Choosing Fuel Options

Mohammad Mosharraf Hossain

The major sources of primary energy in Bangladesh are natural gas and coal. About 75% of the
commercial energy is met by natural gas. With the fast depleting natural gas reserves it is always
an apprehension as to how long we may enjoy the benefits of indigenous gas as new discovery of
gas field in the country is not yet in sight.

Gas Sector (2015)

Description Numbers

Total gas fields 26

Total producing gas fields 20

Total producing gas wells 101

Present gas production 2730 MMCFD

Highest volume of gas production(06 May, 2015) 2785.8 MMCFD

Total gas reserve(proved +Possible) 27.12TCF

Gas production since inception(June 2015) 13.032 TCF

Remaining gas (proved +Possible) 14.088 TCF

Present daily demand of Gas 3200 MMCFD

Present daily gas deficit 500 MMCFD

Present gas customers 30 lacs
The average gas production during 2009 was 1744 MMCFD which has been raised to 2730
MMCFD though working over of old gas wells, accelerating the program for the exploration and
development of new gas wells and its implementation contributed to the enhancement of gas
production by 1378MMCFD, at the same time shut down of two wells namely at Shangu and
Feni gas fields and decrease in the gas flow in some of the gas wells in different gas fields, the
actual gas production was leveled at 986 MMCFD. To identify the structure of the gas reservoir
definitely 3-D seismic surveys have been conducted in 3096 square kilometer area. Meanwhile, 6
new gas structures, 8 exploration and 41 development wells and the work over of 18 gas wells
have been completed. During the same period 767 kilometer gas transmission lines have been
laid to enhance the gas transmission facilities. Gas compressors have been installed in Muchai in
Habiganj district, Ashuganj in Brahmanbaria district and Elenga in Tangail district. Gas is being
supplied to the power stations, fertilizer factories, industrial and commercial as well as domestic
customers numbering about 30 lacs at the moment. To augment the technical capabilities of the
only indigenous oil and gas exploration and development company Bapex procured 3 rigs
capable of drilling up to a greater depth. Plan for importing 500 MMCFD of LNG to alleviate the
gas shortage in the supply chain has been drawn. Schemes have been on board to drill 18
development wells and 11 work over wells in different gas field by the year 2020. Presently, an
exploratory well is in progress at Mobarakpur and a development well at Shalda is under
implementation.

During the year 2014-2015 about, 31,831 gigawatt hour have been generated with natural gas as
the primary fuel in the Power stations while 944 gigawatt hour have been made available from
the coal based Power plant at Barapukuria coal mine. During the period under consideration
71.56% of total generations of power in the country have been produced from the natural gas and
coal. In addition, total 2200 MW of electricity have been generated in the small power plants in
the category of captive power. At the same time, 13, 08,060 MT of urea have been produced
using natural gas as the feed stock in the fertilizer factories.

Sector Wise Demand & Supply Of Natural Gas (2015)

UNIT:MMCFD

Sector Customer Class Demand Supply

Bulk Power 1454 1070

Fertilizer 317 200

Power non greed 70 68

 Sub total 1841 1338

Non Bulk

Industry 452 448

Captive 489 467

CNG 128 125

Domestic 332 330

Commercial & others 33 32

Sub total 1434 1402

TOTAL 3275 2700

There have been some programs to augment the primary energy supply in the country by the
relevant agencies. From the news paper reports it is known that government has been working in
importing LNG and electricity import from India as well as allowing private sector to import
LPG. No new gas connection to domestic sector is being given. Industrial gas consumers are
being encouraged to set up factories in the areas where gas network is available.

To overcome the gas crisis in the country especially in Chittagong region during 2010, a scheme
has been drawn to import about 4 million ton of LNG equivalent to 500MMCFD gas which has
been incorporated in the fast track project list of the country. Under this project import of LNG, a
long term contract with the LNG supplier for this project, construction of 91 kilometer
30”diameter gas transmission pipeline and a floating LNG storage tank at the west of
Maheshkhali in the deep sea and a regasification plant have been the major components for
implementation. A Memorandum of Understanding has also been signed between the
governments of Bangladesh and Qatar in respect of LNG supply. June 2017 has been targeted for
completion of the 91 kilometer 30” gas transmission line from Maheshkhali to Anwara, where
the regasified LNG will reach the supply line. Steps have been taken to set up two land based
LNG terminal – one at Maheshkhali at Chittagong and the other at the Payra port of Patuakhali.
Capacity of each of these terminals will be 6 million tons per annum.

