain blow out .Sylhet 3 was the first producer. Around same time gas was also discovered in Chatak. Around same time Pakistan Industrial Development Corporation planed to set up Natural Gas Fertilizer Factory at Fenchuganj and Cement Factory at Chatak. Gas of Sylhet gas field and Chattak were utilsed for these setting up treatment plants and constructing gas transmission pipelines. That was PPL which after independence became BPL and now Sylhet Gas Fields Ltd. That was the beginning of gas era in this part of the world. During Pakistan days Anglo Dutch oil Giant Shell discovered Titas, Habiganj, Rashidpoor, Bakhrabad, Feni and Kaillashtilla.But other than Titas and Habiganj none of the other gas fields were developed. Brambanria Demra gas transmission pipeline was built by French Company GTM for Titas Gas Transmission and Distribution Company a company registered under company act under EPIDC. The market was very limited Shidhirganj Power plant and some domestic and commercial customers. Famous writer Late Shawkat Osman is known to be the lucky first domestic user of Gas. Habiganj Gas

field was developed in Shajibazar to feed gas to Shajibazar power plant. So before liberation natural gas activities were very limited and market was insignificant to encourage massive exploration by multinational companies. During liberation war of 1971 the small gas transmission infrastructure was also affected. Titas-Demra pipeline was blow at Bhirab Bridge, Ramnagar area. Haripoor- Fenchuganj pipeline was also affected.

When Bangladesh was born like everything else gas sector had to be regenerated from almost scratch. We had brilliant bunch of visionary professionals at Titas Gas .We had committed leaders in Bangabnadhu Government. Bangladesh Oil, Gas & Mineral Corporation which ultimately took name Petrobangla was formed with a great Leader Dr Habibur Rahman as its first Chairman. He was Concurrently Secretary of Power & Energy Mineral Resources also. Dr Mafizudin Chowdhury was the minster.Bangabandhu encouraged Dr. Kamal Hussian, the then Law & Parliamentary Affairs Minster and Dr Habibur Rahman to negotiate with Shell to take over major gas fields. Bangabandhu is misunderstood by some so called intellectuals these days. But if we check history we will find Bangabanadhu could get ownership of major gas fields (Titas, Bakhrabad, Habiganj, Rashidpoor, Feni & Kaillashtilla) for mere 10 million dollars paid in several installments. If we consider Bangabandhus actions with those of persons who handed over Petrobangla owned field Jalalabad to Occidental, Feni & Chattak to Niko for personal gains what should we conclude. Not only that in three and a half year time Bangabandhu Government could engage 6 reputed IOCs in 8 offshore blocks in the Bay of Bengal for exploration of Petroleum. Bangladesh after Bangabandhu could not even engaged any IOC in deep water of the Bay of Bengal in 34 years.

Present Situation: From August 1975 till now gas sector had to overcome many barriers, several ups and downs. Military democracy infiltrated weak and corrupt administration; sector could not be developed professional. Growth and development utilizing huge assistance of development partners could not create efficiency and professionalism. Rather hundreds of well trained professionals left sector causing severe brain rain. The residues can hardly cope up with expanding activities which led to present dismal situation. Let us have a quick browse of present situation. Present Demand and Supply Balance ( on a particular day in May 2009 (in MMSCFD)

Sector

Customer Type Power Fertilizer

Demand 926 289 35 1,250 280 78

Supply Balance 770 163 22 955 270 78

Shortfall 226 126 13 365 10 0

Bulk Non-grid Power (SPP) Sub-total Captive Non-bulk CNG

Industry Domestic Commercial & others Sub-total Grand Total

297 260 26 941 2,191

273 250 22 893 1,848

24 10 4 48 413

Gas Production on That Particular Day (In MMCFD).

A Bangladesh Gas Fields Company Ltd (BGFCL).

Gas Fields

Producing Wells Wells 14 out 16 producing 4 out of 8 producing 9 out of 10 producing 2 1 30

Capacity

Actual Production

Titas

405

402

Bakhrabad

34

33

Habiganj

240

240

Narshingdi Meghna Total

35 Nil 714

34 Nil 7 09

B Sylhet Gas Fields Company Ltd (SGFL).

