Shipping Bhola gas: New firms to join as Intraco falls short of targets

Highlights:

• Intraco was supposed to ship 25 mmcf of gas per day to Dhaka factories by Oct 2024
• It managed to ship only 1.5 mmcf, falling far short of expectations
• It has now requested six more months to meet the target
• Tender for engaging more companies is expected to be opened at the beginning of 2025

The government plans to engage more companies to transport surplus gas from Bhola's fields after Intraco Refueling Station – the contractor responsible for shipping gas from the island district – failed to meet its target.

The company, tasked with transporting 25 million cubic feet (mmcf) of gas per day to energy-strapped factories in Gazipur, Narayanganj, and Savar by October 2024, has requested an additional six months to meet the target. 

It has so far managed to ship only 1.5 mmcf per day, falling far short of expectations.

In the meantime, the government is preparing to float a tender, inviting proposals for shipping surplus gas from Bhola to Dhaka in liquefied natural gas (LNG) form. 

According to a source at Bangladesh Oil, Gas & Mineral Corporation (Petrobangla), the tender is expected to be opened at the beginning of the new year.

In response to the energy crisis affecting various industries, the Energy and Mineral Resources Division initiated efforts to transport gas from the Bhola gas fields.

The three Bhola gas fields have a combined daily production capacity of around 200 mmcf, though current output ranges between 80 and 85 mmcf, according to Petrobangla data.

To supply gas to energy-starved factories in the capital, authorities signed a 10-year contract with Intraco on 21 May 2023. Under the agreement, Intraco was tasked with delivering gas from Bhola in coordination with Sundarban Gas Company and Titas Gas Transmission and Distribution Company.

As per the contract, Intraco was to begin supplying 5 mmcf per day initially, gradually increasing to 25 mmcf within 18 months. However, the company has failed to meet even the minimum target.

By August 2024, Intraco had transported only 70 mmcf of gas from Bhola – just 5% of the targeted volume, according to Sundarban Gas Company data.

"Shipping gas from Bhola island in compressed natural gas (CNG) form is a challenging task. No one can accomplish it within two years. However, we began supply within six months of signing the deal because we already had a machine ready," said Mohammed Riyadh Ali, managing director of Intraco Group.

"Yes, it is true that we could not scale up the volume as per the contract. But we have started building the necessary infrastructure to ship an additional 20 mmcf of gas. If the government approves, we can achieve this within the next six months," he told reporters on Monday in the capital.

Why Intraco failed

Shipping and compressing 5 mmcf of gas per day requires 47 cascade tankers and approximately 12 compressor stations, according to industry experts. 

For 25 mmcf per day, the infrastructure demand rises to around 60 compressors and 238 cascade tankers.

Currently, the company has only 10 compressor stations and a limited number of cascade tankers, leading to its inability to meet the expected shipping volume.

Additionally, most factory owners have shown little interest in purchasing gas in CNG form, as its price is set at Tk47.60 per cubic metre. 

This is significantly higher than the industrial gas tariff of Tk31.50 per cubic metre, making Bhola's shipped gas about Tk17 more expensive.

Govt wants new contractors 

Disappointed with Intraco's performance, authorities are now considering engaging other companies to transport surplus gas from Bhola as LNG.

Last month, Petrobangla held a meeting to outline the plan, with the government preparing to float a tender inviting interested contractors, according to a source at the state corporation.

Several companies, including Russian Gazprom, American Excelerate Energy, and local firms SQ Group and Meghna Shipping, have expressed interest in the project. 

Gazprom and Meghna Shipping have been pursuing the task for the past two years, while SQ Group has proposed processing a minimum of 40 mmcf of gas per day to make the project commercially viable, suggesting a 15-year contract period.

Md Tauhidur Rahman, general manager (Operations) at Sundarban Gas Company, said efforts are underway to transport the gas in LNG form, although the initiative remains in the early stages.