Dhaka (Platts)--23Feb2012/218 am EST/718 GMT
Bangladesh, which has never exported gas despite having a provision to allow for it, plans to ban its export from eight shallow water offshore blocks being offered in a new bidding in April round due to rising domestic demand, Petrobangla Chairman Hussain Monsur told Platts Thursday. "Unlike the previous rounds, we will not allow any international oil company to export natural gas from the shallow water blocks in the Bay of Bengal under a planned bidding round," he said. Natural gas has never been exported from Bangladesh although there was an option to export it as LNG in the previous bidding rounds, Monsur said. The international companies operating in Bangladesh are Chevron, Santos and UK's Tullow Oil; and their total natural gas output is around 1.06 Bcf/d, which accounts for 53% of the country's overall production. State-run gas companies produce the remaining 940,000 Mcf/d of gas, or 47% of the total. While the IOCs have never approached the government to export natural gas from Bangladesh as LNG, in October 2001, Chevron's predecessor Unocal, had proposed to export piped natural gas from its Bibiyana gas field in northeastern Bangladesh to India, a Petrobangla official said. Unocal's gas export plan was later abandoned following local protests and rising domestic demand, he added. Under the provisions of the previous production-sharing contracts, exporting gas as LNG was an option if Petrobangla or other domestic buyers were not available to buy it. Meanwhile, Bangladesh is planning a floating LNG import terminal with a capacity to handle 5 million mt/year of LNG, regasification capacity of at least 500,000 Mcf/d, and berthing and mooring facilities for LNG ships with a capacity of 138,000-260,000 cubic meters. Separately, state-owned Gas Transmission Company Limited has moved to lay a 91 km (56.54 mile) Moheshkhali-Anowara gas transmission pipeline to carry regasified LNG from the terminal to the shore. Bangladesh in January 2011 signed a memorandum of understanding to import 4 million mt/year of LNG from Qatar Petroleum, and its private sector is now allowed to import LNG under the country's newly formulated import policy. Monsur said the ban on export of natural gas from Bangladesh should not discourage IOCs from taking part in the bidding round due to the country's mounting gas demand. He had earlier said Bangladesh is planning to allow a higher sales price for natural gas discovered in the shallow-water blocks. Gas prices are pegged to high sulfur fuel oil prices in Bangladesh. And in the 2008 bid round the floor price for HSFO in the formula was fixed at $70/mt and the ceiling price at $180/mt; so this worked out to a gas price of around $2.90/Mcf. The formula to be offered in the new licensing round raises the floor price of HSFO to $120/mt, while maintaining the ceiling at $180/mt, Monsur said. So the gas price would work out to around $5/Mcf based on this proposed pricing formula, he added. This latest bidding round will be the country's fourth, following tenders in 2008, 2001 and 1997. Demand for natural gas in Bangladesh is mounting in line with the steady GDP growth, which has been around 6% since 2003, the highest ever since independence in 1971. Currently the government is struggling to meet the growing domestic natural gas demand as the overall output hovers around 2.06 Bcf/d against the demand for over 2.50 Bcf/d, he said. State-run Petrobangla stopped new gas connections to industries since June 2009 and households since July 2010. Hundreds of industries are shut and many have reduced manufacturing due to the short supply of natural gas. Gas rationing in industries is also rampant and CNG filling stations are being shut for four hours every day to cope with the shortage of natural gas.--Mohammad Azizur Rahman, newsdesk@platts.com