Gas Fields Sylhet

Producing Wells 1 out of 7 producing

Capacity 2.0

Actual Production. 0.6

KTL#1 KTL#2 Rashid poor

2 4 5 out of 7 producing 2 14

23.0 74.0

21.5 44.3 47.6

Beanibazar Total

18.0 170

13.5 121.5

C. Bangladesh Petroleum Exploration Company (Bapex). Gas Fields Salda Fenchuganj Total A+B +C = 11 Producing Wells 2 2 4 48 Capacity 11 32 43 927 Actual Production. 9.4 23.9 33.3 863.8

International Oil Companies (IOC). Gas Fields Sangu ( Cairn) Jalalabad (Chevron) Moulavibazar (Chevron) Bibiyana ( Chevron) Feni (Niko-Bapex) Bhangura ( Tullow) Total 29 943 1040.6 3 2 3 100 2.3 85.9 12 500 644.3 Producing Wells 4 out of 6 4 Capacity 35 230 Actual Production. 50.3 188.2

75

69.7

A+B+C+D= 17

77

1870.00

1910.00

If we carefully examine the above we find that Titas Gas field still having almost double ultimate recoverable reserve of Bibiyana is producing about 400 MMCFD from 14 wells. The gas field is also leaking gas from apparently fractured gas pay sand. Bibiyana on the other hand is producing 644 from 12 wells although the capacity is shown as 500MMCFD. Similarly the prolific gas field Habiganj from 9 wells produce 240 MMCF while Jalalabad from 4 wells is allowed to produce 180 MMCFD. We know production from a particular well depends on well completion which gain is done considering the deliverability of pay sand, permeability, porosity and skin of the structure. Can it vary so much in adjoining gas fields? Some person must ask questions to Petrobangla. We can also find some ridiculous figures here .Why Sylhet 1 producing only 0.6 MMCFD is still only production? Is there any plan to develop it further? If not why the trained manpower is not transferred elsewhere? Why we are persisting with Niko while Feni only produce 2.5MMCFD? Why PB is allowing Chevron to produce 640MMCFD when its own website evidence that the capacity is 500MMCFD?

If Petrobangla has produced 1910MMCD on the day why downstream only consumed 1870MMCFD. We understand the remaining built line pack. But when system demand is so high there can not be line pack. PB is making GTCL carry more gas than design maximum capacity on North-South Transmission channel which is causing massive pressure drop. Ridiculous. There is nobody to ask question.

We possibly know that gas is a compressible fluid. Differential Pressure is the driving force. North- South Corridor Pipelines are designed with MAOP 1076 Psig and terminal pressure of 850 at Ashuganj Gas manifold station. N-S & R-A in that situation can carry maximum 1050Psig and that too if transmission pipelines are free of depositions ensured by pigging. l We can make higher volume of gas at the cause of higher pressure drop. If one checks pressure at AGMs it will be seen that the terminal pressure go down as low as 700PSIG or even below. Not a drama that endusers in different areas are complaining of low pressure.

The following Pipelines take off from Ashuganj Transmission Hub of GTCL. y y y y Ashuganj- Bakharabad 30inches OD 58KM Gas Transmission Pipeline ( A-B) Ashuganj Elenga Gas 24 inches OD 125KM Transmission Pipeline (B-B). Ashuganj Monohardi 30 inches OD 35 KM Loop line (A-M). AGMS- Titas Gas VS3 20 inches OD 2KM Feeder Line.

In recent days the gas delivered to these from AGMS was: y AB Pipeline: 375.50 MMCFD.

y y y

BB Pipeline : 331.20 MMCFD AM Pipeline : 346.40 MMCFD VS3 Pipeline : 63.20 MMCFD Total : 1116.20 MMCFD

