Bangladesh, whose economy is crippled by power outages and treasury-sapping oil import bills, has discovered new oil reserves in Sylhet, the country’s northern region.
Bangladesh Petroleum Exploration Co (Bapex), the exploration unit of state-run Bangladesh Oil, Gas and Mineral Corp, or Petrobangla, has discovered 137 million barrels of oil reserves in two abandoned gas fields of Kailashtila and Haripur. The total worth of around the 55 million barrels of extractable oil discovered in the two fields is around about 425 billion takas (US$5.5 billion).
“Once produced, this commercially viable oil can offset the import of oil from foreign sources,” Petrobangla chairman Mohammad Hossain Mansur told Asia Times Online. The quality in both reserves is “light, low in sulfur quality”, Reuters reported, citing Bapex managing director Mortuza Ahmed Faruq.
Prime Minister Sheikh Hasina, who is also the energy minister, has instructed Petrobangla to take “immediate steps” to tap the oil resources so that production can begin in a year’s time, said Mansur.
Petrobangla said Bapex will soon start deep drilling into the two fields. Bapex has proposed to drill four wells in Kailashtila and three in Haripur, The finds have been made around 15 years after oil was first discovered in the same area at Haripur.
The development stems from a three-dimensional (3-D) seismic survey by Bapex across 1,250 square kilometers in Kailashtila, Haripur, Rashidpur, Titas and Bakhrabad last year under a US$20 million project approved by the government in 2010.
Mansur is hopeful that “positive results” for oil will also be found for the Bakhrabad and Titas gas fields, while “at the Haripur field, 11 million barrels of oil will be extracted from one of two layers. We may find oil in the other layer also”. No oil was found at Rashidpur, where gas now estimated at 1.22 trillion cubic feet (tcf) was discovered there in September 2011.
More oil fields could well be found in the Sylhet basin, Professor Badrul Imam, at the Geology department of University of Dhaka, told Asia Times Online. “Structural traps in Kailashtila and Haripur have resulted in the oil and gas deposit, in layers. There is a high possibility of similar structural traps in other fields of Sylhet,” he said.
While oil was discovered at Kailashtila and Haripur, the latest survey also indicated that less gas may be produced at the two fields than previously estimated. Kailashtila may produce 1.22 tcf, down from 1.90 tcf previously, and Haripur 310 billion cubic feet (bcf) of gas, down from 479 bcf, although a new gas zone has been identified that may have around 223 bcf.
“The earlier findings were erroneous as these were analyzed from two dimensional seismic surveys,” Mansur told Asia Times Online. “The 3-D seismic survey data are more accurate.” Similar surveys are to be conducted at other gas fields in Bangladesh. “We may find even bigger reserves of oil in these fields,” Mansur said.
Oil was found in Haripur in 1986. According to Banglapedia, the “field had an in-place oil reserve of 10 million barrels, from which 6 million barrels were recoverable”. International oil company Scimitar was given the responsibility to produce oil from the field in 1987. After producing around 560,000 barrels of oil, Scimitar halted production in 1994 due to “low pressure” and later concluded operations in Bangladesh. The oil field was later abandoned.
Bapex has previously discovered another oil field at Kailashtila and oil in Fenchuganj but neither reserve is yet to be proved “commercially viable”.
The projected 55 million barrels that can be produced from the two new finds is equivalent of two years supply for Bangladesh, which imports around 25 million barrels of oil ever year. The new oil will reduce pressure on Bangladesh’s foreign currency reserves, which have declined to below $10 billion at times over the past few months due to increasing import bills.
About $3 billion of the country’s $21.7 billion import payments in the eight months through February were for fuel oils. The overall trade deficit in the period rose to $5.7 billion from $4.9 billion in the corresponding period a year earlier.
A shortage of energy is driving industrialists to use rental power plants, driving up fuel import bills. Seventeen at present in use contribute about a quarter of the country’s total maximum daily power generation of 5,230 MW, which is still well short of the 6,300 MW demand reported by Bangladesh Power Development Board (BPDB) on May 19.
Since 2009, 53 deals for rental power plant projects, perceived as “quick solutions” to the country’s power crisis, have been signed, with some still in the process of being commissioned and others under construction. The combined power capacity of these deals is nearly 6,000 MW.
Bangladesh produces gas sufficient to meet about around 60% of forecast demand at the end of this year, while its considerable coal reserves are not fully exploited due the failure to approve a national coal policy, a draft of which was first “finalized” in 2005.