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  NBR Regional Studies: Energy Revenues and Development in Bangladesh     
The National Bureau of Asian Research
AN EXPLORATORY REVIEW OF BANGLADESH GAS SECTOR:
LATEST EVIDENCE AND AREAS OF FURTHER RESEARCH

Title Page   I     II     III     IV     V     VI     VII     VIII     IX     X     XI
Sylhet Fractionation Plant Project
I.  INTRODUCTION

Besides foreign energy companies, natural gas in Bangladesh is being produced by two subsidiaries of state energy company Petrobangla
-- Sylhet Gas Fields Ltd. and Bangladesh Gas Fields Co. Ltd.

These two companies produce natural gas for domestic consumption. More than 80% of the natural gas is consumed for power and fertilizer production, and the remainder by industry and households.

Petrobangla, the state owned corporation is today responsible for exploration and development of oil, gas and mineral resources of the country. Petrobangla and its subsidiary companies are carrying out their designated responsibilities including distribution and marketing of gas.

Bangladesh Petroleum Corporation (BPC), another state owned corporation looks after the import, production and marketing of petroleum products including gas condensate produced by the gas fields. Some private companies are now involved in the bottling and marketing of LPGs of imported origin.

Natural gas is today recognized as an important indigenous hydrocarbon resource in Bangladesh.
Its use as a fuel in Chhatak Cement Factory in 1960 from the Chhatak Gas Field marked its first commercial exploitation.
It was fed to the first ammonia-urea grass-roots complex, NGFF at Fenchugonj in 1961.

Since then over the years the consumption of natural gas has been increasing and it has contributed to the national development significantly.

Natural gas is now the major fuel for power generation in Bangladesh.
It is the feedstock and fuel for production of urea fertilizer and ammonia.
It is the fuel for many industries and commercial establishments. It is an important cooking fuel in metropolitan areas like Dhaka, Chittagong, Sylhet, Comilla, Mymenshing, Tangail etc. replacing the usual fuel such as wood and kerosene.

The first discovery of natural gas was made in 1955 at Haripur (Sylhet Gas Field) and this was followed by the discovery of the Chhatak Gas Field in 1959. Since then exploration of oil and gas resources has led to the discovery of 22 gas fields and one oil field. When NGFF went on-stream the reserve and production ratio (R/P ratio) was about 40.

International oil companies (IOCs) right from the beginning have been involved in the exploration and development of oil and gas in this region under a wide range of contracting arrangement. After the emergence of Bangladesh, IOCs that were and are associated with exploration and development of oil and gas include: ARCO, INA-Naftaplin, Nippon Oil, Ashland, Canadian Superior Oil, Union Oil, Shell, Schimittar, Occidental, Cairn, Rexwood, UMIC and UNOCAL. Shell and UNOCAL are now producing gas from two fields under separate Production Sharing Contracts (PSCs) and Gas Purchase and Sale Agreements (GPSAs).
On September 18, 2001 production was 1042 MMSCFD and the two IOCs’ contribution was 176 MMSCFD.

Since the beginning of operation by IOCs in the past decade, the current utilization of gas and its utilization in future in Bangladesh have come under close scrutiny specially in view of the IOCs’ desire to recover their investment as early as possible and to keep exploration vibrant. There are many options and there are implications with each one of them including suspicion and fear of being involved in oil politics of unknown consequences.
Sylhet Fractionation Plant Project papers gather dust as 3,000 barrels of NGL burnt out daily Iqbal Siddiquee, Sylhet.
Tue. July 08, 2003

Setting up of an NGL Fractionation Plant in Sylhet remained a far cry even three years after short-listing of six firms following floating of international tender for the purpose.
The plant was planned to ensure proper utilization of the huge quantity of NGL found in good proportion in raw gas produced by the six gas fields in Golapganj-Beanibazar region, unlike in the in other regions. Such gas is considered 'wet gas'.

Every day, gas fields in Sylhet region produce a huge quantity of NGL as a by-product, which is being flared up burnt for years. The proposed plant would produce Liquefied Petroleum Gas (LPG), Motor Spirit and High Speed Diesel.
About 3000 barrels of NGL is being burnt every day from the four gas wells in Kailashtila (Golapganj) and two in Beanibazar, officials said.

The gas produced in the two Beanibazar gas fields contains a very high percentage of 'wet contents'. The officials said sixteen barrels of condensate is available from one million CFT gas of Beanibazar Gas Field and 13 barrels from one million CFT gas of Kailashtila Gas Field.

In 2000, the ministry of Energy and Mineral Resources conducted a feasibility study and field survey in Golapganj and Beanibazar upazilas, the probable location for the proposed gigantic plant.

The six-member body having representatives from the Bang-ladesh Petroleum Corporation (BPC), LP Gas Limited, Sylhet Gas Fields Limited (SGFL), Rupantarita Prakritik Gas Company Limited (RPGCL) and Bangladesh Gas Fields Company Limited (BGFCL) and headed by the Petrobangla Secretary visited the sites and suggested setting up the plant.

The approximate expenditure for the plant was estimated at US $ 30 million at that time.
Accordingly, international tender was floated and six bidders were short-listed.

Structural work of the joint venture plant was scheduled to begin in late 2001. But nothing has been done so far.

Talking to The Daily Star some gas officials said Golapganj-Beanibazar region is the best site for the proposed fractionation plant as it can ensure the best utilisation of the costly NGL, which is found in good proportion without any additional investment.