All these pipelines are also ANSI #600 pipelines and if operated at 1000PSIG inlet pressure can carry 1800MMCFD. But that can only happen if Compressor stations are operational at Muchai and Ashuganj and enough gas can be safely produced upstream which is less likely before 2013 now. But end-users in Greater Sylhet and Brahmanbria must not be bothered about gas crisis .For them production, transmission facilities are more than enough and will remain like that for several years still. The problem is gas stranded in N-S Corridor. GTCL board action has put paid to GTCL plan to put pipeline compressor stations into operation by mid 2011. Which means there will not be major improvement of gas situation anywhere before end 2012 or early 2013 at least? In this situation the following contingency action can be taken. Construct a 20 or 24inches Dia 9 KM loop line from Khatihata to AGMS on priority Basis to evacuate about 200MMCFD gas from N-S Pipelines at Khatihata point. If PC contract is let out soon it can be built by April 2010. This will create room for carrying additional gas through N-S corridor at much comfortable pressure. Situation Downstream of Ashuganj: A-B Pipeline carries 375 MMCFD to Bakhrabad Gas Field Transmission hub where gas is also fed from Bhangura, Bakharabad and Salda gas fields. About 512 MMCFD gas is now available at Bakhrabad Hub which then feeds to * Bakhrabad Demra 20 inches OD 75 KM pipeline. * Bakhrabad Chittagong 24 inches ANSI # 400 175 KM pipeline. About 230 MMCFD gas can be delivered through Bakhrabad Demra pipeline leaving 282 MMCFD for Bakhrabad Chittagong pipeline. Greater Comilla and Greater Noakhlai Consumes about 40MMCFD now leaving about 240 MMCFD for Chittagong market. We believe Sangu now delivers 50 MMCFD directly to CGS Chittagong. About 290 MMCFD is the maximum that can be made available for Chittagong market which is about 50MMCFD less than demand. We should remember here that this is the maximum that can be diverted from national grid. Additional Gas from Bakhrabad new well or Bangura will not make any impact. So till compressors pipe line compressors are operational at Muchai and Ashuganj gas deliverability to Chittagong will not be improved. Sorry Chittagong and Dhaka area will continue to suffer gas draught.

Situation in Ghorashal, Norshingdi, Joydevpoor and Dhaka. Titas allowed mushroom growth of medium and large in and around Dhaka City without bothering for gas availability which consumes huge chunk of gas. Very low price of gas also made most use energy inefficient boilers and other gas appliances. Situtaion is such that even shutting down of two fertilizer plants PUFF and UFFG is also not improving situation. Moreover Titas failed to complete all pipelines conceived under Dhaka Clean fuel project. To improve Dhaka situation an express pipeline can be built from Monohardi to Joydevpoor to divert additional gas from Monohardi as Dhanua -Savar Pipeline even did not help the system. Titas must stop giving domestic connection in its area and encourage people to

go for LPG. Posh apartments can afford these. People in Gulshan, Baridhara, Cantonment, and Uttaara can be transferred to LPG gradually. Gas supply to congested old Dhaka must be phased out also as pipelines due to wear and tear and illegal tapping have become vulnerable to accidents anyway. Industrial consumers around Dhaka city can have very little sympathy as lion share of them are involved in gas pilferage in connivance with corrupt Titas officials and contractors. Another unpleasant action can be shut down Zia Fertilizer Factory and save about 50 MMCFD gas for others. Situtaion in Brahmaputra Basin Region: Wonder where from PB will supply gas to power plants in Sirajgonj area or feed pipelines conceived under GSDP? Is it not a double standard? PB gave go ahead to GTCL to buy very expensive line pipes for pipelines to Bheramara while more essential Pipeline Compressor stations project is allowed to drift further? Consumers beyond Bangabandhu Bridge will continue to suffer till Pipeline Compressor stations are active, Titas Gas Field situation is remedied and additional gas is produced from existing major fields.

Present Gas Situtaion Is a Pain in The Neck:

Gas Situtaion will continue to remain a pain in the Neck for the Government till it can engage effective management to plan and implement aggressive action plan to enhance production, transmission capacity. Exploration in offshore must start without delay. The most viable option is to economically explore and develop coal resource. Government can never achieve its envisioned 5000 MW additional power by 2013 unless coal exploration starts immediately. Power generation on important coal in another ill conceived wrong idea. Bangladesh can not afford that expensive route; neither can it grow enabling infrastructures soon to receive coal from abroad. We hope our knowledgeable politicians will discuss the very important energy option issues in the parliament and agree on indigenous coal exploration in the greater national intesrt without bothering for crows cawing.

