In a significant development for Bangladesh’s oil and gas exploration sector, the controversial requirement of conducting feasibility studies through third parties remains intact, despite previous attempts to remove it.
This study, often seen as an impediment, is regarded by many as a major obstacle hindering the progress of the energy sector.
Feasibility studies are not only time-consuming but also incur substantial costs, making them a contentious issue. Under the previous administration, discussions were initiated to waive the mandatory third-party studies for oil and gas exploration, and the approval process was on the verge of completion.
The move was strongly backed by former PetroBangla Chairman, Janendra Nath Sarker, who argued that the study was redundant for drilling exploratory wells, which could either yield gas or not.
"If we strike gas, it’s highly profitable; if not, the investment is wasted. But does this warrant a feasibility study?" he remarked.
He pointed out that the seismic surveys conducted before drilling already acted as a form of feasibility check.
The process of hiring consultants for these studies is both lengthy and expensive.
It has been noted that while third-party consultants charge between Tk50-60 lakh, PetroBangla could complete the same work at a nominal cost of just Tk 50,000 to Tk1 lakh.
Moreover, tasks that take months to complete by consultants can be finished by PetroBangla or Bapex in just 15 days, relying on their in-house expertise and data.
A source from PetroBangla revealed that the Planning Ministry had previously exempted third-party feasibility studies for exploration wells, 2D, and 3D surveys.
However, this decision was overturned after Cabinet approval was not granted, leaving the requirement intact.
PetroBangla Chairman Rezanur Rahman confirmed the cancellation of the exemption, stating that the proposal to waive third-party feasibility studies had been rejected.
According to current regulations, any project exceeding Tk50 crore in the Detailed Project Proposal (DPP) requires a feasibility study through third-party consultants.
Energy and Mineral Resources Secretary Mohammad Saiful Islam had also advocated for the exemption, sending a letter to the planning ministry in June 2022.
In his letter, Saiful Islam sought a waiver from the mandatory third-party feasibility study for projects exceeding Tk50 crore, arguing that such studies could be conducted internally by Bapex’s experts, saving time and money.
A notable example of the complications caused by DPP requirements is the Mubarakpur case in Pabna, where drilling operations encountered unforeseen technical challenges.
The pressure at the drilling site exceeded expectations, requiring an adjustment to the DPP and significant delays.
Such unexpected complexities are common in the industry, with crucial tools often not being part of the PPR list, leading to procurement delays of up to two years.
Bapex's former managing director, Amjad Hossain, highlighted how third-party feasibility studies could obstruct progress in oil and gas exploration.
He recalled instances where land acquisition was bypassed until the discovery of gas, demonstrating a more streamlined approach to operations.
He also pointed out the lack of foresight in certain cases, such as in Pabna, where decisions were made based on geophysical history without a proper risk assessment in the DPP.
Energy experts have long argued that the energy sector’s slow pace of development stems from a lack of specialised focus and accountability.
Some critics suggest that vested interests are at play, with certain individuals and firms benefitting from the current system.
Allegedly, certain influential figures maintain close ties with consultants, who charge exorbitant fees for work that could easily be done by local experts.
In conclusion, while the energy sector continues to grapple with its challenges, many experts agree that accelerating exploration and development efforts—particularly in the face of the growing gas shortage—requires a shift in approach.
The current system of mandatory third-party feasibility studies, though designed to ensure thoroughness, is seen by many as an unnecessary burden on an already struggling sector.