Notwithstanding the above impressive numbers in the gas supply situation the fact remains that
gas is depleting fast and no new land based gas field is in immediate sight. The only hope is the
deep offshore where no exploration effort has yet been visible. Making predictions about the
future of energy in a constantly changing world is an extremely difficult task. Ten years ago
everyone was talking about $200 per barrel of oil. If we’d made predictions back then, we would
have been very wrong today. LNG was a costlier option even a few years back. No IOC was able
to export Bangladesh gas through LNG; though serious efforts were made by them without
success to sell our gas through gas pipe line. Scenarios have now changed. We are no more
getting a world class gas field in every third exploratory well and the depletion rate of the
existing fields are alarming, so we need to look for something else with which we can move
forward with our economic activities. The foremost important point is to increase the life of gas
utilization – be it through discovery of new gas filed or rationing the present uses to serve the
power sector first so that electricity oriented activities are not affected. Arranging import
substitute fuel that would cause prolonging the gas uses mode for a longer time enabling us to
look for alternative sources of primary energy could be a way out. When considered in
comparison with other eligible importable fuels, LNG would come as a preferred option at least
for some time to come.

The present exploration programs are alarmingly below the expectations. IOCs involvement is at
the lowest point. We have to admit that without the IOCs participation it will not be possible to
discover any new field as the exploration work would now be located in the new green field
horizon that too in the offshore and deep offshore. With the conventional approach of attracting
the IOC with the traditional incentives may not work. These must be brought at least to the level
of the facilities being given by the neighbors if not more. With the present turmoil in the energy
fields all over the world, it may be strategically gainful to get some IOC contract bound before
the days tilt towards better investment friendly globally. While on the exploration issue, it may
be touched upon that the gas deposit in sand may have reached its limitations in the geologically
prospective areas, as such new sources like Shale gas or gas hydrate need to be addressed to in
the exploration efforts in Bangladesh.

LNG or for that matter any importable fuel is not worth considering when one has own energy
resources within the country. From this point of view coal stands a front line candidate for
development. It has been observed that coal mining with its degradable environmental
consequences has created a negative mind set against the concept of using local coal in the
country. We must come out of the notion that coal cannot be used in Bangladesh. To meet the
projected target of 50% power generation on coal based plant by the year 2030 we must develop
simultaneously the coal deposits in the northern Bangladesh without any delay.
In gas sector, pipe line is the cheapest mode of transportation. Import of gas from Turkmenistan
or from Iran will be the best option for the energy need of not only for Bangladesh but for the
entire region. We must give top priority to this option and move forward in all directions. India
and Pakistan have achieved significant progress in this line of thinking. Tremendous interests
have been visible in the cases of Trans Asian Road and Rail communications, but no such
regional or international cooperative movement has been seen in the case of Gas Transmission
project which is definitely very important for all the countries in the region.

We must guard against over production from any gas field as that may trigger irreversible
damage to the reservoir. Last but not the least the institutional capabilities to handle the energy
issues must be given a fresh look to deal with the complex technical, managerial and contractual
issues of the energy sector projects with adequately educated and trained manpower and this also
applies to the proposed LNG project.

Some major issues have cropped up in the energy sector namely use of LPG in the domestic
sector in place of natural gas and use of LPG in the transport sector replacing CNG. These
subjects need further examinations before it is too late. When one consider the options of fuel for
domestic consumptions it is to be remembered that the key determinants of energy demand in the
household sector include: prices of fuels and appliances; disposable income of households;
availability of fuels and appliances; particular requirements related to each use; and cultural
preferences. With increasing disposable income and changes in lifestyles, households tend to
move from the cheapest and least convenient fuels (biomass) to more convenient and normally
more expensive ones (charcoal, kerosene) and eventually to the most convenient and usually
most expensive types of energy (LPG, natural gas, electricity). There is also a correlation
between the choice of cooking fuels and the value of women's time. Women who enter the
formal workforce demand more convenience in their use of household fuels.

