Sources from the Energy and Mineral Resources Department have disclosed that Gazprom continues to lobby for contracts at inflated rates.
The situation has reached a critical point for the state-owned company BAPEX, which has been severely impacted by Gazprom’s high-bid tactics, leading to the company being barely sustained by emergency measures.
Following the fall of the Awami League government on 5 August, the company managed to save approximately Tk3,000 crore.
Gazprom’s syndicate had nearly finalised a bid of nearly Tk300 crore for drilling a well, which BAPEX could have executed for Tk70-80 crore.
The urgency to award the contract under special legislation was conspicuous.
Bangladesh was on the verge of contracting for 15 wells at a proposed rate of $23 million each (Tk120 per USD), totalling nearly Tk4,200 crore. The same work could have been done by BAPEX for a maximum of Tk1,200 crore, as demonstrated by numerous precedents, yet high-priced contracts were continually awarded.
The practices of former prime minister Sheikh Hasina’s energy advisor, Dr Taufiq-e-Elahi Chowdhury's syndicate are hard to believe. In 2014, during the 354th board meeting of BAPEX, a proposal for drilling the Shrikail-4 well was approved. However, at the 556th board meeting, a development project proposal (DPP) worth BDT 64 crore was approved.
Instead of approving this, PetroBangla was instructed to send a DPP for Tk200 crore.
Consequently, a new DPP for the same work was created for BDT 200 crore, which was awarded to Gazprom.
In several instances, Gazprom has been awarded contracts for drilling 17 wells at several times the cost, with another 15 wells nearing finalisation.
The most advanced project involved five wells in BAPEX’s Bhola gas field, which was about to be finalised at a high cost.
However, the interim government’s advisor on energy and mineral resources, Faozul Kabir Khan, suspended the projects under special legislation, saving the company from a massive debt burden.
PetroBangla Chairman Jonendro Nath Sarker informed that files for open tenders are ready, and tenders will be called within a day upon receiving directives.
There is a growing concern that BAPEX is burdened with increasing debt due to the excessive costs of drilling projects, with no returns to show.
Such practices have previously put BAPEX in precarious situations, driven by special interests rather than national benefits.
In the coastal district of Bhola, 9 wells are capable of extracting approximately 200 million cubic feet of gas daily.
However, due to a lack of demand and the absence of pipelines to the mainland, only 60 million cubic feet are being extracted daily.
The ongoing projects, particularly the drilling of five wells at high costs, have raised questions about whose interests are being served.
Critics claim that these projects are prepared for the benefit of the Russian company Gazprom rather than national interests.
Past objections regarding the drilling of wells at exorbitant costs have proven unfounded as these wells remain unused.
The practice of pre-drilling wells without immediate returns has led to an increase in debt rather than any tangible benefits for BAPEX.
In 2017, BAPEX was burdened with Tk400 crore debt from drilling projects.
While BAPEX could have completed these projects for a fraction of the cost, the preference for high-cost contracts has only exacerbated the financial strain.
Professor Shamsul Alam, adviser on energy for the Consumers Association of Bangladesh (CAB), stated that the drilling of wells in Bhola does not align with Bangladesh’s energy needs.
Similar to past practices involving Niko, the current situation involves special interests benefitting from inflated contracts. The use of special power laws to justify such practices is unprecedented.
former prime minister Sheikh Hasina’s energy advisor, Dr Taufiq-e-Elahi Chowdhury, has consistently defended Gazprom’s work as being competitively priced compared to international rates, though many believe this was to justify awarding contracts to Gazprom.
There was a time when local agents and influential political figures exerted pressure, resulting in PetroBangla being forced into high-cost agreements, and BAPEX suffering as a result.
Historically, Bangladesh extracted 2,800 million cubic feet of gas daily from local fields.
With dwindling reserves, this has now decreased to approximately 2,000 million cubic feet. Energy experts believe that the prolonged stagnation in oil and gas exploration has pushed the country into a severe crisis. Adhering to the National Energy Policy of 1995, which mandated the drilling of four exploration wells annually, could have mitigated the current crisis.
Despite the potential for significant discoveries, past governments have failed to implement these policies, leading to today’s predicament.
PetroBangla’s past delays have been subject to criticism, though there are signs of change with the current Chairman Jonendro Nath Sarker’s approach.
Alongside ongoing projects for 48 wells, new plans for drilling 100 additional wells have been proposed.
Bangladesh has drilled approximately 99 exploration wells over 112 years, with plans to drill 69 wells in the next three years.
Although ambitious, this is deemed essential by experts, who note that a single successful well out of ten can be economically viable.
The current approach to exploration has failed to deliver significant results, contributing to the ongoing crisis.
