JBS Vol 03. Num 1. 2001 - NATURAL GAS SECTOR IN BANGLADESH: ISSUES AND OPTIONS

The paper attempts to address the major debates surrounding the Bangladesh gas sector. It addresses the need for an
unbiased Production Sharing Contract (PSC), an accurate estimate of gas reserves, and appropriate pricing
strategies. As Bangladesh lacks the technical capability to conduct gas exploration on its own, she is forced to sign
specific contracts (PSC) with foreign companies, which favor the International Oil Companies (IOC). The local
companies are severely limited by their technological inadequacies. Bangladesh also needs to increase its per capita
primary energy consumption. Hence, the fertilizer and power sectors need to implement their respective projects.
The paper suggests that there is a need to supply power and fertilizer to the northwest region on a priority basis,
since these are the areas where the poverty level is high. The analysis suggests that currently Bangladesh is no
longer experiencing shortage in the supply of gas. Thus, the pricing of gas needs to be determined on the basis of
economic cost and depletion premium. In addition, there is not enough gas to meet 50 years of domestic requirement
and hence the question of pipeline export of gas does not arise. State monopoly in the domestic marketing of gas
should be the preferred option in order to avoid distortion in end user prices. Before allowing exports of gas in the
form of LNG, the tax administration needs to be strengthened. Moreover, a comprehensive gas policy should be
developed with a proper regulatory body that has oversight responsibilities. Efficient gas marketing is the key to
deriving numerous benefits from the gas reserves of Bangladesh.