It is often argued that gas to kitchen has been a wrong staratgy in the past. But it must be
remembered that gas supply projects in the country never targetted domestic use of gas as the
prime objective. It was alays industries and power stations that were the objectives to expand the
gas network over the contry. Gas supply to kitchens came as byproduct benefits and that was
definitely a good outcome as it saved billions of Taka which would other wise have drained out
abroad to import costly LPG. In developed countries, LPG is not a prefered option for domestic
use rather natural gas and electricity are in greater demand for heating and cooking in the
housing sector.Globally household uses of electricity including in the kitchen is moving up. Key
factors in the growth of household electricity consumption are the number of households with
access to electricity supply, penetration rates of electric appliances, and the size and efficiency of
appliances. Among the most common subsidized energy sources for households is electricity,
with the aim of making it accessible even to low income households. However, in many cases
such programs result in effectively subsidizing higher income people who live in urban areas and
have access to electricity grids. For the rural and urban poor, connection to the electricity supply
is often prohibitively expensive or unavailable, even though the price of electricity itself may be
low enough to encourage a switch from other fuels.
Along with the assurance of fuel supply, a related and important aspect is the ‘ease of fuel
procurement’, which reflects the household’s perception of the ease of obtaining fuel. This aspect
is evaluated with the backdrop assumption that if fuel supply is assured for all technology
options, how do they fare in terms of ‘ease of fuel procurement’? Clearly, connected and
delivered utilities like piped natural gas and electricity have the highest ease of procurement,
whereas LPG could have varying levels of ease. In Bangladesh with the extensive network of gas
pipeline, the natural gas would rank high in the ease of fuel supply compared to LPG. As such
instead of stopping gas supply to domestic customer, the available gas should be allocated along
with other priority sectors to the domestic uses as well. Till new discoveries of gas fields are
made, the import of LNG may also include the demand of domestic sector so that the huge
infrastructures of gas supply to the urban areas are well utilized. It may also be analyzed that
whether the gas in domestic uses could be supplied to new power stations that could meet the
demand of house hold electricity including that of the kitchens. Appropriate pricing mechanism
and separate metering would be needed for this purpose.

In Bangladesh LPG is being utilized in a nominal way in the areas where gas pipeline is not
available but inhabited by the economically well of people. With the signal of gas shortage the
trend of LPG supply which is visibly in the private sector is to expand the LPG marketing in the
country. Recently it has been published in the news papers that five companies are set to roll out
their liquefied petroleum gas business this year in a bid to capture the household segment of the
market. The companies - Orion, Index, Navana, Sena Kalyan Sangstha and Beximco - will sell
out about Tk 900 crore in total for their LPG plants. Presently, seven companies supply imported
LPG. The companies are: Totalgaz, Omera, Jamuna, Bashundhara, LAUGFS Gas Bangladesh,
BM Energy and state-owned Bangladesh Petroleum Corporation. Bangladesh consumed only 1.6
lakh tonnes of LPG in 2015. Of the quantity, 1.42 lakh tonnes were imported and 18,000 tonnes
were generated from different government factories as a by-product.

It is apprehended that the CNG facilities for the transport sector will also be taken over by LPG
dealers. It is reported that the government has given the approval to Beximco Group to set up
500 LPG refueling stations across the country in the next two years. Beximco would franchise
the operations of the filling stations and the first one would open in July 2016. The cost of the
project, which includes selling of LPG for cooking and industrial purposes, was estimated to be
around Tk 1,000 crore.

Existing CNG filling station owners observed that they should be given preference for LPG
filling station licences as they have the infrastructure and experience. There are around 600 CNG
stations across the country. According to Totalgaz, a French company that has set up two LPG
filling stations, the approximate cost savings of LPG over petrol is about 30 percent. The choice
of fuels by the transport owners depends on the pricing of the products. A car owner will have
little interest for CNG or LPG if the price of octane is brought close to that of other replacing
fuels. Again it should be examined in depth if the car owners should be given the subsidy in fuel
price as was earlier the case with CNG when they could afford to buy luxury cars at high prices.
Not many countries prefer CNG or LPG in the cars due to technical and operational
inconvenience. If the pricing mechanism is impartially allowed to work, the conventional fuel
will rule the fuel market and people will pay as they can afford without taxing the government
exchequer.

Mohammad Mosharraf Hossain;

Former Chairman of Petrobangla

Propane Power Is Grabbing Growing Share
of Gas-Fired Market
11/10/2015 | Thomas Overton

As liquefied natural gas (LNG) continues to draw attention in the gas market, with the first new
U.S. LNG export terminal in decades coming online next year, another liquefied gas—propane—
is beginning to expand its share of the mix as propane power options continue to grow.

