DHAKA: Before giving consent to sellout of gas to a third party by the exploring multinational company Cairn, the government wants to be sure of sufficient use of the fuel in the country instead of rushing for export.
 
The Energy Ministry in a letter on June 30 directed Petrobangla to make sure there is enough gas to cater domestic needs before making changes to the Production Sharing Contract (PSC) to allow the foreign company to sell out the surplus from its share.

In the event of the change, the letter states that Cairn itself would have to pay the corporate tax on its income through selling gas to a third party. At present, Petrobanga pays the tax as per the PSC terms.

When contacted, Energy Secretary Mohammad Mesbah Uddin told banglanews24.com.bd, “Petrobangla is looking into the matter. They can tell it better.”

Petrobangla Chairman Prof Mansur Ahmed said the ministry is maintaining talks and working with Cairn, the British oil giant, one of foreign firms exploring and extracting hydrocarbons in Bangladesh under production-sharing deals that makes it mandatory for them to sell their shares of the natural gas to the host government.

A high official of the Energy Ministry, wishing anonymity, said in August 2008 Cairn Energy had sought permission of selling out gas to a third party after drilling gas from blocks 10 and 16.

At that time, the company warned that they would not continue in the business if they do not get permission for selling gas to a third party or raising the gas price.

In this context, Petrobangla put forward recommendations to the Energy Ministry the same month for giving permission to Cairn for selling gas if found in Mognama and Hatitya under Block 10.

Block 10 covers a stretch of 3,864-square-kilometer area encompassing Noakhali, Laxmipur and Bhola districts.  

Earlier in March, Cairn demanded annexation of Sundalpur into Block 10 and allowing the sale of gas of South Sangu to a third-party buyer.  

“Petrobangla and the Energy Ministry are actively considering the demand,” a source said.

A high official of the state-run petroleum corporation, Petrobangla, on condition of anonymity, told banglanews24.com.bd that a total of 40 to 50 million cubic feet of gas would have to be produced daily in South Sangu block if only to meet partly the local area’s needs.

“This output can meet the gas and power crisis of Chittagong to some extent,” he added.

According to section 10 of the model PSC, the exploration companies could sell gas to a third party if Petrobangla does not agree to buy for the national grid. On the other hand, section 16 says either Petrobangla would purchase gas or the international company would sell it out to a third party.

Gas export has been an inflammable issue, as a coalition of leftist political parties and like-minded groups stage rowdy protests whenever any government tosses the feeler being continuously cajoled by the IOCs.          

BDST: 2030 Hrs, July 4, 2010