Unocal vs. Bangladesh – Row Over Gas.

by Rashad Chowdhury

Thursday, July 10, 2003

Bibiana, a world-class natural gas field of Bangladesh, lately has been in the center of controversy between the multinational giant Unocal and government of Bangladesh. Discovered in 1998 in the Northeastern region by Unical, Bibiana has an estimated 5.5 Trillion Cubic Feet(TCF) of recoverable reserves of natural gas and 30.7 million barrels (MMbbls) of condensate.

Bangladesh’s proven reserve of 16 TCF of gas is low by world reserve(see Fig.1) and most of the usage of this resource has been centered around the major urban areas. Average Bangladeshi has not seen much benefit of this energy resource although the country has been discovering gas since the 50’s. So with a world-class gas field in Bibiana, one may argue that finally the average Bangladeshi may see some benefits of this resource, right? Not quite!

As a multinational, Unocal has its own game plan and its eye is not on Bangladesh's energy needs, but on her giant neighbor India. With her billion plus population, India is more lucrative and opens more avenues for the multinational oil giant. So Unocal has set in motion the wheels for exportation of gas from Bangladesh into India via pipeline. And this move by Unical is errily similar to past corporate exploitary practices or history in the repeat!

*Fig.1 Bangladesh's place in World Gas Reserve

Country Reserves in Trillion. Cu. Feet(TFC)

1. Russia 1700

2. Iran 812

3. Qatar 300

4. United Arab Emirates 212

5. Saudi Arabia 204

6. USA 164

7. Algeria 160

8. Venezuela 143

9. Nigeria 124

10. Iraq 110

"

"

Pakistan 27

India 23

Bangladesh 16

World Estimated Total Res 5146

First, Unocal wrote a Memorandum of understanding with the Indian side to bring in Gas from Bangladesh. Then it went about convincing the people of Bangladesh that gas export is actually good for the country. They claimed that Bangladesh has too much gas for her own benefit and which she can not utilize although per capita energy consumption in Bangladesh is one of the lowest in the world(3.3 million Btu). Unocal claimed that Bangladesh could rise up to 177 million dollars annually through taxes and other revenue from the pipeline. And this they said is badly needed in a poor country like Bangladesh. Bangladesh's GDP is 230 billion US Dollars (2001 est. at PPP)!

A main selling point according to Unocal’s website is that Dhaka has only a time advantage over gas exporting countries like Iran, Afghanistan or Myanmar. A Unocal representative in Dhaka recently announced that "A delay on the export decision could cause a shrinking international market as the window of opportunity will not remain open always".

But many experts see Bangladesh’s reserve as very limited. Bangladesh has already extracted more than 3 TFC of its reserve. Gas use has been in the increase in Bangladesh with 83 billion cubic feet(bcf) produced in 1983-84 and production reaching 373 bcf during 2000-2001. With the growth of gas sector and proper utilization, Bangladesh can exhaust her present gas reserves within 10-15 years!

Unocal has imbeded stories that it wants to investment 500 million dollars in Bangladesh's economy if gas export is approved by the government. But it does not clarify that this whole investment will go towards building the pipeline and Bangladeshis themselves will have to pay for it over the long run. Unocal's 1,363-kilometer (847-mile) gas pipeline will stretch from Bibiyana to India's capital Delhi. Unocal never talks about the security element of the pipeline in the nuclearized neighborhood of South Asia. They also never talk about the environmental cost of putting in gas pipeline all the way across Bangladesh through population centers and fertile rice fields disrupting habitats both human and other. Unocal, who has claimed to have invested over $350 million in Bangladesh to discover gas are not able to produce proof of expense when Bangladeshi experts ask for it.

Unocal's tentacles have also reached into politics in Bangladesh as has been discovered through different political insiders of the country. It has been alleged that Unocal has heavily invested in Bangladesh's last general election(2001) in favor of a political party. The government previously in power also signed several production sharing contracts with Unocal which may facilitate its export of gas into India.

As an energy giant, Unocal has heavy muscle power in Washington. They have used this muscle to favor its gas export idea across the world governmental bodies. That is why organizations like the World Bank, IMF and the Asian Development Bank links gas export to different loan packages that Bangladesh may receive in the future. Major donor countries like Japan are also pushing Bangladeshi government for gas export. Exporters of Bangladesh's garments sector face the wrath of the energy giant's lobbying power in Washington as their request for access to US market goes unheeded.

Heavy lobbying power and manipulation of the public opinion may make the oil giant's plan a reality in the coming months as Bangladesh's present ruling body is showing favorable signs towards export. But Unocal's interest in the export of gas is probably to use Bangladesh as a stepping tool only. Importing of gas from Bangladesh will make it a player in the Indian energy market and open doors for manipulation of the Indian energy market for the future.

Ironically, this is exactly the way East India Company, the world’s first multinational, colonized the subcontinent back in the 18th century. Pretending to play the kingmaker in then trade rich Bengal, they bribed their way into controlling Bengal's throne and then used Bengal’s powerful army as a stepping tool to subjugate India. This allowed them to use this territory as their own profit making cash cow for the next 100 years. And Unocal's cash cow will now be Bangladesh(English trans-Bengal Land) and India. History, it would seem, has a tendency to repeat itself!

*Source: "Worldwide Look at Reserves and Production,"

Oil& Gas Journal, Vol. 97, No. 51 (December 20, 1999)

pp.91-93.

Related Websites:

http://shakti.hypermart.net/fossil/gas.html

http://www.unocal.com/globalops/b-ipipeline/index.htm