While propane-powered engines and microturbines have been around for a long time, they’ve
always taken a back seat to diesel for a variety of reasons—primarily cost. Diesel has historically
been less expensive than propane, but a combination of higher crude oil prices, a glut in the
natural gas liquids market, and growing environmental regulation of diesel engines has made
propane power generation more attractive.

Simple Propane Power

Propane (also referred to as liquefied petroleum gas, or LPG) is a by-product of natural gas
processing. Compared to LNG, the infrastructure required to make the switch to propane power
is far less challenging. Though generation with propane results in slightly lower output and
efficiency compared to natural gas, propane is much easier and less expensive to compress, ship,
and store than LNG (propane liquefies at –42C compared to –260C for natural gas) or
compressed natural gas (which must be stored at far higher pressures: about 3,000 psi versus 100
psi to 150 psi for propane). Propane-powered turbines can be used for the same simple cycle,
combined cycle, or cogeneration applications as natural gas–fired turbines.

For island grids dependent on imported fuel oil, propane power is especially attractive. Though
it’s not as clean as solar or wind, it’s far cleaner than diesel while still being dispatchable.

The U.S. Virgin Islands Water and Power Authority (WAPA) is in the middle of a $150 million
transition from fuel oil to propane. The project is expected to cut WAPA’s fuel costs by 30%,
amounting to annual savings of around $90 million. The seven GE turbines at the 198-MW plant
on St. Thomas and the 118-MW plant on St. Croix that previously ran on No. 2 fuel oil are being
converted to dual-fuel operation by Dutch firm Vitol.

WAPA received its first load of propane for the project in October, and commissioning and
testing of the plants is expected to begin this month. Going forward, most of the project’s
propane will be stored on a permanently moored very large gas carrier ship, with land-based
tanks adjacent to the plants refilled as needed using small barges.
Growing Options

The market potential for propane power can be seen in moves generation manufacturers have
made recently in positioning their products for use with propane. Finnish firm Wärtsilä, which
has deployed its large engines for utility-scale generation around the world (particularly in
applications such as island power plants) recently announced that its flagship 34SG engine has
been adapted for dual-fuel applications running on either natural gas or propane, without
requiring physical modifications. Wärtsilä’s first propane-fired power plant, which comprises
two 20V34SG engines, is under construction in El Salvador and will be operational by the end of
2015.

Propane-powered microturbines have drawn interest as generation sources for microgrids.

Oncor’s System Operating Services Facility near Dallas (POWER’s 2015 Smart Grid Award
winner), employs a Capstone microturbine running on propane to back up its solar photovoltaic
panels. Capstone also recently deployed a propane-fired, microturbine-powered microgrid at a
luxury ski resort in Chile, as well as at Southern California Edison’s plant on Santa Catalina
Island in California (Figure 1).
Energy Hub Brighten Deep Sea Port
It is easy to dream, but translating it into reality is undoubtedly very difficult. If the dream aims
at achieving some targets, it presents huge challenge. Taking Bangladesh to the level of a
developed country by 2041 is one such dream. Besides meeting various conditions, driving the
economy to a desired destination is the main challenge. One of the major inputs for this is energy
supply. The energy demand grew at an annual average of 8% per annum from 2000 to 2012.
Own natural gas contributed for 70% of this growth. Natural gas is the dominating fuel for
energy and power in Bangladesh. The proven recoverable reserve of natural gas is fast depleting.
Bangladesh is heading towards becoming an imported fuel dependent economy due to a political
decision -- “not exploiting own coal resource now”. Many countries have reached the level of
developed economy through exclusive reliance on imported energy. Drawing those examples, the
policy makers are saying that why Bangladesh cannot do that? But critics apprehend that
Bangladesh does not have similar geographical and geomorphological advantages like those
countries. Though not exactly similar, Matarbari-Maheshkhali islands have some enabling
situation with 10-20 meters of draft in the coastal region close to the shore is prevailing there.
These make the region ideal for a deep seaport apart from using the same for setting up import
infrastructure for the coal and LNG.

