Plan to ship Bhola gas to meet shortage

In a desperate bid to ease the country's gas crisis, Prime Minister's Energy Adviser Dr Tawfiq-e-Elahi Chowdhury on Sunday floated the idea of fetching 80 million cubic feet per day (mmcfd) gas from the Bhola gas field within the next two-to-three months.

The plan to bring gas from Bhola island, though a small volume, would be a step towards addressing the ongoing gas shortage of 500 mmcfd. 

The gas shortage is affecting power generation and industries; which in the end is affecting production for local markets and exports. Hard-hit industries are asking the government to resume import of expensive Liquified Natural Gas (LNG) from the spot market to meet the demand, and the textile sector is willing to pay even more if uninterrupted gas supply is ensured. 

But the energy adviser did not endorse the suggestion. "If we import 200 MMcf of gas for the next six months at the current spot market rate, it will cost about $1.2 billion more than long-term LNG. But the government is not in a position to invest this amount," he said, speaking at an event on "Mitigation of the Impact of Energy Crisis on the Industrial Sector" organised by the Bangladesh Chamber of Industries (BCI) at a city hotel on Sunday.

As an alternative solution, Dr Chowdhury said the gas from the off-grid field in Bhola island would be turned into Compressed Natural Gas (CNG) and shipped via special barges to the mainland and re-gasified into the national grid that has been suffering from massive shortfall triggered by dipping local gas production and limited import of Liquified Natural Gas (LNG).

But officials of Petrobangla, the state-owned energy organisation, said the country did not have the facility to implement such a plan at this moment. It would require an investment for the gas conversion and avail such specialised barges to transport the gas from Bhola island to the mainland.

"Generally, such a process takes a minimum of seven to eight months even if it is readymade. But doing a fresh compressing of gas and shipping would take at least one and a half years," said a top official at Petrobangla, wishing not to be named.

He said that the issue is at a preliminary stage.

The Hydrocarbon Unit of the Energy and Mineral Resources Division is a key stakeholder to facilitate such infrastructure to compress. But when asked about the progress of taking Bhola Gas fields' gas to the national grid, Abul Khayer Md Aminur Rahman, the director general at Hydrocarbon Unit, told The Business Standard (TBS) that his department has not been engaged with the issue yet.

The production capacity of the operational wells in the Bhola field is around 140 million cubic feet (mmcf) of gas per day, whereas the district has a demand of only 65mmcf per day.

But with a 500mmcfd of gas shortage that has drastically affected power generation and industrial production, investors have been putting huge pressure on the government to find an urgent solution.

The industries sought some partial import of LNG from the spot market.

All other options for increasing gas supplies now depend on the chances of finding new gas reserves and increasing production from existing fields.

Factory owners prepare to pay more for gas

During the discussion, RMG and apparel industry owners said priority must be given to gas and electricity supply to industries to protect the economy and jobs.

Anwar-ul Alam Chowdhury, president of the Bangladesh Chamber of Industries, in his welcome address said, "With the state of spot LNG suspension, we are paying Tk16 per cubic metre of gas."

"But if the government imports 200mmcf to 400mmcf of gas at a price rate of $30 Metric Million British Thermal Unit (MMBtu) from the spot market, the last mile tariff for the industry would be Tk22cm to Tk28cm but it would help us to survive," he said.

In the keynote presentation, energy expert Dr Ijaz Hossain said industrial growth is the main driving force of economic growth but industries in Bangladesh do not get enough gas to grow.

At present, industrial gas demand is around 900mmcf per day while the supply is below 500mmcf. The shortfall in the supply of gas is causing huge losses to those industries which have captive generation," he said.

He outlined three types of way outs to increase the gas supply to the industry that includes gas supply management in three critical areas such as Gazipur, Savar, Ashulia and Narayanganj so that these regions receive 100mmcf more gas from the gird daily which is 5.7% of the gas supplied to all other sectors.

He also suggested starting spot market LNG import even if it is $30MMBtu which would cost an extra $90-180 million monthly.

As a short to medium-term way out, he urged to find LNG in the international market below $20 per MMBtu and policy implementation to free up gas from the domestic and CNG sectors.

Dr Binayak Sen, director general at Bangladesh Institute of Development Studies, disagreed with Dr Ijaz Hosssain's suggestion to reduce the gas supply to the fertiliser sector because he thinks it would put the food securities at risk.

He urged the authorities to make energy prices more rational in line with the international market.

Industry owners urge to keep the production afloat

Federation of Bangladesh Chambers of Commerce and Industry (FBCCI) President Md Jashim Uddin suggested that separate gas lines should be laid out for industries to ensure uninterrupted production. 

There are a lot of industrial clusters in greater Dhaka and Chattogram, and those should be given priority in dedicated gas connections, he said in response to the notion that industries are established scattered. 

Former president of BCI and FBCCI AK Azad said the industries in Savar, Gazipur and Narayanganj cannot run their machines on the night shift as they are not getting gas after the evening.

"These companies are thinking of job cuts as the workers for the night shift have been sitting idle, which is a major reason for the companies' losses," he said.

"During the pandemic, our export growth was 38%. But in the last couple of months, we have registered around 7.5% negative growth. If it continues for six months or a year, the unemployment rate will rise," Azad said.

"But we will not need to cut jobs if we can ensure 50% of the production in the factories which is possible by increasing gas supply by only 5% to run the industries at night," he added.

He requested the prime minister to ensure the gas supply so that no worker loses job and no factories have to shut down.

Mohammad Ali Khokon, president of the Bangladesh Textile Mills Association, said the textile sector is in the worst situation.

"If this sector shuts down, around Tk1.20 lakh crore of bank guarantee will also fall under loss. So, we just want to survive," he said.

Md Akhter Hossain Apurbo, vice-president of Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA) said their production has decreased by 40-60% in the last few months.

"Factories are shutting down. In absence of gas, some companies are counting 5% additional cost to run the factories with alternative fuel," said Akhter.

Among others, Naser Ezaz Bijoy, president of the Foreign Investors' Chamber of Commerce and Industry (FICCI), and Md Saiful Islam, president of the Metropolitan Chamber of Commerce and Industry spoke at the programme.

Load shedding in day time if necessary

Tawfiq-e-Elahi Chowdhury said the government is giving utmost importance to the country's agriculture and industrial sectors when it comes to gas supply.

For this, if necessary, he asked people to be ready to stop the use of electricity during the day.

After listening to the traders, Tawfiq-e-Elahi informed them about the plan to reduce gas consumption in various places and increase the supply to the industrial sector. 

"Since the scope of import is less, in order to increase the supply of gas in the country, some people have to reduce consumption. If the supply of gas to electricity is reduced, load shedding will increase. But we have calculated that if we want to increase the supply of gas to the industry, the electricity sector will be the best place to reduce the supply," he said.

A few businessmen, sceptical about the government's initiative to resolve the crisis, urge the energy adviser to say something positive which would give them some assurance.

To that, Tawfiq-e-Ilahi said, "On behalf of the government, we will do whatever it takes to find a solution but you should not lose hope. Those of us who are here now will take an oath for a resolution. If necessary, we will not use electricity during the day."