The gas export debate

With Bangladesh already importing gas to meet its domestic demand, have you ever wondered what would have happened if the country had ever consented to the proposal of gas exports to India – an idea pushed by American oil company Unocal and some Bangladeshi energy experts.

At whose interest did they act in cohesion?

Back in 2001, the now defunct American oil company Unocal that had discovered the Bibiyana gas field in Sylhet formally tabled a proposal to the government: It would build a 1,363-kilometre pipeline from the Bibiyana gas field to Delhi in India. The pipeline would transmit 500 million cubic feet gas per day (mmcfd) – roughly one-sixth of what the nation consumes today from India.

How would it benefit Bangladesh? Unocal said it would fetch us $3.7 billion total revenue over the 20-year project life and $500-$700 million immediate foreign direct investment.

Around that time, oil giant Shell also proposed that Bangladesh could earn $800 million a year by exporting 6 trillion cubic feet (Tcf) gas to India.

And in the early '90s, the World Bank and the Asian Development Bank had stopped funding oil and gas exploration and power projects in Bangladesh at a time when Bangladesh was increasingly facing an energy crisis. Later, the World Bank backed the idea of the oil companies – export the gas!

The oil companies and their lobbies and a pool of experts spread the idea at seminars and in the media that Bangladesh was floating on gas and it did not have the capacity to utilise it. They emphasised on export because that was the best "option" for Bangladesh.

Unocal not just spearheaded the idea of gas export, but it had successfully implanted the idea in the minds of policymakers and energy think-tanks. A part of this lobbying involved offering local "experts" with consultancy jobs with lucrative payments.

Unocal's lobbying and pressure on the government had peaked soon after the Bangladesh nationalist Party (BNP) came to power in late 2001. AKM Mosharraf Hossain was made the state minister for energy and he was "made" to push the export option. Amid Unocal's pressure, the-then BNP government formed two national oil and gas committees – one to assess how much hydrocarbon reserve we had and another to suggest how to best utilise whatever gas resource we had in our hands.

The gas resource assessment committee did not come up with a figure that would justify that Bangladesh was floating on gas; while the gas resource utilisation committee ruled out export of gas (two members of the committee coming from Buet opposed it) as it saw gas supply shortfall in the near future.

How the export debate was created

Back in 1997, Bangladesh suddenly became a centre of attraction for foreign oil companies. Back then, the global gas price was going up and the government had floated an international bidding, seeking offers from oil companies for exploration and development of oil and gas fields in Bangladesh. Just a year ago, British company Cairn had struck an off-shore gas field in Chattogram. Other than Cairn, American oil company Occidental was exploring gas in Moulvibazar (and blew up the gas field in mid-97).

Rumors were abuzz that Bangladesh was floating on gas. And the quantity could be as high as 100 Tcf or as low as 26 Tcf. Back then, Bangladesh's proven gas reserve was around 10-12 Tcf.

After the 1997 block bidding, several international oil companies including Shell, Exxon-Mobil and Unocal started working in Bangladesh.

US company Unocal had not entered the Bangladeshi scenario through the block bidding – but by firstly pursuing an unsolicited deal for a gas field in Bhola that was discovered by Bangladesh and then, secondly by buying the stakes of Occidental in Bangladesh.

File photo of a gas field in Bibiyana.

Occidental had in its hand some of the most gas rich blocks. But its hands became dirty for the Moulvibazar or Magurchhara blow out in 1997. Occidental was negligent in its operation and it was facing penalty.

However, in the following year Occidental discovered the Bibiyana gas field – but instead of developing the gas field, the company was looking for a way out and Unocal showed it the way.

Unocal had been nurturing a "pipe dream": It would install a gas transmission pipeline from central Asia stretching up to Bangladesh and it would help nations export and transmit gas from surplus areas to gas starving area. In Unocal's map, India was the big gas starving nation. Bangladesh, on the other hand, had enough surplus gas and the country's development pace was so slow that it could not possibly use this surplus gas.

Unocal entered the scenario through an unsolicited deal over the Shahbazpur gas field. This deal did not work out. But with Occidental's resourceful gas fields in hand, the company found a new game with the Bibiyana gas field.