The coastal region of Bangladesh delta has shallow draft as the delta is formed of sediments
carried by rivers flowing from the upstream. Chittagong port has 9-meter and Mongla only 4.5-
meter all season draft. Consequently, these two operational ports are not suitable for importing
primary fuel like coal and LNG. The new Payra port under development also would not have
required draft. A JICA survey states: “Anti-clockwise rotation of water by cyclone storm causes
sedimentary material forms in south-westerly direction.” Consequently, there is little opportunity
for getting required draft in the south western parts of the coastal region. Available information
suggests that there is opportunity for getting 10-20 meters draft into the sea but it would be 100-
km away from the Mongla port. From the under construction Payra port, the distance of deep sea
having 15-20-meter draft would be about 35-km. In the southern Chittagong region, especially in
Matarbari-Maheshkhali region, 10-20 meter draft deep sea would be pretty adjacent. That is why
JICA in its ‘Big-B’ survey report suggested for setting up imported fuel infrastructure and deep
sea port in that region and advised phase-wise implementation until 2041.
Fuel Import: Some Global Experience

United States of America, the largest fuel importer, enjoys strategic geographic advantage. It can
easily access the huge surplus fuel availability of Canada importing gas through trans-border
pipelines and hydropower through power transmission grid connectivity. Beyond this, USA
import primary fuel from other countries as well. For Shell gas and oil bubble significantly
reducing its importing and its strategy for reducing coal use, USA is set to become one of the top
LNG and coal exporting country soon.

Japan is the largest fuel importer in Asia. The entire country has costal region having 18 meter
plus draft. It has no issue importing coal using Capesize or Panamax vessels. They do not need
transhipment of coal through ligtherage. For LNG import they have set up land based terminals
near the shore. Other two major importing countries South Korea and Taiwan also have deep sea
near their shore. For these adavantages they can comfortably import fuel and meet the entire
demand of domestic industry. But situation is very different for Bangladesh. The importers
cannot even bring 3,000 tonnes LPG carrying vessels near Mongla port. For fuel import, the
larger vessel you use the lesser is the transportation cost. In a very restricted deep draft coastal
facility of Bangladesh, Matarbari-Maheshkhali is a unique location.

Fuel Supply and Power Generation Plan

Bangladesh is now using 1 TCF gas per annum. From 2000 till last year, over 8 TCF from
proven gas reserve has been consumed. Over this period only 1 TCF new reserve could be added.
State Minister for Energy, Power and Mineral Resources Nasrul Hamid said the entire proven gas
reserve will be completely exhausted by 2031 if no new large gas field is discovered soon.
National ENP Company BAPEX has started working on a plan for 53 exploration wells in the
onshore areas. If successful in 10 years, these may provide 3 TCF of new gas. Three IOCs are
working in the 5 offshore blocks in the Bay of Bengal under PSC. The government is working on
leasing out all offshore blocks of the Bay of Bengal (shallow and deep water) to IOCs by 2021.
Petrobangla is optimistic about discovering at least 7 TCF of new gas from these prospects in 10-
12 years. Even if these expectations lead to adding 10 TCF of new gas by 2041, Bangladesh
would have to rely on imported LNG for meeting 75% of its gas demand.

One of main own fuel option of Bangladesh is high heating value, low sulphur, low ash coal.
Five discovered coal fields have 3.3 billion tonnes of reserve. Experts observe that planned
exploitation can extract at least 2 billion tonnes from these discovered fields. These can fuel
10,000 MW power generation for 60 years. But now the lone Barapukuria coal mine using
underground mining method is somehow limping. It is supplying coal to a mine mouth 250 MW
power plant. Another new unit of125 MW is being constructed there. The present production cost
U$$130/tonne is higher than imported coal. But the political decision of not mining own coal in
the near future has pushed the country to almost exclusive dependency on imported coal. It
would not be out of place mentioning that imported coal will cause at least 25% more generation
cost than using the own coal.
The draft PSMP 2016 prepared by JICA estimates a gas demand of 5,800 MMCFD by 2039. Of
those, 1,800 MMCFD may come from expected new discoveries. The remaining requirement
would need to be met through importing 4,000 MMCFD (28 Million Tonne) LNG. BERC
Member Engr. Mizanur Rahman when asked whether Bangladesh can absorb almost exclusive
reliance on imported fuel, he spoke about having no other options. He found no risks if enabling
infrastructure and fuel import contacts are concluded for an effective fuel supply chain in the
meantime. BUET Prof Dr M Tamim observed that failure in exploiting own coal resource has
driven Bangladesh to almost exclusively dependent on imported fuel. According to him,
Bangladesh would become 92% imported fuel dependent by 2030 if it continues to keep its coal
resource buried underground.

