Energy price speeds Bangladesh turnaround on gas reserves

High energy prices have cast renewed doubt on Bangladesh’s plans to open up its natural gas reserves for exports, the country’s finance minister said in an interview with Emerging Markets. Saifur Rahman said that the government now has “second thoughts” on the contentious issue of opening up exports of natural gas, seen by many as the country’s prize asset. The higher cost of crude oil has added an additional $1.5 billion to Bangladesh’s import bill in the first ten months of this fiscal year. Given soaring international gas prices exports could be a lucrative way to earn much needed foreign exchange, but the issue is fraught with political implications for the Bangladesh government, with many politicians preferring to keep control of the cherished commodity in case of tougher times ahead. Foreign hydrocarbons firms have been trying hard for years to gain greater access to the country’s proven gas reserves estimated at around 13 to 16 trillion cubic feet. Prime minister Begum Khaleda Zia has taken a tougher line than her predecessor on the question of gas exports and awarding exploration contracts. The previous government offered around eight gas blocks to international investors. Although the current administration is carrying out a seismic scrutiny of new blocks, they are “unlikely to be offered to investors until a new government takes charge” next January, the minister said. As part of its efforts to conserve the use of oil, the government is pursuing an intensive programme to set up a domestic gas network, parts of which are being built by foreign companies, the minister said. Efforts to substitute gas for petrol have also paid off: about half the vehicles in Dhaka have switched to using compressed natural gas from petrol and diesel. The minister also warned that high energy prices across south Asian nations are eating into local credit by crowding out private investment, raising the spectre of inflation and casting a dark shadow over the prospects for their continued economic growth. Rahman, who chaired an informal meeting of south Asian finance ministers on Wednesday, told Emerging Markets: “High metal and energy prices are putting pressure on the balance of payments and stoking the fear of inflation.” Rahman also urged the Asian Development Bank (ADB) to provide a special programme to neutralize the pressure faced by these countries on the lines of the World Bank’s energy crisis programme announced in 1979-80. Despite severe floods that affected nearly two-thirds of the country, the economy managed to grow by 6.5% last year