Natural Gas One of the country's few mineral resources is natural gas, which is the basis for nitrogenous fertilizer production sufficient to meet the country's needs. Estimated national reserves range from 182 billion to 623 billion cubic meters. Deposits lie in more than a dozen different locations, six of which were producing in 1986. The country's gas production is concentrated in the northeastern part of the country (see fig. 9). Reserves also have been discovered offshore, but extraction is not yet cost effective. Total gas production in FY 1986 was 2.9 billion cubic meters, with production rising at least 10 percent per year. All production was consumed domestically. About 40 percent of production was used for generating power, nearly 40 percent for producing fertilizer, and the rest divided among industrial, commercial, and household uses. Even by

conservative estimates of reserves and consumption trends, the supply was expected to be adequate for Bangladesh's requirements through the year 2030. Bangladesh Gas Reserve Running Out? Engr. Khondkar Abdus Saleque Wednesday, 05.20.2009, 06:51am (GMT)
Some people are busy panicking everyone that Bangladesh gas reserve is fast running out. Some media reports quoting Petrobangla submission to a parliamentary standing committee has indicated that that the proven gas reserve may run out as early as 2011 and if actions can be taken to convert probable reserve to proven reserve this may last till 2015. The following figures appeared in media report. y y y y y y y Recoverable reserve of 23 discovered Gas Fields: 15 .41 Tcf. Gas Already used till December 2008 : 8.05 Tcf Remaining Recoverable Reserve : 7.36 Tcf. 79 wells of 17 Producing Fields Producing : 1870-1900MMCFD 6 Gas Fields operated by 4 IOCs Produce : 970 MMCFD. 11 Gas Fields of 3 PB Companies Produce : 930 MMCFD. Gas Consumption Pattern: Power (Grid) : 700-730MMCFD.

Non Grid : 20 MMCFD Fertilizer : 212 MMCFD. Others : 930 MMCFD.

Quoting Gas Sector Master Plan 2006, Petrobangla and others are panicking that after 2011 proven gas reserve will run out. In this situation any one may ask how authentic are the GSMP figures? Have other figures like our consumptions pattern met GSMP figures? What happens to other discovered gas fields not yet under production? We will deal with these later.

Media report has also mentioned the transmission components of AB assisted GSDP under implementation. y y y y y Gas Pipeline Compressor Stations (Muchai, Ashuganj &Elenga) Monohardi-Elenga - Jamuna East Bank Gas Transmission Pipeline. Hatikamrul-Bonpara-Ishwardi-Bheramara Gas Transmission Pipeline. Bonpara Rajshahi Spurline. Bheramara -Khulna Gas Transmission Pipeline.

These pipelines may take us beyond 2013 to see all completed. Usually Gas pipelines are planned for 25 years economic life. If we say our gas reserve will run out in 2011 or 2015 then why we are wasting our time, money and efforts for these? Is it not ridiculous double standard? In recent times PB also approached to ADB for additional fund for Ashuganj Chittagong Pipeline. If we do not have our gas why should we bother about it? Parliamentary committee must ask PB to submit approved Project Proforma of

each GSDP components. PB must stand by their commitments to ensure supply of gas to all users that they indicated in PP over the economic life of those end-users. GSMP predicted some new power plants to be fed with gas. Why PB can not commit gas supply to these? Present PB Chairman was Director (Planning) when these projects were approved. PB Chairman was also involved with Gas System Master Plan formulation.

The news of gas reserve running out, that is being circulated around has every reason to panic Investors and Industrial Entrepreauner. Natural gas is and will continue to dominate Bangladesh economy as no other viable options can practically make major contribution in near future. The only other option coal exploration is stuck in quick sand of beauracracy.

As grasshopper of Bangladesh Gas sector over two and a half decade this write strongly differs from the propaganda that Bangladesh gas reserve is running out so soon. There must be deep rooted conspiracy behind it. If we knew that our system will struggle for gas shortage from 2011 why we allowed so many gas using middle to large industries develop in Dhaka and Chittagong gas region without carrying out required exploration and development of gas resources?

What is the Actual Situation? It is true gas system now is suffering from serious crisis. About 300 MMCFD production deficit has caused impediment everywhere. About 800MW power generation capacity remains idle, industrial production is affected, industrial growth is stalled. But this is simply due to inefficiency of inefficiency and incompetence of Petrobangla management and undue interference of government in the functioning of autonomous public sector gas companies. Over the last 7 years Petrobangla has been managed by incompetent management who could not plan actions for meeting the down stream gas demand and set up appropriate gas production and transmission infrastructures. PB failed to monitor IOCs properly which led to unbalanced growth of gas demand against production and transmission. Why IOCs were allowed 5 years cooling period for exploration at block 5, 7 & 10? Why Cairn could not be pushed to complete exploration at Magnama and Hatiya? Who gained from unnecessary expenditures in depleting Shangu? It is ridiculous that a facility build to handle 520MMCFD gas handles only 50MMCFD. What answer those persons have who approved setting up of a Giant plant at Salimpoor? Why scam company NIKO still hangs on with Feni, Chattak fields and violated virgin Tengratilla structure? Niko is producing only 1MMCFD from Feni, potential Chattak and high potential Tengratilla remains unexplored. We were told that block 9 is high potential. But activities of tiny Tullow over the years do not evidence that. Why Irish Tullow was preferred over Exxon- Mobil - PETRONAS? Even Japanese appeared very keen for block 9 when we visited Tokyo with State Minster of Energy of previous Awami League government. There must be some rat somewhere. Our policy makers, our political leadership can not also deny responsibilities?

