Energy Security and Natural Energy Security and Natural ResourcesResources

Challenging Challenging ‘Resource ‘Resource Curse' model Curse' model in in BangladeshBangladesh

Anu Muhammad Anu Muhammad April 2013April 2013

Photo: Shilpi Barua

What is Energy Security?What is Energy Security?

Energy Security can be described as ”the Energy Security can be described as ”the uninterrupted uninterrupted physical availabilityphysical availability at a price at a price which is which is affordableaffordable, while respecting , while respecting environment environment concerns”. (International Energy Agency)concerns”. (International Energy Agency)

Energy security is a term for an association Energy security is a term for an association between national security and the availability of between national security and the availability of natural resources for energy consumption. Access natural resources for energy consumption. Access to cheap energy has become essential to the to cheap energy has become essential to the functioning of modern economies. functioning of modern economies.

What is sustainable What is sustainable development? development?

‘‘meets the needs of the present without compromising the meets the needs of the present without compromising the ability of future generations to meet their own needs.’ ability of future generations to meet their own needs.’ ( ( Our Our Common FutureCommon Future, The Brundtland Commission, formally the World Commission on Environment and Development , The Brundtland Commission, formally the World Commission on Environment and Development (WCED) report, United Nations. 1987.)(WCED) report, United Nations. 1987.)

Sustainable development (SD) is a pattern of resource use, Sustainable development (SD) is a pattern of resource use, that aims to meet human needs while preserving the that aims to meet human needs while preserving the environment so that these needs can be met not only in the environment so that these needs can be met not only in the present, but also for generations to come (sometimes present, but also for generations to come (sometimes taught as ELF-Environment, Local people, Futuretaught as ELF-Environment, Local people, Future))

while oil still accounts for the largest share of world while oil still accounts for the largest share of world commercial fuel production, some 2 billion people still rely commercial fuel production, some 2 billion people still rely on the most basic fuel of all, wood and combustible waste on the most basic fuel of all, wood and combustible waste products, for simple cooking and heating.’ products, for simple cooking and heating.’

Energy and Development: Energy and Development: Diverge Scenario Diverge Scenario

growth winners such as US, Canada, Australia, and growth winners such as US, Canada, Australia, and Norway are rich in resources Norway are rich in resources

availability of natural resources should be strong availability of natural resources should be strong component of growth, but there are opposite component of growth, but there are opposite experiences too……experiences too……

Many natural resource abundant economies tend to Many natural resource abundant economies tend to grow slower than economies without substantial grow slower than economies without substantial resources. resources.

growth losers, such as Nigeria, Zambia, Sierra Leone, growth losers, such as Nigeria, Zambia, Sierra Leone, Angola, are all resource-rich, while the Asian tigers: Angola, are all resource-rich, while the Asian tigers: Korea, Taiwan, Hong Kong, and Singapore, are all Korea, Taiwan, Hong Kong, and Singapore, are all resource-poor. resource-poor.

(Institutions and the resource curse: Halvor Mehlum, Karl Moene and Ragnar Torvik, 2nd March (Institutions and the resource curse: Halvor Mehlum, Karl Moene and Ragnar Torvik, 2nd March 2005)2005)

How Resources turn into How Resources turn into Curse?Curse?

The surprisingly negative outcomes in oil- and mineral-The surprisingly negative outcomes in oil- and mineral-dependent countries are referred to as the “resource curse.”dependent countries are referred to as the “resource curse.” (Covering Oil..)(Covering Oil..)

Natural resource abundance does therefore hinder economic Natural resource abundance does therefore hinder economic growth in countries with growth in countries with grabber friendly institutionsgrabber friendly institutions, but , but does not in countries with does not in countries with producer friendly institutionsproducer friendly institutions. . (Institutions and the resource curse: Halvor Mehlum, Karl Moene and Ragnar Torvik, 2nd March 2005)(Institutions and the resource curse: Halvor Mehlum, Karl Moene and Ragnar Torvik, 2nd March 2005)

Many countries rich in natural resources exploit and squander Many countries rich in natural resources exploit and squander that wealth to enrich a minority while corruption and that wealth to enrich a minority while corruption and mismanagement leave the majority impoverished. mismanagement leave the majority impoverished. (COVERING OIL: Edited (COVERING OIL: Edited by Svetlana Tsalik and Anya Schiffrin, Open Society Institute, 2005by Svetlana Tsalik and Anya Schiffrin, Open Society Institute, 2005

according to the second Arab Human Development Report, according to the second Arab Human Development Report, released by the United Nations in 2003, high dependence on oil released by the United Nations in 2003, high dependence on oil in parts of the Middle East has led to “the over concentration of in parts of the Middle East has led to “the over concentration of wealth in a few hands,” and “faltering economic growth,” and wealth in a few hands,” and “faltering economic growth,” and “weakened the demand for knowledge.”“weakened the demand for knowledge.”

