Wednesday, June 15, 2011

Govt Needs To Shelve PSC With ConocoPhillips

IT IS perhaps a poignant indicator on how detrimental to our national interest the production sharing contract that the government, according to the commerce minister, will sign on June 16 with the US oil giant ConocoPhillips for exploration and extraction in the hydrocarbon blocks 10 and 11 in the Bay of Bengal is that even the finance minister, apparently a staunch believer in anti-people neo-liberal economic policies, has demanded clarification from the Energy Division on a particular provision of the contract. According to a report front-paged in New Age on Tuesday, the finance minister issued a letter on Sunday, asking the Energy Division to clarify the concern expressed by experts over the model PSC 2008 , especially its Article 15.5.4. The article says Petrobangla can retain only 20 per cent of the total marketable natural gas for the first 10 years, that too, if it has its own pipelines and other infrastructure to transport gas to the national grid. The rest will be exported in the form of liquefied natural gas and Petrobangla will be paid for its small stake. The experts rightly pointed out that ‘money earned by exporting gas, instead of using it for power generation and industrial production… will contribute little to our national economy.’ One need not have a degree in economics to figure out that the proposed production sharing contract, which the cabinet committee on economic affairs approved on May 23 , is devoid of even a business rationale. First, it essentially envisages the US oil giant’s virtual ownership of the two hydrocarbon blocks, given the condition that Petrobangla must have its own pipelines and other infrastructure to transport natural gas from the blocks to the national grid to have 20 per cent stake in whatever quantum of gas is extracted. In other words, the contract essentially gives an international company the right to do business with, and make profit from, gas that Bangladesh owns. Worse still, it also means that the country may have to import gas extracted from its own hydrocarbon blocks. Moreover, Bangladesh is currently undergoing a serious energy crunch, struggling to run even the existing power plants and industrial units. The current electricity shortfall, according to the Power Development Board statistics, is in the range of 1 ,500 and 2 ,000 megawatts; the deficit is expected to rise further. The government has undertaken several projects to install power plants, without actually specifying where the primary fuel for these plants, e.g. gas, coal, etc, will come from. Of course, exploration and extraction of natural gas is an imperative for Bangladesh but only to an extent whereby the gas is fed to the power plants and industrial units. If exploration and extraction of new hydrocarbon blocks by international oil companies means buying gas at international market prices, the country might as well look for sellers of gas on the international market to import gas and suspend exploration of its own resources until it develops its own exploration and extraction capacity. There is hardly any reason to believe that the government and its energy officials somehow overlooked the simple math. Moreover, the prime minister, Sheikh Hasina, asserted in her previous tenure as the head of government that export will only be an option when Bangladesh has a proven gas reserve for domestic consumption for 50 years. The sudden change of heart on her government’s part could then very well be construed as a manifestation of its subservient policies, subservience to the countries and organisations that pursue neo-liberal agenda. Be that as it may, the government must not go ahead with the contract with ConocoPhillips. The conscious and patriotic sections of society and the media must raise their voice and sustain pressure on the government so that it does not.