Implementation of all components of ADB assisted GSDP projects have been delayed at least 3 years which has led to this present crisis situation. If GSP could be implemented there could be another at least 500MMCFD production from national gas fields and compressors and new pipelines could evacuate and deliver require gas to all growth centers in quantity at required pressure. Government must fix responsibility for failure and at least remove them from management.

Bangladesh gas sector is more than 50 years old much older than Bangladesh. Still we do not have any gas exploration or utilization strategy. We do not have any depletion policy .Reservoir study and reservoir management is the most neglected division of Petrobangla. There is no plan for systematic pressure survey of producing national gas fields. Perhaps Petrobangla bosses have never heard of integrated reservoir management. Renowned reservoir specialist Late Quazi Shahid alone ploughed in the sand for several years. He was mostly ignored, cruelly sidetracked. Unfortunately after tragic death of Mr Shahid and Mr Based and change of Job of Rahman Murshed PB has no genuine reservoir expert. None of our gas fields have been scientifically appraised, no one can tell with assurance about the drive mechanism depletion drive or water drive .We experienced two gas production disasters Bakahrabad and Shangu, we witnessed few unfortunate blow outs Magurchra & Tengratilla. We learned nothing as we continue to let production companies produce at much higher rates. We unfortunately are short sighted.

Most of our gas fields have not yet seen 3D seismic survey. Significant areas onshore and almost entire offshore remains unexplored. None of our gas fields have started secondary recovery .In this scenario it is criminal offence by underperforming PB to say that our gas will run out by 2011 0r 2015 . If that happens then all PB senior executives over the last decade must face criminal charges for killing our gas resource and taking the nation for a ride.

Major Gas fields Titas, Habiganj, Kaillashtilla, Bibiyana, and Jalalabad if carefully depleted and if Bakhrabad is appropriately redeveloped can cater our needs till 2030 without any panic. If Cairn does not want to further explore at Magnama and Hatiya they must be asked to relinquish new exploration company can be engaged through fresh bidding .Bapex may be allowed to form strategic alliance with proper exploration companies and carry out massive hunt for petroleum onshore, IOCs carrying Bapex as carried over partner must be engaged soon at offshore drilling. 3 D Seismic under GSDP must be conducted soon at major gas fields as conceived under GSDP. But for all these a very strong and performing Petrobangla is required to spearhead gas sector operation. Can Mahajote Government read the writings on the wall? If business as usual 2010 by now government may face serious agitation on the street for power, gas and water.

General Background

Map of Bangladesh. (Source: FAO-Forestry)

In 2005, Bangladeshs real gross domestic product (GDP) grew at 5.4 percent, down somewhat from the 2004 growth rate of 6.3 percent. Economic forecasts are at 5.8 percent for 2006. Economic performance has been steady since 1990, with annual GDP growth averaging 5 percent. However, Bangladesh remains one of the worlds poorest and most densely populated countries, and faces a number of obstacles to further growth and development. Despite recent growth, Bangladesh faces numerous challenges. According to the International Monetary Fund (IMF), the country is hampered by weak institutions and inadequate infrastructure. Bangladesh remains dependent on foreign aid and worker remittances for a large percent of its economic activity. In 2004, the government of Bangladesh estimated that remittances from expatriates totaled $3.3 billion, or 6 percent of nominal GDP. The country also remains vulnerable tonatural disasters such as cyclones, floods, and droughts. This is especially true in the agriculture sector, which employs about two-thirds of the labor force and accounts for 22 percent of GDP. Bangladesh is a member of the South Asian Association for Regional Cooperation (SAARC), along with Bhutan, India, Maldives, Nepal, Pakistan and Sri Lanka. SAARC aims to promote regional economic cooperation as well as economic and social development in South Asia. In 2004, the seven SAARC members agreed to create a South Asian Free Trade Area (SAFTA), which came into force on 1 January 2006. SAFTA aims to reduce tariffs and other trade barriers between the seven member countries.