Occupation, Colonization, Occupation, Colonization, internal Militarization, war, internal Militarization, war,

genocide..genocide.. Saudi ArabiaSaudi Arabia SomaliaSomalia IraqIraq AfghanistanAfghanistan LibyaLibya IndiaIndia EcuadorEcuador ColombiaColombia MyanmarMyanmar NigeriaNigeria AngolaAngola SudanSudan IndonesiaIndonesia

Global Military expenditure Global Military expenditure goes beyond $1 trillion a yeargoes beyond $1 trillion a year

1 per cent of this could 1 per cent of this could provide safe water for 7 provide safe water for 7

billion people in the earth billion people in the earth (Source: UNDP, 2000)(Source: UNDP, 2000)

Oil-gas-coal corporate bodies Oil-gas-coal corporate bodies are the main patrons of are the main patrons of autocracy and war for autocracy and war for

grabbing resources, therefore grabbing resources, therefore prime beneficiaries. prime beneficiaries.

Examples of Internal Examples of Internal Militarization Militarization

India: almost one third of India is now ruled by military, most India: almost one third of India is now ruled by military, most of these areas are resource rich. of these areas are resource rich.

Nigeria: Shell pays local security forces that commit abuses in Nigeria: Shell pays local security forces that commit abuses in Niger Delta; fails to aggressively step in during the trial and Niger Delta; fails to aggressively step in during the trial and execution of local leaders (1990s)execution of local leaders (1990s)

Nigeria: Chevron recruited and transported Nigerian military Nigeria: Chevron recruited and transported Nigerian military and police who shot at and killed peaceful protesters from and police who shot at and killed peaceful protesters from Chevron helicopters (1998 and 1999). Poet activist was hanged Chevron helicopters (1998 and 1999). Poet activist was hanged for protest.for protest.

Burma: Unocal contracts with Burmese military to provide Burma: Unocal contracts with Burmese military to provide security for Yadana pipeline; villagers are killed, raped, security for Yadana pipeline; villagers are killed, raped, tortured, and forced to work building infrastructure (1994 – tortured, and forced to work building infrastructure (1994 – present)present)

Colombia: Colombian riot police brought in to remove members Colombia: Colombian riot police brought in to remove members of U’wa indigenous people resisting Occidental Petroleum’s oil of U’wa indigenous people resisting Occidental Petroleum’s oil projects (late 1990s). In an unending war against people in the projects (late 1990s). In an unending war against people in the name of anti-drug operation. name of anti-drug operation.

Ecuador: ‘the city of shell’ in Amazon jungle, near Quito, is Ecuador: ‘the city of shell’ in Amazon jungle, near Quito, is protected by military base. protected by military base.

Four types of countriesFour types of countries US, Australia, UK, France, GermanyUS, Australia, UK, France, Germany….command over own ….command over own

resources, also on resources in many other countries of the resources, also on resources in many other countries of the world. Beneficiaries of colonial system, old and new. world. Beneficiaries of colonial system, old and new.

Norway, China, Malaysia, India, Brazil, VietnamNorway, China, Malaysia, India, Brazil, Vietnam: growing : growing economies, good control over own resources, developed economies, good control over own resources, developed national institutions, now expanding overseas. national institutions, now expanding overseas.

Sudan, Nigeria, ColombiaSudan, Nigeria, Colombia….. ….. (resource curse group),(resource curse group), no no command over own resources, domination by IOCs or command over own resources, domination by IOCs or centre countries. centre countries.

Venezuela, Bolivia, EcuadorVenezuela, Bolivia, Ecuador had been in resource curse had been in resource curse group, trying to build new direction by changing policies, group, trying to build new direction by changing policies, revising international contracts, building new institutions revising international contracts, building new institutions (coming out of resource curse group). (coming out of resource curse group).

Where does Bangladesh stand?Where does Bangladesh stand?

What happens in resource What happens in resource curse countries?curse countries?

Continuity from colonial period......Continuity from colonial period...... ““On average, countries which started the period with a high value On average, countries which started the period with a high value

of resource-based exports to GDP tended to experience slower of resource-based exports to GDP tended to experience slower growth during the following twenty years...”growth during the following twenty years...” Jeffrey D. Sachs and Jeffrey D. Sachs and

Andrew M. Warner, Harvard University, 1997.Andrew M. Warner, Harvard University, 1997.