PSMP2016 and Fuel for Power Generation

The PSMP 2016, which is now waiting for the government approval, provides for 57,000 MW
generation capacity by 2041 -- 35% of that capacity would come from own gas and imported
LNG and another 35% (almost exclusively on imported coal) from coal. The reaming 30% would
be contributed by Nuclear Power, import from regional countries and liquid fuel. But questions
have been raised for various initiatives for new power plants outside the scope of PSMP 2016.

A 1,320 MW coal based power project has been taken up at Pekua, which is not included in
PSMP. A coal-based plant has been adopted for setting up at Gazaria while an initiative for
setting up a third coal fired plant has also been taken at Payera which is outside PSMP. Approval
has also been given for 750 MW gas-based power plant of Indian Conglomerate Reliance Group.
Fuel import plan is also being adjusted with these projects. Experts cautioned that these may
create situation for over investment in the power sector. These may cause exceeding power
generation target that of 57,000 MW that PSMP 2016 suggested by 2041.

Fuel Import Infrastructure in Coastal Areas

Two imported coal-based projects each having 1,320 MW capacity are now advancing in the
Southern region of Bangladesh at Rampal Bagerhat and Payra in Patuakhali. Of these, the
Rampal power plant is scheduled to come into commercial operation in 2022. As per preliminary
plan, coal for this plant would be transhipped from mother vessels anchored in deep sea and
transported by smaller vessels to coal terminal of the plant. Another coal based plant of a private
sector did not get approval due to coal transportation complexities. The government has also
decided not to go for the second unit at Rampal. Transhipment of coal through lighterage would
increase cost of generation.

The state-owned North Western Power Generation Company Ltd (NWPGCL), by forming a joint
venture with CMC China, is advancing the 1,320 MW coal based plant at Payra with the ultimate
objective of generation of 2,640 MW there. Another public sector company is also working on a
1,320 MW capacity coal based plant there. NWPGCL source informed that the first unit may
start operation in 2020. If Matarbari coal port is constructed by then, coal for Payra plant will be
brought from there using ligherage vessels. Otherwise they would invest on infrastructure in
deep sea transhipment facility.

There is a plan for developing a deep seaport at Payra as well. Initially a coal port was included
in Payra power plant development. Later the responsibility has been given to the port authority.
The deep seaport construction is a great challenge here in consideration of draft. The 10-15 meter
draft is available at 35 km distance from the shore. Consequently, a huge investment would be
required for bringing the deep sea closer to the shore through massive dredging operation.
Beyond all these, Petrobangla is working on a 7 million tonne annual capacity land based LNG
terminal at Payra.

There are few other planned power generation projects along the coastal areas from Chittagong
to Cox’s bazar. Private sector company S Alam Group in a joint venture with a Chinese company
is constructing a coal-fired plant at Bashkhali, Anowara. With a plan also to import 3.5 million
tonnes of LNG by setting up FSRU there, the Reliance group of India has signed agreement with
the government. They will set up power plant using the gas. BEXIMCO has given a proposal to
the government for setting up a multipurpose port at Bashkhali. Using this facility, they want to
import bulk LPG, LNG and liquid fuel. EGCB is advancing on a coal-fired 1,320MW coal-based
power plant at Pekua in Cox’sbazar.

Works for engaging contractors for the first unit of Matarbari coal based power plant (1,200
MW) and a coal port under JICA financing by Coal Power Generation Company is at final stage.
There is a plan for the second unit of 1,200 MW power plant there. Besides, a Singapore
company SEMBCROPCorporation has also signed agreement for a 700 MW power plant at
Matarbari.

Bangladesh Power Development Board (BPDB) has acquired 8,000 acres of land at
Maheshkhali. Eight blocks have been identified for 8 imported coal based power plants there.
Each will have 1,320 MW of generation capacity. The land blocks were also allocated for
importing 7 million tonnes of LNG import infrastructure and 3,000 MW LNG based power
generation plant there. Chinese Company HQC has started feasibility study for a land based
LNG terminal under MOU with Petrobangla. Coal for the planned coal based power plants here
would be supplied from Matarbari Coal Port (Coal Transhipment terminal)

Besides, BPC has started working on a Single Point Mooring (SPM) construction project not
very far from Maheshkhali for importing liquid petroleum. Excelerate Energy has started
working on FSRU terminal for supplying 3.5 tonnes imported LNG for Petrobangla. It is
expected to start operation from March 2018. Bangladeshi company Summit Group will also set
up a similar capacity FSRU there. Indian Company PETRONET is carrying out feasibility study
for a 3.5 to 7-million tonne land based LNG terminal at Kutubdia. Petrobangla has also signed
MOU with SEMBCROP for a 7 million tonnes capacity LNG terminal. Hong Kong Shanghai
Manjala Power Plant has given a proposal to Petrobangla for setting up of a 3.5 tonnes annual
capacity LNG terminal at Sangu valley.

