Energy sector planning in a fix

It appears that there are deep divisions in the decision-making process when it comes to charting out future energy planning of the country. As per a report published in Prothom Alo on November 13, we are informed that there is significant difference of opinions as to which companies should the Bangladesh Petroleum Exploration Company (BAPEX) work with when it comes to exploration of prospective gas fields. The fact is that no significant gas field has been discovered in the last twelve years, and while demand has continually risen, supply has not.

There remains a lot of speculation as to which way we should go. Should BAPEX capabilities be enhanced further or do we completely open up both onshore and offshore exploration to International Oil Companies (IOC). Whether foreign companies' participation will be limited to Russian involvement or should the Chinese be given equal priority. Yes, there have been major successes by the government in handling the contingency planning but the same cannot be said for long term planning. Gas production has doubled from 1350 MMcfd in 2009 to 2700 MMcfd today, but at the cost of seriously depleting our reserves. Today, liquid fuel-based power generation (about a third) is giving us dividends thanks primarily to the relatively lower price of crude oil in international markets. However, that can change next year. This over reliance on liquid fuel-run power plants is having an adverse impact on the investments for oil, gas and coal exploration possibilities. There has been much talk about import of coal and introduction of liquefied natural gas (LNG) to the primary fuel mix, but where are the concrete plans to turning them into reality? 

On paper, we see a lot of things happening. The Vision 2021 Plan envisages power generation capacity to reach 24,000 megawatts (MW) by 2021, meaning that 9,000 MW of new capacity will have to be added. Of this, a large portion will have to come from imported coal. In the absence of deep-sea port facilities, how is that coal going to be transported to the several power plants being envisaged. Although we have been assured Chinese investments in developing port and railway facilities, these projects will take several years to plan and develop. The gas shortages being faced today will continue to multiply in the absence of any major discovery of gas fields.

The situation remains less than rosy on the offshore exploration scenario. As per media reports, a "multi-client survey" that was supposed to be initiated by the government to assess possible oil and gas reserves has not happened, and without that data, no foreign company would be interested in moving forward. A decision taken today to conduct a comprehensive seismic survey for hydrocarbons offshore will take about three years to complete.

The inertia we suffer from when it comes to turning plans into action drags on from months to years and now that an approximate 8 trillion cubic feet (Tcf) of gas has been consumed over the 2000-2015 period, an estimated reserve between 12-14 Tcf is left. We have suddenly woken up to ground realities. Our plans are far removed from deliverables and this means that the power master plan may well have to be revised where imported liquid-fuel run power plants will play a greater role in the energy mix. Experts have pointed out that LNG will not produce electricity cheaper than we are doing so now. The natural gas price is around USD 2.3/thousand cubic feet (Mcf), but we will end up supplying gas to end users at a minimum of USD 4.50/Mcf if we are thinking about importing 500 million cubic feet per day (MMCFD) of LNG to meet current shortages. 

Then again, we have not been able to take advantage of greatly depressed LNG prices today because we do not have our infrastructure (regasification plant) in place. The first time the issue of setting up a regasification plant was mentioned was five years back. Similarly we do not have our infrastructure in place to handle the millions of tonnes of coal that will be required to feed the envisaged coal-fired plants that are supposed to become the backbone of our future power generation. To put it in a nutshell, we have made very little visible progress in ensuring long term contracts for the fuels we hope to import, either LNG or coal, two primary fuel sources that are supposed to take over once natural gas supply reaches critical point. 

The writer is Assistant Editor, The Daily Star.