Energy is the most important object for development of a country and petroleum is the key source of energy generation as well as revenue generation for development of a nation.
Internationally crude oil price comes down to about US$28/barrel at mid 2015 and maximum price was US$125/barrel at early 2012.
It is fluctuating around the benchmark of US$50/barrel since late 2015 to till date. Bangladesh has no crude oil production field at this moment except condensate the byproduct of natural gas and local demand is mostly fulfilled by importing crude oil.
Through import of crude oil country is losing huge amount of foreign currency and by keeping oil price at higher level Government get rid of subsidy in this sector and additionally it is generating surplus revenue for them.
According to recent data of state-owned Petrobangla consumption demand of natural gas is about 3500 mmcfd where as total production is about 2700 mmcfd, shortage is about 800 mmcfd.
Among this total production about 38% of natural gas is used for power generation, 6% is used for fertilizer as off season and other 56% is used for different industry, CNG and household purpose.
Bangladesh has total recoverable reserve about 13.5 trillion cubic feet (tcf). The present consumption rate of natural gas may reduce the total reserves drastically and so far it may last for 10-15 years from now. Though have a vast unexplored offshore area of Bangladesh which is highly potential for hydrocarbon.
As low international price of oil government might think of reducing oil price locally in view to increase the use of crude oil in different arena which may insist to reduce the use of natural gas for some energy user like motor vehicle and in production of power.
It’s now proper time to change the raw materials from natural gas to crude oil for energy generation as the international oil price is at low level as well as it may help to save our natural gas. Increase use of crude oil ultimately helps to minimize the production of natural gas as well as may prolong the consumption period of natural gas.
There is no scope of increasing international crude oil price within the next five years and it will be within the bench mark of US$45-60/barrel as because the oil production is still surplus in OPEC (Organization of the Petroleum Exporting Countries) and other oil exporting countries.
Even after cut the production of crude oil by OPEC countries the price is still fluctuating around US$50/barrel. Since 2016 USA increase the production of fracking shale oil and this year USA increase the drilling rig operation around 15%, meaning the increase of crude oil production which may affect the oil price to be at lower.
It might keep the oil price within the bench mark of US$45-60/barrel supposed to be standard for international oil market and may continue this price till 2022. The production rates of fracking shale oil is considerably higher and continue for longer period than a normal oil field (sandstone reservoir) as shale is the source rock for oil and gas. Besides most of the oil producing country is now thinking to reduce production cost through preferring the exploration of fracking shale oil and oil reserves at shallow depth.
On the other hand the world is now seeking alternate energy source like solar energy, nuclear energy and wind energy etc and some countries have wide extent use of alternate energy source and day by day increasing all over the world.
It also means that the growth of petroleum (oil) demand will be lower slowly following the next 10-20 years and the demand of crude oil is turning downtrend. Thus the oil exporting countries and international oil companies is now thinking of production cost considering oil price at around US$50-60/barrel and recalculate their production cost to keep as low as possible favoring return to drilling operation as oil and gas industry is now in big crisis.
From the above justification the prediction here, has no possibility of increasing crude oil price more than US$60/barrel in near future or even could be lower considering the extensive innovation of alternate energy source and fracking shale oil.
Figure: Crude oil price graph of last two years
Bangladesh might take this opportunity through maximum use of crude oil by creating a vast marketing scope in the entire applicable sector and earn good revenue.
For this government may think to reduce oil price at minimum level by keeping minimum profit margin and it will also reduce the production cost of byproduct materials, may create a vast crude oil market and accelerate the economic growth of country. Through marginal profit and huge marketing it may create large revenue at end.
There will be great advantage for the nation that it will reduce the use of natural gas and longer the consumption period of our valuable asset, also replace energy raw materials from natural gas to crude oil and Bangladesh will turn into a developed country.
Rezaul Kabir is a petroleum geologist and an international oil & gas exploration specialist.