Oil

According to Oil & Gas Journal (OGJ), Bangladesh has 28 million barrels of proven oil reserves as of January 2006, down from 56 million barrels in 2005. The country produced an estimated 4,000 barrels per day (bbl/d) of oil in 2005, flat from the previous year. Bangladesh’s relatively low level of domestic reserves and production capacity make it a net oil importer, as the country consumed an estimated 91,000 bbl/d of oil in 2005.

Exploration and Production

To date oil exploration has been rather unsuccessful in Bangladesh, with most companies choosing to focus instead on the country’s plentiful natural gas reserves. Exploration and production activities are primarily carried out by the Bangladesh Petroleum Exploration and Production Company (BAPEX), a subsidiary of the state-owned Bangladesh Oil, Gas & Mineral Corporation (Petrobangla). However, the country has also initiated several Production Sharing Contracts (PSCs) with foreign oil companies and has employed tax incentives to attract foreign company involvement.

In 1993, after the formation of a new National Energy policy, the government of Bangladesh divided its territory and offshore sites into 23 blocks and opened them to foreign bidding for oil and gas exploration. During the First Bidding Round in 1993, eight blocks were awarded to four companies through PSCs. In 1997 during the Second Bidding Round, three PSCs were awarded covering four additional blocks. The government planned to hold a third round of bidding focusing on the offshore Bay of Bengal region in 2006, but it has so far been delayed. Before new bidding is opened, the government will complete a geological and seismic survey to identify potential exploration sites. Bangladesh must also accurately mark its deep sea territory and settle ongoing maritime border disputes with India and Myanmar.

Refining/Downstream

According to OGJ, Bangladesh has 33,000-bbl/d of crude oil refining capacity at Eastern Refinery Ltd.’s (ERL) facility at Chittagong. The ERL complex is a subsidiary of the state-owned Bangladesh Petroleum Corporation (BPC).