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(Last updated: 18 Jul 2007)
Trends and opportunities
The market
In 2005, natural gas production in Bangladesh was approximately 475 billion cubic feet. Demand is predicted to increase at six per cent per year over the next two decades. Natural gas is Bangladesh's only significant source of commercial energy.
The consumption mix of natural gas in Bangladesh is as follows:
- Power generation – 45–50 per cent
- Fertiliser production – 30–35 per cent
- Industry – 10–15 per cent
- Domestic and commercial – 8–10 per cent
The Bangladesh Oil, Gas and Mineral Corporation (PETROBANGLA) official estimates put the known discovered reserve of natural gas at 21 trillion cubic feet, of which an estimated 12–15 trillion cubic feet is proven recoverable. The US Geological Survey estimated that Bangladesh has potentially 32 trillion cubic feet of undiscovered reserves.
At present, the two national Bangladesh gas production companies – Bangladesh Gas Fields Company Limited (BGFCL) and Sylhet Gas Fields Limited (SGFCL) – as well as a number of international oil companies, supply local demand. Most of the growth in the production is coming from private enterprise operators.
Demand is growing in the industrial sector as well as for domestic use. Foreign companies, after meeting local demand, are pursuing the opportunity to export gas.
Bangladesh already has an extensive pipeline network in the eastern half of the country, built up over the past 20 years by PETROBANGLA employing capital supplied by the Bangladesh Government, the World Bank, Asian Development Bank and other sources. Pipeline infrastructure is underdeveloped in the western half of the country.
Opportunities
It is the government's policy in the oil and gas sector to offer special incentive packages for the exploration of oil and gas resources in the west zone. Similar incentives are offered to encourage oil and gas exploration in offshore areas. In general, foreign and local entrepreneurs are encouraged to invest in exploration for petroleum and solid fuels in the country.
Infrastructure development represents a prime opportunity for Australian exporters. Making economic use of natural gas requires very large expenditures in downstream infrastructure developments, including gas transportation and utilisation infrastructures.
In February 2005, the Dhaka-based Spectra Group signed a memorandum of understanding with the Gas Authority of India to develop compressed natural gas pipelines and retail outlets in Bangladesh.
In March 2005, the Bangladesh Business Development Corporation and the Gas Authority of India signed a memorandum of understanding to jointly-operate gas transmission, pipeline and distribution network development in Bangladesh.
The UK-based Tullow Oil has received government approval to build a pipeline and gas processing plant in Bangladesh.
Competitive environment
Most of the world-leading oil and gas companies are now present in Bangladesh. These companies include:
- Unocal
- Shell
- Occidental
- Cairn Energy
- Rexwood
- Texaco
- Chevron
- Euron
- Helliburton
- UMC
- British Petroleum
- Mobil
- Tullow Oil
- Maersk Oile
However, few Australian companies are (or have been) active in the Bangladesh oil and gas industry.
Some exceptions include GASCOR and the Australian engineering and construction company, McConnell Dowell which was involved in gas pipeline construction with Cairn Energy.
An Australian presence in the Bangladesh oil and gas sector has developed indirectly, largely as a result of a 'pull factor' in the recruitment of Australian oil and gas professionals by the major international companies. Australian companies are showing interest in the delivery of training services and in drilling work.
Apart from the natural gas sector, Wesfarmers Limited, an Australian company, operates a LPG distribution business having invested in LPG bottling plant in Bangladesh in early 2000.
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