Khondkar A Saleque Sufi, an eminent energy expert has been working in the energy sector of Bangladesh for the last few decades. He is currently living in Australia with his whole family.
Sufi worked with the Afghanistan government for long time as an advisor for mitigating its energy crisis. He takes part in different seminars and workshops on energy issues at different countries across the world. He also writes on energy issues at different media.
This multifaceted energy expert recently came to Bangladesh and energynewsbd.com Editor Aminur Rahman caught up with him and talked about Bangladesh`s energy crisis and its future.
energynewsbd.com: You are working in energy sector for four decades. How do you evaluate the success and failure of Bangladesh energy sector over this period?
Khondkar A Saleque Sufi: Bangladesh energy sector played major role in the impressive economic development of Bangladesh over this period. Cheaper gas availability made possible for cheaper generation of power. Cheaper gas and power made Bangladesh commodity very competitive in world market. Gas based energy generation and economic development is a major success for Bangladesh over the last four decades.
At the same time mono fuel gas dependence and not diversifying fuel resources in time are major failures over this period. Bangladesh also failed to carry out required exploration and exploitation of petroleum resources over the last 15 years.
On the other hand availability of cheaper gas and power caused mushrooming of energy inefficient industrial growth. Demand outpaced production causing huge deficit. Bangladesh could not exploit its substantial high quality coal resources for indecision over policy and strategy. Failure in ensuring energy efficiency and formulating economic pricing of energy and power is another failure.
energynewsbd.com: Bangladesh is becoming increasingly dependent on energy and power supply from regional countries especially India. What are your views?
Saleque Sufi: Bangladesh needs sustainable supply of primary fuel to support its power sector expansion. The power demand is growing at the rate of about 10% annually. Bangladesh has to import primary fuel and power from different sources to feed its economic growth for achieving national vision.
Geographically Bangladesh is surrounded by India from almost three directions. It is not that India is self-sufficient in primary fuel and power. Certain regions of India have surplus and other regions have deficits. But some states of India have stranded fuel and power which India is guardedly exporting to Bangladesh.
But depending on a single source creates uncertainty. Bangladesh must work to implement its mega power generation projects for targeted completion and import primary energy and fuel from diversified sources. It must also expedite exploration of own petroleum and coal resources for long term fuel and energy security.
energynewsbd.com: What is your evaluation of gas sector of Bangladesh? What is your suggestion for confronting gas crisis?
Saleque Sufi: There is no denial that failure of the gas sector in matching the supply with demand growth is the major reason for the present vulnerable energy security. There has been less than minimum exploration for new gas resources over the last 15 years. About 8.2 trillion cubic feet (Tcf) discovered gas reserve has been used between 2000 to 2015 against which the total new addition is a little over 1 Tcf. Lack of perspective planning, adoptions of projects without techno economic feasibility studies, utilisation of finite gas resources inefficiently in not too value addition industries led to serious crisis in the gas sector.
Of the total production capacity of 2,740 million cubic feet per day (MMcfd) about 47% is produced from Bibiyana gas field. There can be production glitch any time. If that happens, then it will create huge crisis. As per the official statement the present gas deficit is over 600 MMcfd.
But if unmet demand is added the present deficit is over 1,000 MMcfd and continues growing. Greater Chittagong area is suffering from gas drought over years. Government initiated plan for importing 500 MMcfd equivalent LNG imports in 2010 with a target of achieving it by 2013. However, the existing situation indicates that it may not happen before 2019. By then the national production may deplete to 2,000 MMcfd and deficit may grow to over 1,500-2,000 MMcfd.
Relying exclusively on Bangladesh Petroleum Exploration and Production Company Limited (BAPEX) for onshore exploration was also not smart. BAPEX did its best in exploring few marginal gas fields.
But these were not enough for meeting the huge deficit. The actions for offshore exploration and deep water exploration are frustrating.
It is suggested to undertake the following on top priority basis. Expediting LNG import initiatives and reviewing gas price to make industry ready for absorbing LNG price shock.
- Concluding JV between BAPEX and selected International Oil Companies (IOCs) for further exploring identified structures in the greater Chittagong area
- Adopt rational and feasible exploration and drilling program of BAPEX in its allotted blocks and ring fenced areas
- Letting out production sharing contract (PSC) for engaging IOCs in onshore frontier areas outside BAPEX ring fenced areas
- Facilitating IOCs in exploring and developing resources in allotted offshore blocks
- Reviewing model PSC for making it more investment friendly and go for fresh Offshore bidding round as Soon as possible
- Adopting strategy for rational use of gas for demand management ( replacing natural gas use with LPG wherever feasible)
- Placement of right professionals in the right place and empowering the Petrobangla company boards for managing the company affairs free from bureaucracy
energynewsbd.com: Recently an Indian secessionist group has threatened to blow up gas production and transmission infrastructure of Bibiyana Gas field. What are your views about this threat?
