GAS SECTOR MASTER PLAN BANGLADESH 2017 - Ministry of …

1 Ramboll Hannemanns All 53 DK-2300 Copenhagen S Denmark T +45 5161 1000 F +45 5161 1001 GAS SECTOR MASTER PLAN BANGLADESH 2017 II Intended for Petrobangla, PowerCell Document type final report Date 28 February 2018 Revision 3 Made by Gang Lu, Per J rgensen, Bent Svensson, Arnfried Lemp, Fraser Wyllie, Carsten M ller Nielsen, Ioannis Abatzis, Asaduzzaman, Mirza Habib Checked by Per J rgensen, Bent Svensson, Arnfried Lemp, S ren L vstad Christensen Approved by Per J rgensen, S ren L vstad Christensen I CONTENTS 1. EXECUTIVE SUMMARY 1 2. ROAD MAP AND RECOMMENDATIONS 16 3. INTRODUCTION AND CONTEXT OF THE PROJECT 24 Background 24 Problem statement 25 Overview of this final report 28 4. GAS DEMAND 29 BANGLADESH energy SECTOR current status a burning challenge 29 Scenarios Setting 44 Gas demand forecast methodology 46 Power SECTOR gas demand forecast 52 Captive power SECTOR gas demand forecast 59 Fertiliser SECTOR gas demand forecast 62 Industry SECTOR gas demand forecast 64 Domestic SECTOR gas demand forecast 66 Commercial SECTOR gas demand forecast 68 CNG SECTOR gas demand forecast 69 Total Gas Demand Forecast 71 Regional Gas Demand Forecast 73 5.

2 GAS SUPPLY 80 Review of the upstream supply SECTOR 80 Gas reserve position 98 Country supply production forecasts 106 Review of GSPM 2006 122 Analysis of the exploration program by public SECTOR 123 Analysis of the exploration program by private SECTOR 124 Key recommendations for gas supply augmentation 124 6. LEAST COST SUPPLY SOLUTION 126 Overall supply and demand 126 Short-term Strategy (2017 2021) 135 Medium-term Strategy (2021 2030) 136 Long-term Strategy (2031 2041) 137 7. TRANSMISSION INFRASTRUCTURE PLAN 139 Gas transmission infrastructure planning 139 Natural gas transmission fundamentals 140 Underground gas storage, small scale LNG and biogas 143 Existing and planned gas transmission system 144 Transmission system modelling 148 8. REGIONAL GAS NETWORK 157 II The regional Euroasian gas network and supply possibilities 157 Feasibility for gas transmission hook-up to BANGLADESH from India159 Myanmar gas network and supply situation 161 Recommendations for integration in Bay of Bengal gas market161 9.

3 LNG IMPORT 164 Locations for all LNG Import facilities 164 Overview of LNG Terminal Development Plans 164 Update of FSRU terminal planning in BANGLADESH 167 Economic Comparison between FSRU and Land-based LNG Receiving Terminal 169 10. LEGAL AND REGULATORY 174 Objective 174 Review of legal and regulatory documents 174 Key entities in the oil and gas SECTOR and institutional set-up 175 Gas tariffs 178 Gas allocation and pricing 183 Upstream fiscal terms for the PSCs and Bidding process 184 Regulatory framework 186 Imports of LNG and move towards a competitive gas market 188 Timing of introduction of dual markets 192 Findings and recommendations - legal and regulatory analysis 192 III FIGURES Figure 1: Gas demand per SECTOR and per scenario.

4 1 Figure 2: Future potential gas production .. 2 Figure 3: Net cost of supply by geological area at USD 60/bbl environment .. 3 Figure 4: Examples of import requirements as a function of upstream successes .. 4 Figure 5: Demand in franchise areas in scenario C .. 6 Figure 6: Short-term additional investments .. 7 Figure 7: Medium term additional investments .. 10 Figure 8: High level Long Term Gas Transmission Plan .. 12 Figure 9: Gas Price reviews consumer groups .. 14 Figure 10: Overall 17 Figure 11: Infrastructure action plan .. 21 Figure 12: Historical Energy Prices, USD/mmbtu .. 25 Figure 13: World Bank Commodities Price Forecast (in nominal USD) .. 26 Figure 14: Primary Energy Consumption per Capita .. 29 Figure 15: Energy Consumption Comparison - BANGLADESH vs India vs Thailand .. 30 Figure 16: Gas Share in Primary Energy Consumption (excl. Biofuel & Waste), 2016.

5 31 Figure 17: BANGLADESH Historical Gas Consumption .. 32 Figure 18: Historical Gas Consumption by SECTOR .. 32 Figure 19: BANGLADESH Historical Grid Power Net Energy (excl. Captive Power & Solar PV) Generation .. 33 Figure 20: Unit Cost of Electricity Generation (BDT per KWh) .. 37 Figure 21: Electricity Budgetary Support .. 37 Figure 22: End User Price Comparison (USD/mmBtu) .. 38 Figure 23: Gas subsidies as % of GDP GCC countries .. 38 Figure 24: BANGLADESH Real GDP Growth .. 46 Figure 25: Gas demand and supply 2016/17 .. 47 Figure 26: GSMP2006 GDP Growth Scenarios .. 48 Figure 27: BANGLADESH Gas Demand Forecast vs Consumption .. 48 Figure 28: Gas Demand Analysis Industry SECTOR .. 49 Figure 29: Gas Demand Analysis CNG SECTOR 2002-2014 .. 50 Figure 30: GSMP2006 National Power Generation Dispatch Forecast Case A .. 51 Figure 31: BANGLADESH historical electricity consumption.

