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Wednesday, 28 August, 2002, 10:43 GMT 11:43 UK
Bangladeshi row over gas exports
Bangladeshi gas works
Gas is the Bangladesh's biggest natural resource
Bangladesh should not export natural gas to India because it has insufficient reserves, two government committees have recommended.

Debate over the country's main natural resource has been heated after international donors and Western energy companies demanded the exports.


Given the limitation of expanding domestic market, the need for limited gas export is envisaged under the proposed project

ADB
The government said it might allow gas exports once more fields were found.

"The issue of export of gas may be considered if new discoveries are made by international oil companies," State Minister for Energy Mosharraf Hossain said after releasing the reports.

US oil giant Unocal, which has invested heavily in the country's energy sector, reacted cautiously to the recommendations.

"We believe that gas exports will help Bangladesh achieve its economic, social and energy goals and promote countrywide exploration," the company said in a statement.

Prime Minister Khaleda Zia said any decision would be taken on the basis of "national consensus" and "protecting national interest."

Loan criteria

Mr Hossain said earlier this month a $250m loan from the Asian Development Bank (ADB) to build a pipeline to supply the western part of the country hinged on the exports.

The ADB has asked the government to export gas daily to India, the nearest market, to underwrite the loan.

Forecasts have suggested the exports could raise $300m a year in foreign earnings for the cash-poor country.

"Given the limitation of expanding domestic market, the need for limited gas export is envisaged under the proposed project," the ADB said in a statement earlier this month.

The country has proven recoverable gas reserves of 13 trillion cubic feet (390 billion cubic metres) of which more than 23% has already been extracted, according to official figures.

The reports said unless new reserves were found Bangladesh would need to import natural gas after 2015, estimating that up to 69 trillion cubic feet would be needed up to 2050.

Corporate pressure

Major oil companies, including Unocal, Chevron, Texaco of the US, Anglo-Dutch Shell and Ireland's Tullow, and many smaller Western oil exploration firms, have pressured successive governments to export natural gas.

Unocal said in its statement it believe there were still "undiscovered gas resources of over 32 trillion cubic feet".

Bangladesh is studying a proposal by Unocal to export gas to neighbouring India through a 1,350 km (850 mile) pipeline.

The government is still seeking $685m in damages from Unocal for the discharge of natural gas during a devastating fire in 1997.

Some of the companies have hinted that they might stop exploration in Bangladesh unless they start taking revenues from exports.

The main opposition party Awami League, led by former prime minister Sheikh Hasina, is opposed to gas exports until it has enough reserves to meet local needs for the next 50 years.

See also:

20 Aug 02 | Business
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