In Saudi Arabia, whose proven crude oil reserves are the greatest In Saudi Arabia, whose proven crude oil reserves are the greatest in the world, per capita income has plunged from $28,600 in 1981 in the world, per capita income has plunged from $28,600 in 1981 to $6,800 in 2001, increased again with high price of oil in 2008. to $6,800 in 2001, increased again with high price of oil in 2008. Autocracy. Highest military contract with the US in 2011. Autocracy. Highest military contract with the US in 2011.

In Nigeria and Venezuela, real per capita income has decreased to In Nigeria and Venezuela, real per capita income has decreased to the levels of the 1960s, while many other countries—Algeria, the levels of the 1960s, while many other countries—Algeria, Angola, Congo, Ecuador, Gabon, Iran, Iraq, Kuwait, Libya, Qatar, Angola, Congo, Ecuador, Gabon, Iran, Iraq, Kuwait, Libya, Qatar, and Trinidad Tobago—are back to the levels of the 1970s and and Trinidad Tobago—are back to the levels of the 1970s and early 1980s.early 1980s.

Resources and crisis: Resources and crisis: NigeriaNigeria

In 2009, Nigeria exported In 2009, Nigeria exported close to 500 Bcf of LNG. close to 500 Bcf of LNG.

Nigeria has vast natural Nigeria has vast natural gas, coal, and renewable gas, coal, and renewable energy resources that energy resources that could be used for power could be used for power generation, generation, industrialization. industrialization. However, the country is However, the country is suffering from huge load suffering from huge load shedding, poverty, shedding, poverty, unemployment and very unemployment and very weak infrastructure. weak infrastructure.

More on NigeriaMore on Nigeria

Nigeria had an estimated 187 Nigeria had an estimated 187 trillion cubic feet (tcf) of proven trillion cubic feet (tcf) of proven natural gas reserves (2010), natural gas reserves (2010), makes Nigeria the ninth largest makes Nigeria the ninth largest natural gas reserve holder in the natural gas reserve holder in the world and the largest in Africa, world and the largest in Africa, also largest oil reserve in the also largest oil reserve in the region.region.

BP Statistical Review of World EnergyBP Statistical Review of World Energy

All the oil revenues -- $350 billion All the oil revenues -- $350 billion in total – did not seem to add to in total – did not seem to add to the standard of living at all. the standard of living at all. Between 1970 and 2000, the Between 1970 and 2000, the poverty rate increased from about poverty rate increased from about one-third of the population to one-third of the population to almost 70 per cent of the almost 70 per cent of the

population.population. ((Covering OilCovering Oil, Ed. by Svetlana Tsalik and Anya , Ed. by Svetlana Tsalik and Anya

Schiffrin, Open Society Institute, NY, 2005Schiffrin, Open Society Institute, NY, 2005

Myanmar, Ecuador and Myanmar, Ecuador and CongoCongo

““An energy rich country, Myanmar is now suffering the worst fuel An energy rich country, Myanmar is now suffering the worst fuel shortage in the region. Its own citizens are starved of electricity, shortage in the region. Its own citizens are starved of electricity, but the regime sells a steady stream of natural gas to but the regime sells a steady stream of natural gas to neighbouring Thailand. Yet this export success has not saved the neighbouring Thailand. Yet this export success has not saved the public finances. Current reserves are estimated at no more than public finances. Current reserves are estimated at no more than US$240 million-enough to cover only the next six weeks of US$240 million-enough to cover only the next six weeks of imports. A shortage of foreign exchange has caused the black-imports. A shortage of foreign exchange has caused the black-market price of gasoline up by 600% in less than a year.”market price of gasoline up by 600% in less than a year.” (The (The Economist, April 4, 2002)Economist, April 4, 2002)

Since 1970, in the period of oil boom, the official poverty level Since 1970, in the period of oil boom, the official poverty level grew from 50 to 70 percent, under or unemployment increased grew from 50 to 70 percent, under or unemployment increased from 15 to 70 percent, and public debt increased from $240 from 15 to 70 percent, and public debt increased from $240 million to $16 billion. Allocation for the poorest segments declined million to $16 billion. Allocation for the poorest segments declined from 20 to 6 percent.from 20 to 6 percent.

(John Perkins: (John Perkins: Confessions of an economic Hitman)Confessions of an economic Hitman)

Seventy five percent of Congolese natural resources are at the Seventy five percent of Congolese natural resources are at the present owned by foreign companies. Congo rates #158 and #142 present owned by foreign companies. Congo rates #158 and #142 in terms of per capita GDP and human development index. in terms of per capita GDP and human development index. (http://www.dominionpaper.ca/articles/119).(http://www.dominionpaper.ca/articles/119).

