Officials and experts view this move taken last week as "suicidal" saying that there is no justification of doing another mistake as in the Niko deal where foreign companies are being given risk-free and near-confirmed gas resources reserved for national exploration company Bapex.

Some of these ring-fenced areas have gas sand structures much bigger than that of Titas gas field [5.12 trillion cubic feet (tcf) proven reserve] which is the country's biggest gas field till date. For instance, while the Titas field gas structure is 20 km by 17 km in size, the reserved Sitakunda gas structure is 70 km by 10 km and the reserved Patia structure is 40 km by 15 km.

In its July 25 letter, Petrobangla Director Maj Md Moktadir Ali informed Bapex of an earlier proposal sent to the energy ministry and directed it to take steps to open up the ring-fenced areas and blocks 8 and 11, reserved for Bapex, for joint venture agreements with foreign oil companies.

The letter asked Bapex to "protect" national interest and ensure "transparency" in this bid.

The reserved or ring-fenced areas include Kapatia, North Bhairab, Hazipur, Kamta, Sitakunda, Patia and Jaldi. These areas were ring-fenced in the nineties when various exploration blocks were opened to foreign oil companies with the vision that Bangladeshi company Bapex would one day tap them.

The joint venture agreement system is an easy by-pass for a competitive bidding and this ensures low risk investment for foreign oil companies. At the same time, it practically gives away local resources to foreign companies at nominal prices.

Sources said a controversial Petrobangla high official, under the influence of certain local agents of foreign oil companies, has prompted this move. He has justified this suggestion on ground of lack of finances.

"This is just a lame excuse. Financing oil and gas exploration projects did not get due priorities in the past though the contribution of Petrobangla's companies are significant. There were always adequate funds and a lack of political will," said an energy ministry high official.

Nine companies under Petrobangla annually contribute more than Tk 3,000 crore to the national exchequer as tax, supplementary duties and profit.

"More importantly, three gas production and exploration companies -- Bangladesh Gas Field Company (BGFCL), Sylhet Gas Field Company (SGFL) and the lone exploration company Bangladesh Exploration Company (Bapex) --annually pay Tk 1,800 crore to the government as tax and supplementary duties. As per the company rules, these companies are supposed to be able to keep 20 percent of their earnings, which does not happen," he said.

"The government in 1994 had given away the discovered Jalalabad gas field with its proven 1.5 tcf gas to Occidental (now Chevron) but why? Back then Bapex asked for just Tk 200 crore to drill wells and set up gas processing plants to develop this field but the government said there is no fund. Then after Occidental developed it and started supplying gas, the government paid the foreign company Tk 300 crore in just one year as payment of gas," the official noted.

"I see self-contradictory actions, and not lack of fund," he added.

A Petrobangla official asked, "Is it really difficult for the government to allocate Tk 100 crore a year to each of these three companies to allow them to explore and develop the resources?"

He went on, "Alternatively, the government can simply give Bapex a one-time allocation of Tk 500 crore to build its own business and contribute to the nation." In India, the national oil company ONGC was given 500 crore rupees as one-time investment a couple of decades back. Now, this company has turned into a Rs 30,000 crore giant.

In 2004, Bapex was forced to sign a controversial joint venture deal with Canadian company Niko resources to develop "marginal" (previously used) gas fields owned by Bapex. In the list of three fields, one field -- Chhatak (or Tengratila) was unexplored and therefore deserved, at least, open tender to ensure competent and fair exploration programmes. Incompetent company Niko caused two rounds of blowouts in Tengratila area, which experts believe has the potential of one trillion cubic feet of gas.

"It seems we have either stopped believing in ourselves, or we are too eager to give everything away to foreign companies for personal gains," said a senior official. "The Niko deal is a glaring example of how we undermine our own interest, and how can Petrobangla want to follow that example?"

PETROBANGLA'S MOVE
Earlier on July 3, in a letter to the energy secretary Petrobangla set the ground for the idea of JVA. The letter notes that the country is presently producing 1,800 million cubic feet per day (mmcfd) gas against a demand for 1,750 mmcfd. Gas demand is projected to go up to 1,800 mmcfd in 2008 and 2,850 mmcfd in 2012. Therefore, the country must take up programmes to enhance gas supplies.

In its two-page letter describing the history of exploration activities and block bidding in the country, Petrobangla said the country has taken the initiative for off-shore block bidding this year and taken legal steps to lift the court injunction on signing new Production Sharing Contracts (PSCs). It said in the upcoming bid offering 23 blocks, oil companies might be interested in blocks 15, 22, 3, 6 and 4.

Then it went on suggesting that Bapex may open its ring-fenced areas of Sitakunda, Kamta, Mobarakpur, Semutang, Patharia etc and blocks 8 and 11 reserved for Bapex for joint venture deals with foreign companies.

The energy ministry on July 16 issued a letter on "On-shore" oil and gas exploration programme announcing a government decision to take legal measures to withdraw court injunction on signing PSCs and to take steps to sign JVAs in ring-fenced and reserved areas of Bapex.

RING-FENCED RESOURCES
Other than two large blocks of 8 and 11, Bapex was given exclusive rights to several zones where previous exploration indicated strong possibilities of oil and gas resources.

The Kapatia and North Bhairab gas structures are relatively smaller but there are strong indications of gas resources there. The Kamta gas structure located in block 9 also has similar promises.

A foreign company named Steinback explored another zone called Hazipur in 1952 and discovered oil. With technologies of those days, the reserve was marked as small, while most geologists now believe it has a great potential.

The country's biggest gas structure discovered so far is Sitakunda, located in block 15. But this 70 km by 10 km structure is situated in a hilly belt full of faults, making it technically difficult for Bapex to undertake conventional exploration programme.

"The Sitakunda structure has 48 gas seepage points in the surface and three oil seepage. Foreign oil companies had drilled four wells there between 1910 and 1914, and Petrobangla drilled one in 1983. This zone demands patient and high tech exploration programme because we believe, once we can access this field, it will produce both oil and gas," said an official.

The Patia zone located in block 16 also has a 40 km by 15 km large gas structure where foreign oil company PPL drilled a well in 1952. "During those times, they used thicker mud (twice the density of water) drilling. Such drilling can stop gas from coming out, and therefore they did not discover gas. Nowadays we use mud with equal density of water. We believe if we undertake drilling programmes now, we will find gas there," he added.

The Jaldi structure also spreads around a significant 32 km by 7 km area. Gas was discovered there in 1964 when explorers drilled three wells there.