DG Terminal, a Dipon Gas Subsidiary, has also tabled a proposal for a bulk LPG terminal
including storage facility at Maheshkhali. There is also a plan for setting up of an Eight million
tonne capacity crude oil refinery at Matarbari by 2041. Many other local and foreign companies
are submitting unsolicited proposals to the government for investment in Chittagong and Cox’s
Bazar coastal areas.

South Chittagong Development Plan and Matarbari-Maheshkhali

The BPDB had initiated a plan few years back to develop an energy hub at Matarbari-
Maheshkhali. A German company was engaged as consultant. They submitted a final report
taking into consideration the land use and infrastructure development plan. Following the
recommendations, LNG import terminals, LNG based power plants and coal fired power plants
development plan is being finalized. This plan has taken into consideration of the Southern
section of North Maheshkhali. The plan includes provision for 8 (eight) 1,320 MW power plants
with a total generation capacity of 10,560 MW in 8 blocks and 3,000 MW LNG based power
plants. This means plans for generation of over 13,000 MW power in Mahekhali. Former BPDB
senior executive and now working as a member of BERC Engr Mizanur Rahman was deeply
involved with this planning. He told the EP that it would not be appropriate location for the
power plants in the South Section of North Maheshkahli. He suggested pushing the power plants
further north of North Maheshkhali. He suggested constructing the LNG based power plants near
the growth centers instead of Maheshkhali. There would be no better option than Maheshkhali-
Matarbari to develop a deep seaport, which will be very essential in future. LNG terminals and
coal ports must be constructed in the south section of North Maheskhali as part of deep sea port.
Director General of the Power Cell Engr. Mohammad Hossain opposing such views said under
directive of the government Matarbari and Maheshkhali is being developed as energy hub. He is
unaware of any government plan for deep sea port there.
Big B & JICA Feasibility Study

JICA completed a compressive study of South Chittagong development in 2015 considering the
2041 requirements of Bangladesh. The report suggested for developing Matarbari-Maheshkhali
with the construction of deep seaport energy hub and related downstream industries. It stated of
phase-wise construction of 1,200 MW coal based power with total capacity of 3,600 MW in the
public sector at Matarbari. SEMBCROP would construct a 700 MW power plant there as IPP.
On the other hand, the report included suggestions for 5 units of 1,320 MW of capacity each
totalling 6,600 MW coal based power plants. It also included suggestions for 14 million
tonnes/year LNG import infrastructure setting up inclusive of FSRU and land based terminals.

The proposed coal port according to the report was suggested to be a coal trans-shipment
terminal (CTT). This would have annual handling capacity of 41 million tonnes. The capacity of
this CCT as appeared in the report was 9 million tonnes in 2016, 26 million tonnes in 2031 and
41 million tonnes in 2041. Coal would be supplied from here to all the power plants of Matarbari
and Maheskhali using conveyor belts. Coal to other power plants in different parts of the country
can also be supplied from here through lighterage vessels. 70,000-80,000 tonne capacity
Panamax vessels can berth and unload at this CTT. This will be a very sophisticated modern
terminal. Coal storage yard and other facilities will also be there.

Industries will be set up in different blocks following JICA study report. Deep sea port with
integrated planning would also be set at Matarbari Maheskhali beside the coal and LNG
terminals for feeding these industries. The study report also has included land use plan of the two
islands. The plan for crude oil import and refinery is also clearly spelled out in the study.

The JICA report states that 72% coal, 34% LNG and 78% petroleum products would come from
import by 2026 through Matarbari-Maheshkhali. By 2041, the infrastructure of Maheshkhali and
Matarbari alone would meet 85% coal, 51% LNG and 62% liquid fuel import requirement of
Bangladesh. Some 23% of electricity demand of the country would be met from plants in
Matarbari-Maheshkahli area. The report mentioned that the CTT will be operational 300 days
every year. By 2030, the CTT would be able to handle 336 Panamax vessels. CTT will start with
50 hectares of land but eventually would be expanded to 150 Hectares.

