Gas export will 'hurt' national interest

Despite natural gas accounting for only about 20 percent of our overall energy needs, the debate has been sharpened for years by the urgency to decide on exporting gas to India. Gas aside, our other sources of energy include oil and coal (12 percent) and traditional sources like wood, straw, cow- dung, etc (over 70 percent). Low per capita energy consumption being correlated with per capita income (and the GDP), we deserve to be labeled as one of the Least Developed Countries.

Gas is assuming a lifeblood role in our economy. Since 1995, 98 percent of our electricity production has been derived from gas. 44 percent of the produced gas now goes into producing electricity, 36 percent into fertilizer factories, 2 percent into industrial and commercial activities and 7 percent to domestic end-users.

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With every passing day, we're increasing such uses in all the above and in many other sectors. Yet, it does frustrate us to see only 12 percent of our household having access to gas although the debate over export is taking the nation by storm.

A Noble laureate joins the debate

The gas export debate and the concomitant dilemma have been protracted and painful since the mid- 1990s. A national consensus has however prevailed, based on the fear of paucity in the quantum of actual reserve, and all major political parties and the civil society stood firm against pressures from without to import gas.

This stand is an informed one; hence susceptible to intense debate and dissection. A Noble laureate scholar of economics, Joseph E. Stiglitz, too partook in the debate lately and supported our stand while the canceled meeting on August 16 between the state minister for energy and the Prime Minister stalled the decision further. The two incidents may not be related, but the nation heard the message loud and clear.

"Gas reserve is your security against any volatility of energy prices on the international market," cautioned the Nobel laureate economist. While we may choose not to delve deep into the global energy scenarios, we do have other concerns relating gas export.

Professor Stiglitz had also touched upon something more important than our immediate concerns. He advised Dhaka to use gas as a sort of 'trump card of energy security' (quotation mine) to face a global market full of bidders for the scarce resource.

Global backdrop & domestic dynamics

Geographically, North America consumes 29.8 percent of the global energy while its share of global production stands at 13.5 percent. Western Europe consumes 17.3 percent, but produces about 8 percent only. Since gas alone accounts for 22 percent of global energy, Bangladesh's gas resource needs to be garnered and capitalized keeping such scenarios in mind.

Dhaka must also assess what will be the price of gas in near and distant future in the context of global demands and the likely sources of supply. For we might chose to export if the cost of importing to meet future shortages doesn't outweigh the gain we make now. The more gas we use, the more gas guzzling we create. The need for more and more gas being perpetual, our obsession with gas is unlikely to wane unless we shift to the use of coal or nuclear power as our main sources of energy.

The US derives roughly about half of its energy from coal, yet it is engaged in a protracted haggling with Canada with respect to the running of gas pipelines from Alaska to the US mainland via Canadian territory. Such is the demand for gas in fueling the global economy amid shrinking sources of oil. Behind every major war of our time, bids for energy have acted as a prime factor.

Another relevant concern is our current pattern of consumption. As of now, the growth in demand for gas is well over 12 percent while the production has increased by 5-7 percent only. We thus have an existing shortage, which is acute. The prospect of export, hence, remains contingent upon more proven reserve of both gas and oil.

History and a bit of homework

If history is anything to go by, we've observed our quest for energy discovery being marred by setbacks for nearly a century now. Foreign companies drilled six exploration wells in our land during the final decades of British rule (1910-33), but found nothing. The same companies were successful in discovering oil and gas in the Middle East, during the same period.

And then, of the total 36 wells drilled from 1974 through the 1980s, only five gas and one oil field were discovered. Much homework is hence needed to get the figures right while assessing our reserve and the necessity. For, of the total 64 wells drilled ever since, only 22 discovery were confirmed. The success rate being one- in- three, and of them many being economically 'not viable,' we have reasons to be wary of how we handle this finite resource.

One also encounters an arithmetical nightmare while venturing into assessing the quantity of proven and extractable reserves. We only know that the proven gas reserve in the country nears to around 15 tcf (trillion cubic feet), an estimate that roughly tally with the data released by the energy ministry this week. Minus the already extracted 5 tcf, our proven extractable reserve now stands at about 10 tcf. How long this reserve is supposed to last?

Well, it is easier to ascertain the proven reserve on the basis of scientific evidence than it is to predict future needs. One conventional approach toward calculating it is to extend the current level of consumption to the desired level of economic growth, and to the paraphernalia attached to the achievement of such growth levels.

Current daily production in the 54 wells -- including 9 off shore -- is 1270 mcfd (million cubic feet per day) against a demand of 1284 mcfd. Based on this trend, the proven reserve is supposed to last for about 25 years if the GDP grows by 4-5 percent.