Saleque Sufi: Organised terrorist groups in different countries have blown up petroleum supply infrastructures. I hope such threat has been taken with due seriousness. Gas Transmission Company Limited Bangladesh (GTCL) and Petrobangla alone cannot secure the infrastructure from terrorist attack.
Chevron has possibly the best security system of their gas production infrastructure. But pipelines are vulnerable. From my experience of very difficult struggle in managing integrity of North South Condensate Pipeline as Director (Operation) GTCL I would suggested government agencies supplementing 24/7 vigilance of the system.
energynewsbd.com: You have spent a major time of your career in gas pipeline construction and operation management. Do you think there is any such possibility of gas black out like power grid collapse?
Saleque Sufi: Gas transmission is different from power transmission. Gas grid usually has significant line pack (high pressure inventory of gas). The present gas system demand supply is so imbalanced that even line pack use cannot meet the demand. Moreover, transmission system has accumulated condensate and sludge for failure in carrying out routine on stream pigging.
There may be condensate surge if the lines are not pigged soon. That may cause embarrassing situation. If the condensate surge ingress in the suction side of compressor stations there may be gas transmission system black out.
Exclusive dependence on three major gas fields Bibiyana, Titas and Jalalabad for over 80% supply may also cause gas system black out if one or two gas fields have forced outage.
energynewsbd.com: Well below 50% population of Bangladesh have pipeline supply of gas. Government could not ensure reliable supply of fuel for cooking yet. What do you think government should do?
Saleque Sufi: Government must seriously consider phasing out pipeline supply of gas for domestic use as soon as possible. Aggressive program for replacing this with reliable supply of LPG at affordable price must be the feasible option. It is almost impossible to identify all illegal connections and pipelines and remove these. Moreover, the system has become vulnerable for accidents from leakages.
Domestic gas supply infrastructure in major distribution networks has become vulnerable. Old pipelines have been corroded.
Many unauthorised pipelines and connections have made system messy. Older companies like Titas Gas Transmission and Distribution Company Ltd (TGTDCL), Karnafuli Gas Distribution Company Limited (KGDCL) and Bakhrabad Gas Distribution Company Limited (BGDCL) do not have institutional memory and reliable as build drawings. In case of failures of a section it is often difficult to locate isolation valve. The frequent visits of earthquake may cause catastrophic damages from gas system failures.
Government must adopt plan in phasing out all gas connections for domestic and commercial use within the next three years. Liquefied petroleum gas (LPG) bottling and supply should be subsidised and price must be regulated.
energynewsbd.com: Bangladesh has agreed to provide corridor for India for transporting LPG and Liquefied natural gas (LNG) to Northern Indian States? Indian state owned company Indian Oil Company Ltd (IOCL) has signed a MoU with Bangladesh Petroleum Corporation (BPC) for setting up a large LPG plant in Chittagong.
Bangladesh will let its pipeline infrastructure to allow IOCL transport some LPG to Northern states after meeting Bangladesh requirements. How do you think it can benefit Bangladesh?
Saleque Sufi: I always believe that regional connectivity of power and energy grid will benefit countries of the region for achieving sustainable energy security. We missed an opportunity in 2005 for gas supply from Myanmar through the proposed Myanmar-Bangladesh-India tri nation pipeline.
Bangladesh needs primary energy from any possible sources to keep its economic development growing. Own discovered gas resources is fast depleting. New resources may not be available soon.
In this scenario Indian company setting up large LPG plant in Bangladesh will boost Bangladesh endeavor for securing fuel supply. After meeting Bangladesh requirement if LPG is exported from Indian plant in Bangladesh to Indian states I find nothing wrong here.
But LPG and natural gas is not the same commodity. A separate pipeline will need to be built for LPG. A win-win contract will benefit both parties. Similarly if India agrees to export LNG converted gas to Bangladesh and transport gas through Bangladesh to Indian states in the north, it might come out as be beneficial for both the countries.
Bangladesh will get wheeling charge for letting India use its transmission pipeline infrastructure. Bangladesh will also get gas from such arrangements. But Bangladesh must negotiate the contracts properly. It must be win –win for both parties.
energynewsbd.com: Government is contemplating for concluding PSC like gas sector for coal exploration. Though it is rare yet do you consider it will be useful for Bangladesh?