Oil
According to Oil & Gas Journal (OGJ), Bangladesh has 28 million barrels of proven oil reserves as of January 2006, down from 56 million barrels in 2005. The country produced an estimated 4,000 barrels per day (bbl/d) of oil in 2005, flat from the previous year. Bangladeshs relatively

low level of domestic reserves and production capacity make it a net oil importer, as the country consumed an estimated 91,000 bbl/d of oil in 2005.
Exploration and Production

To date oil exploration has been rather unsuccessful in Bangladesh, with most companies choosing to focus instead on the countrys plentiful natural gas reserves. Exploration and production activities are primarily carried out by the Bangladesh Petroleum Exploration and Production Company (BAPEX), a subsidiary of the state-owned Bangladesh Oil, Gas & Mineral Corporation (Petrobangla). However, the country has also initiated several Production Sharing Contracts (PSCs) with foreign oil companies and has employed tax incentives to attract foreign company involvement. In 1993, after the formation of a new National Energy policy, the government of Bangladesh divided its territory and offshore sites into 23 blocks and opened them to foreign bidding for oil and gas exploration. During the First Bidding Round in 1993, eight blocks were awarded to four companies through PSCs. In 1997 during the Second Bidding Round, three PSCs were awarded covering four additional blocks. The government planned to hold a third round of bidding focusing on the offshore Bay of Bengal region in 2006, but it has so far been delayed. Before new bidding is opened, the government will complete a geological andseismic survey to identify potential exploration sites. Bangladesh must also accurately mark its deep sea territory and settle ongoing maritime border disputes with India and Myanmar.
Refining/Downstream

According to OGJ, Bangladesh has 33,000-bbl/d of crude oil refining capacity at Eastern Refinery Ltd.s (ERL) facility at Chittagong. The ERL complex is a subsidiary of the stateowned Bangladesh Petroleum Corporation (BPC).

Natural Gas

Natural Gas Production in Bangladesh, 1994-2004. (Source: EIA International Energy Annual)

Natural gas reserve estimates vary widely for Bangladesh. Oil & Gas Journal (OGJ) reported that Bangladesh had 5 trillion cubic feet (Tcf) of proven natural gas reserves as of January 2006,

down significantly from OGJs January 2005 estimate of 10.6 Tcf. It is not clear why the large downgrade of Bangladeshs natural gas reserves occurred. In mid-2004, estimates from stateowned Petrobangla put net proven reserves at 15.3 Tcf. Bangladeshs Ministry of Finance estimated in 2004 that the country holds 28.4 Tcf of total gas reserves, of which 20.5 Tcf is recoverable. In June 2001, theU.S. Geological Survey estimated that Bangladesh contains 32.1 Tcf of additional undiscovered reserves. While estimates of the countrys reserves vary, natural gas is Bangladeshs only significant source of commercial energy. The government of Bangladesh estimates that natural gas accounts for 80 percent of the countrys commercial energy consumption. In 2004, Bangaladesh produced 463 billion cubic feet (Bcf) of natural gas, up from 429 Bcf in 2003 and more than doubling the 1994 level. Despite increasing production levels, Bangladesh has never been a net exporter of natural gas. Given the uncertain size of the countrys natural gas reserves, the government has been reluctant to export natural gas and has instead focused on meeting current and future domestic energy needs.
Exploration and Production