Unocal came up with an initial assessment that the field had a recoverable reserve of 2.4 trillion cubic feet of gas. The company started saying that Bangladesh did not have the market for this field and this gas needed to be exported to India.

Unocal's Mintoo connection

When Unocal began pursuing its unsolicited deal over the Shahbazpur gas field, the company gave a one percent share to businessman Abdul Awal Mintoo to facilitate its operations in Bangladesh.

Considering that Unocal, later Chevron, has been producing huge gas from the Bibiyana, Moulvibazar and Jalalabad gas fields – that one percent is anything but insignificant.

According to leaked documents known as the Paradise Papers a few years back, Mintoo's business entity NFM Energy Limited was registered in Bermuda and incorporated on August 9, 1999. Unocal gave its share to NFM Energy. Mintoo had been enjoying this one percent share of Unocal or later, Chevron's profit, for more than a decade.

Back at that time, Mintoo was close to the Awami League. Awami League chief and the-then Prime Minister Sheikh Hasina was not interested in exporting gas. During American President Bill Clinton's visit in March 2000, she suddenly announced that Bangladesh would not export any gas unless it had ensured a 50-year gas reserve for the nation first.

This had disappointed Unocal.

Several weeks before the October 2001 elections, Abdul Awal Mintoo suddenly joined the BNP – which later came to power through that election.

The pressure to export gas resumed after the election.

Gas utilisation committee

As the Petrobangla kept on resisting the export option, in early 2002, the BNP government formed a national committee for national gas utilisation. One of the mandates of this committee was to see if gas could be exported.

The committee headed by former energy secretary Azim Uddin Ahmed comprised of Petrobangla Director (Finance) SR Osmani, Petrobangla Director (Operations) Dr M Ismail, Centre for Policy Dialogue (CPD) Distinguished Fellow Dr Debapriya Bhattachariya, Chartered Accountant MA Hafiz, Buet Chemical Engineering Department professors Prof M Tamim, Dr Ijaz Hossain, Prof. Momtajuddin Ahmed of Dhaka University, and BIDS Research Director Dr KAS Murshid.

In July 2002, the National Committee on Gas Utilisation unanimously agreed that all current gas discoveries should be kept for home and incremental pipeline export could be considered in the future in case of supply saturation as well as major new gas discoveries.

But this consensus came after a series of arguments between some members and the two Buet professors. When an economic analysis was discussed at the committee that the country was not in a position to export gas, the two professors argued that the US oil company Unocal would be disappointed if the committee did not favour "limited" gas export from "its Bibiyana gas field".

Their arguments were countered saying that it was not the task of the committee to favour any particular oil company or to decide on gas export but address national issues.

The final meeting in July again started with the two different opinions on exports. But the overwhelming majority felt that the-then existing proven gas reserve of 15 trillion cubic feet was not enough to handle a projected 20-year domestic demand scenario. It also forecasted gradual gas crisis in the country from 2015 – which is happening now as per the forecast.

Export pressure relieved

The Gas utilisation committee report naturally watered down any hope of Unocal to make the government agree to export gas. So Unocal went silent for a couple of years. Then in 2004, the company finally moved on to begin developing the Bibiyana gas field for local gas consumption.

Three years later, when Unocal was acquired globally by Chevron, its Bangladesh chief Andrew L Fawthrop told this correspondent that he believed the country's land-based gas discoveries could not be exported due to high local demand. He added that high domestic demands would require expansion of the Bibiyana field between 2011 and 2015. Bibiyana field was later expanded and production was more than doubled from 2013-14.

Energy importing nation

By the time Awami League returned to power in late 2008, the country's energy scenario was in shambles. Businesses and industries were desperately trying to grow – but energy and infrastructure were pulling them down.

From the beginning, Sheikh Hasina emphasised on power generation and diversification of primary energy so that the nation does not excessively rely on depleting natural gas supplies. As part of it, the government sought to build nuclear, coal-based and LNG-based power plants. Besides, the government in 2010 took the initiative to import LNG and have it mixed with the local gas – so that the existing gas-based industries and consumers continue their operations.