Saleque Sufi: PSC in coal and mining sector is rarely done for exploring the resources in developing countries. There are examples of such PSCs in Queensland and Western Australia.
However, it may take long time for Bangladesh for preparing investment friendly model PSC for Coal Exploration. Bangladesh wasted decade over indecision for coal exploration. It is highly unlikely that major mining companies would be interested in PSC for coal exploration and development in Bangladesh.
It may be another waste of time. Bangladesh mines and minerals acts and policies have enough provisions for dealing with coal mining issues.
Bangladesh must I repeat must explore its own coal resources as soon as possible and set up mine mouth coal fired power generation plant as own coal is the most feasible and affordable fuel option.
energynewsbd.com: Government has recently tasked Hydrocarbon Unit to finalise the coal policy. Government has failed to finalise this for a long time. What are the reasons for this according to you?
Saleque Sufi: Anyone can question the sincere intention of the government about mining own discovered coal reserve. Bangladesh has Mines and Minerals act and policies. It also has environment policy. Mining act Barapukuria is being done under the coverage of that policy. The contract at Phulbari was signed within the ambit of such policy.
For mining coal or any other mineral there is hardly any need for a separate coal policy. Coal mining is being done in many countries of the world.
But how many countries have separate coal policy? Still as coal policy was conceived to be adopted it must not have taken almost 10 years for three different governments to conclude the policy. We are not sure how much Hydrocarbon Unit can assist here as the very mind set of the government needs changing about mining own coal .
energynewsbd.com: Bangladesh is lagging behind in offshore exploration for Hydrocarbon resources? What should be done?
Saleque Sufi: Bangladesh was the first country in the region to enter the Bay of Bengal in 1974 for offshore exploration when six IOCs were awarded production sharing contract (PSC) for 8 offshore blocks. But once that endeavor was over it took several years for Bangladesh to renter offshore exploration.
The reasons behind this were the maritime boundary disputes with Myanmar and India. Bangladesh also failed to create enough incentives in its model PSC for attracting major IOCs in risk investments. Major IOCs had a view that Bangladesh PSC could not create Win-Win contract.
IOCs viewed that it could not create healthy balance in risk and reward. Also protracted multi-tier decision making process remained as disincentive. There is a believe that ConocoPhillips for strategic reasons for brightening its portfolio in money market signed and held few offshore blocks for several years without genuine interest of developing those. Finally it opted out from those.
Bangladesh failed to expedite preparatory actions for fresh bidding rounds after resolutions of maritime boundary disputes while Myanmar and India are in far advanced stages. Failure in engaging surveyors for multi-client survey for acquiring data and information is a sad episode.
Bangladesh needs updating its PSC creating required additional incentives for attracting IOCs in highly expensive deep water exploration. IOCs in general are not much interested for risk investment at this time of low crude oil price in global market.
Petrobangla and Energy and Mineral Resources Division (EMRD) need to smarten its PSC management and negotiation skills a great deal. There are no reasons why Bangladesh PSC block bidding won’t attract IOCs the same way at these do everywhere else. Gas pricing, fiscal incentives, market access, risks allocations need fresh look and approval process need to be smartened.
energynewsbd.com: What government should do for human resources development in the energy sector?
Saleque Sufi: Let me discuss the matter in a wider perspective. There has been huge brain drain of competent officials from gas and power sector creating huge void.
Now it has become a huge challenge in finding required competent human resources for managing several mega energy and power projects. Governance structure of power and energy sector is a major issue. Government is too much into power and gas system day to day operation. State Owned Enterprises (SOEs) have too much interference in their affairs from governing ministries.
This does not help growing competent responsible executives in energy sector. SOEs must have autonomy as mandated in the company act and must be governed by properly constituted board of directors. A properly constituted and manned Bangladesh Energy Regulatory Commission (BERC) should act as economic regulator of power and energy for creating accountability and efficiency in power and energy business. BERC must act freely and independently as per its mandate.
Too many irrelevant persons get the benefits of foreign trips and short training those are being made now. There must be a well thought human resources development policies.
The training institutes of Power and Energy Sector in Bangladesh can have twinning arrangements with leading regional and international institutes. Universities and industries must develop linkages.
Undergraduates must have feel of the industry before they graduate. There must be scope of research in universities. Recruitment of right professionals, a carefully crafted training and human resources development policy. Government and industry must get benefit from each foreign trip and training.