First Shale Step Sees Growing Expectations Amid Supply Concerns
BMI View: Bangladesh's Ministry of Petroleum and Energy's Hydrocarbon Unit announced mid-July that it has contracted German company DMT GmbH to conduct an assessment of the country's shale gas potential. Bangladesh has been facing severe constraint s on its gas demand as it lacks sufficient production and gas import infrastructure, making shale gas a potentially significant upside for the country 's consumption . However, we stress that this remains at a very early stage and is unlikely to have any direct impact within the decade.
Bangladesh has been attempting to revive its energy supply in multiple ways over the recent years. The country's growing consumption of gas has been constrained by a lack of sufficient output and the absence of gas import infrastructure to meet demand, which in turn threatens to prevent the economy from expanding to its full capacity. Fuel consumption is also rapidly increasing, though Bangladesh has been able to import enough to meet demand despite the burdens it puts on the country's trade balance. We have seen developments in two areas which could ease constraint s on energy demand:
In April 2013, the government proposed to reform its production sharing contract (PSC) model in order to boost exploration interest in the market. This followed an announcement that Bangladesh 's latest biding round had only attracted two bids due to investors' dissatisfaction with the country's licensing terms (see ' Above Ground Competition Pushes Regulatory Overhaul ' , April 22) .
Bangladesh is also planning to develop a floating liquefied natural gas (LNG) import terminal by 2015. However, the government is still in negotiations with three of the short-listed companies, including India's Hiranandani Electricity, South Korea's Samsung C&T and Bermuda-based Golar LNG Energy, to finalise its construction.
Despite the strictures to Bangladesh's regulatory system have not stopped the interest of several IOCs in the hydrocarbon potential of the country's sector of the Bay of Bengal. Large deposits in both the Indian and Myanmar section of these waters - KG-D6 for the former and the Yetagun and Yadana fields for the latter - suggest that offshore Bangladesh could hold significant resources.
|Energy Constraints Dampen Consumption Growth|
|Bangladeshi Oil Production & Consumption (LHC) and Gas Production &Consumption (RHC)|