Natural gas exploration and production is dominated by three state-owned companies, all of which are subsidiaries of Petrobangla. Bangladeshs largest gas production company, Bangladesh Gas Fields Company Ltd. (BGFCL), operates the Sylhet, Kailashtila MSTE, Kailashtia, Rashidpur, and Beanibazar gas fields. From these five fields, BGFCL produces 810 million cubic feet per day (Mmcf/d), or roughly half of the countrys total natural gas production. The Sylhet Gas Field Company Ltd. (SGFCL) is Bangladeshs second largest production company, producing 162 Mmcf/d of natural gas. SGFCL operates the Sylhet, Kailashtila MSTE, Kailashtia, Rashidpur, and Beanibazar gas fields. The third state-owned company involved in natural gas production and exploration is BAPEX, which produces about 58 Mmcf/d of natural gas from the Salda and Fenchuganj fields. To encourage natural gas exploration, the government opened the natural gas sector to foreign investment in 1993, after initiating the First Bidding Round of Production Sharing Contracts. Foreign companies today produce 501 Mmcf/d of natural gas from four gas fields. The leading foreign producer is Chevron, which produces 331 Mmcf/d from the Jalalabad and Moulavibazar fields. Chevron also expects to begin producing an estimated 300 Mmcf/d of natural gas from the Bibiana field in October 2006. The UKs Cairn Energy is the second largest foreign natural gas production company, producing 146 Mmcf/d of natural gas from Bangladeshs lone offshore gas field at Sangu. Canadas Niko Resources has been involved in disputes with the government after two blowouts that occurred in 2005 at the companys Chattak (formerly known as Tengratila) gas field. There are several other fields that may prove to hold additional natural gas resources. Petrobangla estimates that the Bibiana field, currently operated by Chevron, may contain as much as 2.4 Tcf in recoverable natural gas reserves. Offshore natural gas fields also present large possible reserves, although minimal offshore exploration has occurred to date due to lingering border disputes withIndia and Myanmar.

Pipelines

Domestic Bangladeshs domestic natural gas pipeline network is operated by the Gas Transmission Company Ltd. (GTCL), a subsidiary of Petrobangla. The company began with the 120-mile pipeline connecting the Kailashtila gas field to Ashuganj. Later GTCL implemented the 40-mile Ashuganj-Bakhrabad pipeline, which completed the interconnection of the national gas grid. GTCL currently operates 480 miles of pipelines and is the sole natural gas transmission company in Bangladesh. Most of Bangladeshs pipeline network is concentrated in the more populated and developed eastern zone of the country. In 2000, Bangladesh completed a 20-mile pipeline across the Jamuna River, which separates the eastern and western parts of the country. In 2001, this pipeline was extended to the Baghabari natural gas-fired power plant, and a network of pipelines in the west is now starting to take shape. In June 2006, the government of Bangladesh and the Asian Development Bank (ADB) signed a $230 million loan package to improve Bangladesh's natural gas infrastructure, specifically designed to aid economic development in the western part of the country. According to the ADB, the project includes four gas transmission pipelines, measuring 220 miles, which will transport about 360 Mmcf/d ofnatural gas to the 15 million people living in west Bangladesh. International Since 1997, Bangladesh has been working to reach an agreement with its neighbors for the establishment of a 560-mile pipeline to transportnatural gas from Myanmar to India through its territory. In January 2005, the Bengali government approved the project, contingent upon India and Myanmar accepting trade concessions and other stipulations. So far, India has not accepted the demands of Bangladesh, and GAIL, Indias state-owned pipeline operator, completed a feasibility study in June 2006 of an 870-mile pipeline from Myanmar that would circumvent Bangladesh altogether. However, this option would significantly increase transport costs of natural gas from Myanmar, and the pipeline would have to travel through unstable areas in northeastern India.

Coal
Bangladesh has small coal reserves, and has consumed little coal in the past. Bangladesh began commercial coal production in April 2003 with the opening of the Barapukuria Coal Mine, which is expected to produce one million short tons of coal per year (Mmst/y), principally forelectricity generation. This mine is being used to fuel the 250-MW Barapukuria Coal-Fired Power Plant in Parbotipur, which began commercial operation in January 2006. Another possible coal mining project at Khalashpir is under consideration as well. Despite Bangladeshs small reserves, the government has recently promoted the development of coal to ease its reliance on natural gas for power generation. Bangladeshs coal reserves have so far not been developed, mainly owing to a lack of domestic financing. To attract investment, the

government has opened the coal sector to foreign bidding. Although estimates vary, Bangladeshs Energy Ministry judges that the country has up to 2.7 billion short tons of highquality coal reserves. According to the latest Energy Information Administration (EIA) figures, in 2004 Bangladesh has no domestic coal reserves or production. The government is currently crafting a new national coal policy that will govern foreign involvement in Bangladeshs coal sector. Some analysts anticipate the new coal policy will hike the royalty rate on coal projects from 6 percent to 16 percent and place limits on coal exports from the country, among other guidelines. In July 2005, UK-based Asia Energy Corp. (AEC) submitted a proposal to develop a coal mine in Bangladeshs Phulbari region. According to a Scheme of Development and Feasibility Study submitted to the government, AEC declares that the Phulbari site contains an estimated 572 million short tons of recoverablecoal reserves. The initial investment in the project would be $1.4 billion, and the open-pit mine is expected to produce 15 Mmst/y of coal to fuel a planned 500megawatt power station. AEC is awaiting formal approval from the government, which has declared that it will not approve any new coal development projects until its new coal policy is enacted. AEC also faces a number of other obstacles in gaining approval for the project. According to the Feasibility Study submitted by Asia Energy, up to 40,000 people would gradually be relocated away from the Phulbari area that currently live on or near the planned mining locations.

