Govt approves Tk2,133cr projects to purchase new rig, explore gas in Bhola

Highlights:

• Ecnec clears 13 projects worth Tk8,333.28cr
• Of the 13, two projects worth Tk2,133cr were approved to purchase of 2,000-hp rig and exploration of five gas wells in Bhola
• Govt ramping up local gas exploration to reduce LNG imports
• Govt also formed a high-level committee to identify and assess all khas (government-owned) land across the country

To reduce imports of liquefied natural gas (LNG), the government has approved two projects involving Tk2,133 crore – one to purchase a 2,000-horsepower rig (a drilling machine used for extracting natural resources) and the other for exploration and development of five gas wells in Bhola.

The Executive Committee of the National Economic Council (Ecnec) today (17 September) approved the projects, along with 11 other development initiatives, involving a total estimated cost of Tk8,333.28 crore, at a meeting held in the NEC conference room in the capital's Sher-e-Bangla Nagar, chaired by Chief Adviser Muhammad Yunus.

Of the total cost, Tk4,437.82 crore will come from the government's fund, Tk1,225.36 crore as project assistance, and the remaining Tk2,670.09 crore will be covered by the implementing agencies' own funds.

After the meeting, Planning Adviser Wahiduddin Mahmud briefed reporters.

He said a new rig is being purchased for Bangladesh Petroleum Exploration and Production Company Limited (Bapex) to boost gas exploration in the country. Although the government-owned company currently has some rigs, they are insufficient, forcing reliance on foreign companies.

Regarding gas exploration in Bhola, Wahiduddin Mahmud said that a new project for gas exploration and production in the Bhola region has been approved. The area has been identified as a potential gas-rich zone. Several stages of exploration have already been completed there, and the new project will further advance exploration and well drilling.

He emphasised that increasing domestic gas exploration is essential to reduce dependence on LNG, making the expansion of Bapex's capacity and new initiatives in Bhola highly important.

The purchase of a 2,000-horsepower rig for Bapex is estimated to cost Tk577.23 crore, of which Tk520 crore will come from government funds, and the remainder from the company's own funds.

According to the project proposal, to increase domestic gas production, Bapex plans to drill 56 wells and carry out 16 workovers by 2028. Currently, Bapex operates two drilling rigs and one workover rig, with one additional drilling rig upgraded. However, this remains insufficient for well drilling.

Meanwhile, the five-well project in Bhola is estimated at Tk1,555.66 crore, with Tk1,244.80 crore from government funds and the remainder from the company's own funds. Four wells – Shahbazpur-5 and Shahbazpur-7 in the Shahbazpur field, and Bhola North-3 and Bhola North-4 in the Bhola North field – will be assessed and developed, while one well, Shahbazpur North East-1, will be explored. The open tender was announced last December, with submissions due by 3 February next year.

According to Petrobangla's gas reserve report, three gas fields have so far been discovered in the Bhola district. Based on the 2P (proved and probable) reserve survey, the Shahbazpur field has a gas reserve of 634 billion cubic feet (BCF), of which 143 BCF had been extracted by June 2023. Since Bhola is not yet connected to the national gas grid, the extracted gas is supplied only to some local industries and gas-based power plants.

The Bhola North-1 gas field has an estimated reserve of 435 BCF, while another field in Ilisha holds 140 BCF. Although these two fields were discovered in 2018 and 2023, their gas is not yet being utilised.

According to officials, the government is now focusing on connecting the gas discovered in Bhola to the national grid and drilling additional wells to boost gas exploration. More gas reserves need to be confirmed in Bhola before pipeline supply can begin. For this reason, drilling initiatives have been launched. Petrobangla also aims to involve more foreign companies in the drilling work through open competitive tenders, taking advantage of the opportunity provided by the repeal of a special energy law.

At a press conference, Planning Adviser Wahiduddin Mahmud said that while development partners supervise foreign-funded projects, this does not guarantee the absence of irregularities. 

He said that foreign-funded projects generally have higher costs, citing examples like metro rail and highways, where Bangladesh's expenses exceed those of neighbouring countries. 

The government will now review selected projects to identify reasons for cost escalation, with research and publication possible if needed, the adviser said.

Wahiduddin Mahmud said that the situation has changed: concessional loans are declining, and post-LDC graduation, Bangladesh will have fewer opportunities for soft loans. Henceforth, loans will be taken only for priority projects essential for the country. Projects will now be carefully vetted for necessity before seeking foreign funding. 

Govt forms committee to map Khas land

The government has set up a high-level committee to identify and assess all khas (government-owned) land across the country. The committee, chaired by Land Adviser Ali Imam Majumder, will submit a report within two months on land quantity, condition, usage, and encroachment.

Planning Adviser Wahiduddin Mahmud said using khas land for development projects will optimise government land use and reduce delays caused by complex land acquisition processes.

The committee will work with district commissioners to map land nationwide, helping protect agricultural areas while facilitating infrastructure, education, health, and other government projects, he said.

Regarding Annual Development Programme (ADP) implementation, the planning adviser said that the ADP execution rate stood at just 2.39% during July–August.

He explained that many projects remain without contractors, as several did not return after the government change in July last year. Moreover, ministries and departments are holding off on issuing tenders because the new government procurement rules have not yet been approved. After vetting by the law ministry, the rules are expected to be approved next week.

Wahiduddin Mahmud added that the new procurement rules introduce major reforms, including measures to prevent the same firm from repeatedly winning contracts.