6 52 Figure 32: Peak power curves .. 54 Figure 33: BANGLADESH Peak Power Demand Forecast .. 56 Figure 34: Power demand/generation requirement forecast Scenario A .. 57 Figure 35: Power demand/generation forecast Scenario B .. 57 Figure 36: Gas demand forecast power SECTOR .. 59 Figure 37: Gas demand forecast captive power SECTOR .. 62 Figure 38: Gas demand analysis - industry .. 64 Figure 39: BANGLADESH GDP by SECTOR .. 65 Figure 40: Gas demand forecast industry .. 66 IV Figure 41: Gas demand analysis - domestic .. 66 Figure 42: Gas demand forecast domestic .. 68 Figure 43: Gas demand analysis - commercial .. 68 Figure 44: Gas demand forecast commercial .. 69 Figure 45: Gas demand analysis - CNG .. 70 Figure 46: Gas demand forecast CNG .. 71 Figure 47: Gas demand forecast total .. 72 Figure 48: Gas demand by SECTOR Scenarios A, B, C .. 73 Figure 49: Gas demand forecast by SECTOR share.

7 73 Figure 50: BANGLADESH gas distribution by franchise area .. 74 Figure 51: Gas Demand Franchise Areas Share of Total BANGLADESH Demand .. 78 Figure 52: Gas Demand Forecast by Franchise Areas .. 79 Figure 53: Petrobangla Organisational Structure.. 81 Figure 54: Licence Map.. 86 Figure 55: Seismic coverage of BANGLADESH .. 92 Figure 56: BANGLADESH exploration drilling history: 2010-2014. Development wells before 2010 are not shown.. 95 Figure 57: Discovery ages and cumulated GIIP gas resource. Data from Table 16. The Average growth per year from 1960-2016 has been 500 bcf per year.. 96 Figure 58: Size distribution of the Gas Initially In Place (GIIP) of the 26 discovered fields. 96 Figure 59: Location of producing fields and LNG terminals.. 97 Figure 60: Summary of actual average daily production (1960-2015) and forecasted production (2016-2041) from existing fields in BANGLADESH .

8 103 Figure 61: Cumulated annual production (1960-2015) and forecasted production (2016-2041) from existing fields in BANGLADESH normalised to total present day expected production.. 104 Figure 62: Case A Proven, Probable and Possible (3P) reserves production forecast.. 108 Figure 63: Case B - Proven, Probable and Possible (3P) Reserves with YTF contribution to the production forecast.. 111 Figure 64: Case C - Proven, Probable and Possible (3P) Reserves with 34 tcf YTF contribution to the production forecast. Description for the assumptions for the individual YTF areas (A to G) is detailed in section below .. 112 Figure 65: Mapped prospects, leads and discovered fields.. 115 Figure 66: Division of BANGLADESH into seven areas (A-G) based on past and present exploration activities and seismic data availability.. 117 Figure 67: Demand Case A Production Forecast, from GMSP (2006).

9 122 Figure 68: Gas demand and indigenous supply (existing discoveries) .. 126 Figure 69: Indicative Net Cost of Supply (excluding all BANGLADESH taxes) @USD60/bbl Oil .. 127 Figure 70: BANGLADESH acreage map by areas .. 127 Figure 71: Resource & production assumptions .. 128 Figure 72: Upstream cost assumptions .. 128 Figure 73: Proved gas reserve and production history in BANGLADESH and Myanmar.. 130 V Figure 74: New discoveries in Myanmar.. 131 Figure 75: Myanmar gas production .. 132 Figure 76: Spot LNG DES prices in Europe and Asia, USD/mmbtu .. 133 Figure 77: Global LNG long-term contracts .. 135 Figure 78: Short-term Supply and Demand Balance .. 136 Figure 79: Medium-term Supply and Demand balance .. 136 Figure 80: Long-term Supply and Demand Balance .. 138 Figure 81: BANGLADESH gas transmission system 2016 .. 145 Figure 82: BANGLADESH Gas Transmission Pipeline Network Model.

10 148 Figure 83: Short term additional investments .. 151 Figure 84: Medium term additional investments .. 153 Figure 85: High level Long Term Gas Transmission Plan .. 155 Figure 86: Pipeline infrastructure in the region .. 157 Figure 87: Ongoing JHPL (Red Route) & Future Pipeline Extension to Assam (Blue Route) 159 Figure 88: Feasibility Options for Hook-up .. 160 Figure 89: Myanmar BANGLADESH India pipeline connection possibility .. 162 Figure 90: Possible Bay of Bengal integrated gas transmission system in Euroasia market .. 163 Figure 91: Geographical positioning of the upcoming LNG import projects.. 166 Figure 92: Floating Storage and Regasification Unit illustration.. 167 Figure 93: Floating Storage and Regasification Unit illustration .. 168 Figure 94: Cyclone in Bay of Bengal.. 170 Figure 95: Existing institutional setup .. 175 Figure 96: Flow of gas and money in the gas SECTOR in BANGLADESH .