Six months of Russia's invasion of Ukraine and sanctions on Russia continues to alter geopolitics and the global economy. As the world wades through the new paradigm shifts created by the war, it is also forced to tackle disruptions in energy supply chains. The ripple effects have been far and wide, and Bangladesh has not been spared.
On Saturday, Prime Minister's Adviser for Private Industry and Investment, Salman F Rahman said the energy supply is going to be the biggest challenge if its global prices do not fall in the next six months. And in most likelihood, global prices will not fall in the coming months.
The Business Standard spoke to energy experts to understand what are the ways forward for Bangladesh in the short and long run to counter energy supply uncertainties and disruptions.
'The future is very gloomy'
Dr M Tamim, professor of Petroleum and Mineral Resources Engineering, Buet
If the current energy situation continues like this, we might face serious hardship. After all, we are connected to the international market and price, and when these are affected, they will obviously have an impact on us.
If the world's second largest and third largest oil supplying sources can no longer provide as before, it will be catastrophic for the world energy balance.
If we were aware of this crisis even three or four years ago, we probably could have done something about it. But now, it will be really tough as our own energy production has decreased.
With our current financial issues, we might be able to continue in our current energy situation for a few more months. But it all depends on the future and we can only hope this war ends soon.
The reality is every country is going through the same problem. People in Japan are going to freeze during winter if they cannot buy LNG; the situation in Europe is apparent, Cuba and some regions in China are facing extreme load-shedding.
Even with the serious threat of recession, we have to try to save energy and not just for a few months, we have to keep trying till we reach a solution.
In the meantime, we have to try to increase gas supply from our existing wells. Chevron expressed interest in exploring new hydrocarbon prospects in Bangladesh, we should give a quick decision on it. It has the capacity to mobilise and increase gas production faster than Bapex.
Only taking one step at a time will not help us right now. We have to do many things at the same time: we have to stop gas and electricity theft and also try to decrease demand as well as increase efficiency.
During a crisis, even taking small steps becomes extremely beneficial. And this is no ordinary crisis, it is a war. It is not our war but it has affected us nonetheless. A country like Bangladesh, which is poor and gradually developing, will suffer the most from it.
As for finding alternative LNG sources, there are a limited number of countries who supply LNG, such as Australia and Papua New Guinea, and they charge a high price. For Bangladesh, we do not have an option other than getting LNG from the Middle East.
The looming recession will affect our RMG sector, exports and remittance, making things all the more difficult for us. The future is very gloomy.
'We can use this crisis to build a more sustainable energy system'
Ijaz Hossain, former professor of Chemical Engineering, Buet
The government's wait and see approach is fairly valid. They have no choice [anyway] because what they were supposed to have done, such as developing our own gas [supply], did not happen. There had been inordinate delays.
What he [advisor to the Prime Minister] is trying to say is that if the situation returns to normal [pre-Ukraine war] in six months, then the government does not want to rush into anything new. And that's valid.
On the other hand, if everything becomes normal, gas still won't be cheap. Even if it becomes normal, it will be a new normal. And on top of that, the dollar became weak. So the burden will be very, very high.
Even if we get the gas [in future], we won't get it at the same price as before because they [producers] understood that there is a high demand and that they don't need to sell it at low price.
The way prices of commodities increase, the same will happen with gas.
Coal mining is an option, which will not give immediate relief, granted. However, in the pipeline we have a few coal-fired power plants, I mean nuclear power plants. All combined, that's 8,000 MW. Even, let's say, 4-5,000MW comes from it, we won't be worse off than we are now. Our main target is to remove oil-fired power plants, which is expensive.
There's certainly a direct environmental and pollution impact, for which the government did not take up coal mining for this long. If we start mining, the company should be made to take on good practices and even after that, if a problem arises, then the contract should have a clause stating that the government has the right to close the mine - without giving any compensation.
Local gas exploration is definitely [another] viable option. [However] the government decided that we won't find gas, or that it's too expensive or a waste of time. And that's how they moved away from it. But most of us believe that there is gas. It may not be a whole lot to solve all our problems, but it is enough to lessen the kind of burden, the kind of situation we are going to face in the near future.
Regarding local gas exploration, the government tries to say that the big companies are not interested in coming here to Bangladesh. The answer to that is to forget the big companies.
There are many, many companies, like even in Turkey, for example. We don't think of these companies. There's Malaysia, there's Brazil [too]. We have to think outside the box. We have to go into joint ventures and also spend some of our own money.
We have to take on exploration by any means necessary. If needed, we have BAPEX, we can send them abroad, provide training, give a good salary and strengthen it through a special plan. My point is, even if we don't find the gas we expect to find, there still will be enough to pay for the money we spent on our efforts. We may not get what we are expecting to solve the problem, but even knowing how much we have is very very valuable. And then we can plan accordingly.
The question is have we tried our level best to supplement our gas production locally? The answer is no. That's all we are asking. Do your level best. Don't base decisions on hearsay things like there is no gas, etc. There is enough proof that there is gas.
We can bring in consultants, experts, small companies, and create a pool of expertise. Yes, it will be expensive, but it can be done. Currently our approach to local gas exploration is fragmented, it needs to be organised.
In regards to short-term efforts, there is workover [refers to any kind of oil well intervention involving invasive techniques and expensive process of extending the life of the well]. This is a six-month process. They have not done proper maintenance and so production decreased. The maximum potential [to increase output] is 10%, which is still not bad.
Another is appraisal well [used to establish an extension to an existing discovery, are used to prove extra reserves, whether in a proven segment or a new segment, and/or narrow down the reserves range to enable the engineers to select an optimum development concept]. This will take 1-2 years, [and can increase output] by another 10%.
Meanwhile, to get results from local gas exploration, even if we are lucky, it will take five years.
Additionally, you have to look at the fuels separately. For instance, if we look at the oil market. It has already stabilised. Now if you expect the price of oil to come down to $50 per barrel, that's wishful thinking. Everyone says the fair price for oil is $80-100 per barrel, and we are already there. We have to live with this price, if we cannot afford it, well then we are too poor to be in this [market].
The problem is with gas. We are dependent on it. If the gas situation does not improve, we will be in trouble.
Long term energy security for Bangladesh is not to look at gas. Not to forget it either, if it's cheap and available, we will use it. But look at other alternatives. Like India for instance, they don't have gas or are not heavily reliant on it. So how are they managing? They became used to other fuels. Many industries are even run with wood, agricultural residue, etc.
My suggestion is that we change our overdependence on gas and we have to rethink many things. And of course, this is the time to really look at renewable energy, even if it is slightly more expensive. It is available here and it will not suffer from supply disruptions.
If we take conservation and energy efficient measures, we can save 20% [of energy]. Another 20% can come from renewable energy. We are not using any of our renewable energy. And for the remaining 60%, there should be a mix of coal, biomass, electricity, import from Nepal - a variety of things.
We can use this crisis to promote conservation, energy efficiency, diversify and also get more renewable energy into the system. This crisis can be used to build a more sustainable energy system and look at sources that we usually don't look at.