Electricity

Installed Electricity Generation Capacity by Type, 1994-2004. (Source: EIA International Energy Annual)

In 2004, Bangladesh had 4.7 gigawatts (GW) of installed generation capacity, up from 3.6 GW in 2002. 95 percent of this capacity was conventional thermal power (primarily natural gas) and the remaining 5 percent hydroelectric power. Electricity generation per capita is one of the lowest in the world, at about 155 kilowatt-hours (kwh) in 2005. According to the World Bank, only 32 percent of the population has access to electricity, primarily in the more developed eastern zone of the country. Since much of the country is disconnected from the nationalelectricity grid, noncommercial sources of energy such as biomass are estimated to represent more than half of Bangladeshs energy consumption.

Sector Organization

Bangladeshs Ministry of Power, Energy, and Mineral Resources (MPEMR) controls the power sector in Bangladesh. This is done primarily through the Power Division and Power Cell, which were created in 1998 with a mandate of managing, regulating, and leading reforms in the power sector. Generation and distribution activities have been opened to foreign and private sector involvement, although both sectors remain dominated by state-owned entities. According to Power Cell, in 2004 the Bangladesh Power Development Board (BPDB) generated 3,630 megawatts (MW) of the countrys 4,920 MW of total commercial electricity, or about 74 percent of the total installed capacity. All grid-connectedelectricity transmission is carried out by stateowned Power Grid Company of Bangladesh (PGCB). Given the poor state-run electricity infrastructure, in 1996 the government issued the "Private Sector Power Generation Policy of Bangladesh" and began to solicit proposals from independent power producers (IPPs) in hopes of easing the countrys electricity supply shortage. Several IPPs broke ground on new power stations after 1996, and more recently Bangladesh has attracted large investment proposals. In May 2005, U.S.-based Vulcan Energy signed amemorandum of understanding (MOU) with the government of Bangladesh for the construction of $1.6 billion in gas, coal, and fertilizer projects that would bring an additional 1,800 MW in generating capacity online. The Tata group of companies in India is also mulling $3 billion in energy sector projects in Bangladesh, including a 500-MW coal-fired power station and a 1000-MW gas-fired generator. However, in July 2006 company representatives announced that Tata would not proceed with the investment plans. In addition to large IPP projects, in April 1998, Bangladesh adopted a "Small Power Generation Policy," which encourages development of small local generation projects of up to 10-MW in capacity in underserved areas. The country has an active rural electrification program, which is supported by the $280 million loan package from the ADBs Power Sector Development Program (PSDP) initiated in 2003. Aside from improving electricity infrastructure in rural areas, the PSDP aims to build long-term institutional capacity, improve efficiency, and promote private sector participation in Bangaldeshs power sector. Conventional Thermal Bangladesh generated 16.9 billion kilowatt-hours of electricity from conventional thermal sources in 2004, representing 94 percent of its total generation for the year. The government of Bangladesh estimates that about 80 percent of itscommercial electricity consumption comes from roughly 30 natural gas-fired plants. In January 2006, Bangladeshs first coal-fired power plant began commercial production at the 250-MW Barapukuria facility in Parbotipur. In July 2005, AEC proposed the development of a coal mine and 500-MW power station in Bangladeshs Phulbari region and awaits government approval. Vulcan Energys possible investment plans would bring two 450-MW coal-fired plants to Bangladesh, and the Tata group suspended plans for a proposed a 1000-MW coal-fired facility in July 2006.

Other Sources Bangladesh generated 1.1 billion kilowatt-hours of electricity from hydroelectric sources in 2004, or roughly 6 percent of its total. News reports suggest that the government is looking to develop additional hydroelectric plants, possibly in neighboringBhutan. Biomass (primarily wood, crop residues, and animal waste) is a significant noncommercial energy source in Bangladesh, estimated to account for over half of the countrysenergy consumption. Biomass is especially prevalent in rural areas for household energy purposes such as cooking