One JICA study stated of US$ 58 billion investment by 2041 for power plants, LNG terminals
(FSRU and Land Based) and CTT. This would come from governments financing, development
partners and private sector investments. Public Private Partnership (PPP) has also been stressed
upon in the study.

Conclusion

The Ministry of Power, Energy & Minreal Resource (MPEMR) is working on power plants,
LNG terminal and coal port development for power generation and fuel supply at Matarbari and
Maheshkhali following their own plan. Initially, the government has plan for 13,000 MW power
generation in the region. But now the changed plan targets for generating 13,000 MW in
Maheshkhali alone. Besides, there are plans for 3,100 MW at Matarbari, 1,320 MW at Pekua and
1,320 MW at Bashkhali. On the other hand, though the original plan was to import 14 million
tonnes of LNG, but by now six MOUs have been concluded that would facilitate importing LNG
double the plan.

Bangladesh would definitely need to have a deep seaport as a regional development hub. By the
next decade the two existing ports, including the under development Payra, would seriously
struggle managing the growing economic demand. The initiative to develop deep seaport at
Sonadia has been stalled. Sonadia is very environment and echo sensitive. North Maheshkhali
and Matarbari is the ideal alternative, according to experts, for its unique geographical location.
Experts suggested developing Matarbari-Maheshkhali under integrated planning with a deep
seaport and considering deep water LNG terminals and CTT as integral parts of the port. These
would require more careful utilization of land there. Keeping land at sea face for the deep
seaport, the reaming land should be optimally used for other installations. Matarbari-
Maheshkhali would not be an energy hub, it will become an energy integrated deep seaport in the
future. Sonadia - Maheshkhali south will be its buffer zone.

Cover Interview

Develop Maheskhali into Energy Hub with Provision for Turning It Into Deep Sea Port

Prof Dr.M Tamim

Chairman, Petroleum Engineering Department, BUET

Despite having extensive coastal areas in Bangladesh, it is extremely difficult for constructing a
deep sea port due to shallow draft. Sonadia, Maheshkhali and Matarbari have required draft. But
construction of deep sea port has become uncertain now. Consequently, Maheshkhali can be the
most ideal location for a deep sea port. In my opinion, taking the essential need for a deep sea
port into priority consideration, the energy infrastructures at Maheskhlai should be planned under
comprehensive resource management master planning. LNG terminal and coal terminal
construction can be part of port construction. Initially these would be used for fuel import but
eventually these would be integral part of deep sea port when it becomes operational.

On the other hand, now being heard the plans for 13,000-14,000 MW coal fired power plants and
3,000 MW LNG based power plants in Maheskhlai and Matarbari island. The plan must be
freshly reviewed to see whether it is appropriate or not. The reasons behind location of imported
coal based power plants in coastal areas away from growth centers are well understood, but the
plan for locating LNG based power plants cannot be supported.

A new hub is in the process of development with Nepal, Bhutan, Bangladesh and eastern regions
of India. There is no other option to developing a deep sea port for the hub. Bangladesh does not
have wider choice of locations for this. Maheskhlai is one of them. There is no option but to use
every piece of land there under a comprehensive planning.

______________________________________________________________________
Deep Sea Energy Hub Infrastructure to be Set Up in Maheskhali

Mohammad Hossain

Director General of Power Cell

Deep sea port is essential for future Bangladesh. Several studies are being conducted for one of
the proposed location at Sonadia. On the other hand, Bangladesh needs importing primary fuel
on the backdrop of own fuel shortage. From these considerations, initiatives have been taken for
setting up energy hubs at Payera and Maheshkhali. Of these, a multipurpose energy hub,
including deep sea energy import infrastructure, would be set up at Maheshkhali.

A comprehensive master plan is being finalised for Maheshkhali with far reaching objectives and
coordinating all aspects. Under this, a similar master plan initiative has been taken for a coal port
and coal fired power plants at Matarbari. That port would later be transformed into a coal
transhipment terminal. From this terminal, coal would be transported to all power plants in the
two islands through conveyor belts.

The proven reserve of own natural gas is fast depleting. Imported LNG would replace that. A
major portion of the country’s gas demand would be met through importing LNG through some
FSRU and land based terminals. In each of the 8 blocks at Matarbari, one 1320 MW capacity
imported coal fired power plant would be constructed. Areas have been earmarked also for
3000MW capacity LNG based power plants. All these would turn Maheskhlai as an Energy hub
of international standard in the future.