But, with 10-12 percent increase in consumption per year, which is what our current rate of consumption is, it will last for 8- 10 years at the most. This time scale does not cover even two ambitious five years plans needed to face global economic challenges in an era of free trading.

Put it simply: each 1 percent growth in GDP requires 2-2.5 percent rise in power supply, a ratio typical of developing nations' early stage of industrialization. Thus, a GDP growth of 8 percent a year will increase demand for power generation alone by 16-20 percent. Our power generation being almost entirely dependent on availability of gas, we seem to have 6-7 years of proven reserve. If the reserve proves to be more, it will come as a streak of good fortune to the nation. But don't bet on it.

And, should we decide to export 3.5 to 3.7 tcf, as was suggested by our state minister for energy the other day, the current reserve will last only 5-6 years at the most.

Gas and global competitiveness

Sound alarming? Add to this another decisive factor; the mind-boggling and almost incredulous phenomenon of system loss. The comparative proportion of system loss is highest in Bangladesh among the SAARC nations. Each year, one third of the total investment into power sector (nearly Taka 5 billion) is eaten up by system loss alone.

Once this lost amount is added to the electricity production cost, the market price of goods produced by factories goes up commensurably. This pushes the prices of 'Made in Bangladesh products' upward in global markets. If we did not take such factors in consideration before, our intent to march globally impels us to do so from now on.

That aside, natural gas also accounts for some 60 percent of Bangladesh's commercial energy needs. If the electricity price were to fall to zero, hypothetically speaking, market price of all industrial products too would fall commensurably. And the amount of goods demanded would rise proportionally. The increase in the demand of goods will accelerate overall GDP growth of the nation. This is not a radical economic thought, but one that the neo-conservatives of the West are currently pursuing.

Energy security and national security

The dependency of our civilization on energy consumption has made energy security an integral part of national security. Regionally, per capita electricity consumption in India is about four times higher than Bangladesh. Being gas - starved, only Myanmar has a lower per capita electricity consumption than Bangladesh while a Chinese citizen currently consumes 10 times more electricity than his Bangladeshi counterpart.

The Chinese growth of GDP spurred to 9-10 percent over the years as China used its electricity and cheaper labour to produce cheaper industrial goods that enticed global buyers. Since economic security constitutes a major plank of national security, the importance of gas is paramount to any aspiring nation. We're no exception.

The role of gas in gradual industrialization is so paramount that a glance at some of the pending needs in northern Bangladesh might help mitigate this assertion. Gas is urgently needed in the Ishwardi and Nilfamari EPZs; in more than 1,000 silk-related industries in Rajshahi and Chapainawabgonj; in 1,000 rice processing units in Rajshahi, Nowgaon and Chapainowabgonj; and in 1200 brick fields in greater Rajshahi that now burn wood, deplete forestry and emit pollutants. The cost of environmental damage is incalculable as people all over the country burn forests as a substitute for gas.

Oil exploration: next best move

The scenarios in the gas sector not being as bright as the initial euphoria led us to believe, an aggressive oil exploration drive is our next best move. One of the positive aspects of our gas is that it's pure and can be used in industries and household alike without much refinement. Pure gas reserves are indicative of oil deposits around.

The quantity of mithen in natural gas is a deciding factor to adjudge quality of gas as well as to seek oil deposits in the vicinity. The proportion of mithen is 95.84 percent in our gas. Especially in the Chatak field, it is 98.2 percent. This renders a vital clue to the prospect of immense oil reserve in some parts of the country.

For years, we have derived separable liquid from the gas-- known as condenset to use the oil-like-liquid as a source of energy for vehicles. Some estimate suggests that the quantity of condenset in our natural gas is about 40 million barrels, mostly in Biyanibazar, Kailashtila, Sylhet and Titas fields.

Experts believe oil reserves stalk the subterranean layers of greater Sylhet, and, in December 1986, oil was discovered by our indigenous experts in Haripur, Sylhet. Many gas export opponents also point out that Bangladesh has limited geography, a factor that might not result in expected yields of gas as is being predicted.

And, as we proceed with creeping urabanisation of our small, overpopulated nation, use of gas becomes unavoidable to keep pace with increased brick productions too. Unchecked brick fields are proliferating around and depleting our stock of wood. We know too well that living in hazardous environment is worse than living in poverty. We're struck by this double challenge constantly.

The above reasons guide us not to export gas for the time being, unless more extractable gas and oil field discovery intervenes to change our knowledge-based stand on the issue. A decision to export gas under the existing scenario will be indefensible both economically and politically. People too will repel such a move.

Author and columnist M. Shahidul Islam is a senior assistant editor of this paper.