UNCTAD on FDI in the LDCsUNCTAD on FDI in the LDCs

According to a United Nations report, 66% of foreign According to a United Nations report, 66% of foreign investment in the 1990s went to the developing nations investment in the 1990s went to the developing nations of Africa. It has increased to 87% during 2000-2005. of Africa. It has increased to 87% during 2000-2005. Only Angola, Chad, Equatorial Guinea and Sudan, the Only Angola, Chad, Equatorial Guinea and Sudan, the four oil producing countries, are receiving 56% of four oil producing countries, are receiving 56% of foreign investment. UNCTAD notes, foreign investment foreign investment. UNCTAD notes, foreign investment in these developing countries is generally ‘resource in these developing countries is generally ‘resource seeking’. The type of this investment is such that it has seeking’. The type of this investment is such that it has neither created jobs nor has it encouraged capacity neither created jobs nor has it encouraged capacity building or technical development at the local level. building or technical development at the local level. This sector is like an island where the ones who profit This sector is like an island where the ones who profit at the end of the day are the multinational companies at the end of the day are the multinational companies

(UNCTAD, (UNCTAD, The Least Developed Countries Report, 2006The Least Developed Countries Report, 2006)). .

Joseph Stiglitz on natural Joseph Stiglitz on natural resources in developing resources in developing

economieseconomies ‘‘A country that sells off its natural resources, privatizes its oil A country that sells off its natural resources, privatizes its oil

company, and borrows against future revenues, may experience company, and borrows against future revenues, may experience a consumption binge that raises GDP, but the accounting a consumption binge that raises GDP, but the accounting framework should show that the country has actually become framework should show that the country has actually become poorer.’poorer.’

The IMF should not put undue pressure on countries to privatize The IMF should not put undue pressure on countries to privatize their extractive industries. (In many developing countries, their extractive industries. (In many developing countries, privatization is tantamount to selling the natural resources to privatization is tantamount to selling the natural resources to foreign firms, since there are no domestic firms with the capital foreign firms, since there are no domestic firms with the capital and skills necessary to undertake the task of extraction.)and skills necessary to undertake the task of extraction.)

A country like Bangladesh, with limited reserves of natural gas, A country like Bangladesh, with limited reserves of natural gas,

might want to exercise caution when selling its gas, given that might want to exercise caution when selling its gas, given that there is no other effective way of insuring itself against an there is no other effective way of insuring itself against an increase in the price of energy over the long run.’increase in the price of energy over the long run.’

((Covering OilCovering Oil, Ed. by Svetlana Tsalik and Anya Schiffrin, Open Society Institute, NY, 2005, Ed. by Svetlana Tsalik and Anya Schiffrin, Open Society Institute, NY, 2005

World Bank: neo-liberal reform World Bank: neo-liberal reform a tool for grabbing natural a tool for grabbing natural

resources resources “ “The Bank’s Oil, Gas, and Mining Policy division -The Bank’s Oil, Gas, and Mining Policy division -

through an integrated set of services, loans, technical through an integrated set of services, loans, technical assistance, guarantees and knowledge products- assistance, guarantees and knowledge products- provides advice on legal, fiscal and contractual issues, provides advice on legal, fiscal and contractual issues, regulation, sector regulation, sector restructuring, and privatization. restructuring, and privatization. These efforts help state-enterprises transition to the These efforts help state-enterprises transition to the private sector –reducing the drain on the public private sector –reducing the drain on the public sector, lowering costs of productionsector, lowering costs of production,, and providing a and providing a level playing field that encourages entrepreneurs to level playing field that encourages entrepreneurs to

enter a competitive market.”enter a competitive market.”

(http://web.worldbank.org/WBSITE/EXTERNAL/TOPICS/EXTOGMC/0,,menuPK:463288~contentMDK(http://web.worldbank.org/WBSITE/EXTERNAL/TOPICS/EXTOGMC/0,,menuPK:463288~contentMDK:20219974~pagePK:148956~piPK:216618~theSitePK:336930,00.html):20219974~pagePK:148956~piPK:216618~theSitePK:336930,00.html)

Lessons: Global and local Lessons: Global and local Resource abundance does not automatically ensure Resource abundance does not automatically ensure

sustainable development.sustainable development. For many countries resources become curse. ‘Resource For many countries resources become curse. ‘Resource

curse’ phenomenon is now a real issue.curse’ phenomenon is now a real issue. Militarization, war, and conflicts have been closely linked Militarization, war, and conflicts have been closely linked

with grabbing energy resources. with grabbing energy resources. Corruption, poverty, inequality, repression go together Corruption, poverty, inequality, repression go together

with natural resources for many countries. with natural resources for many countries. Increasing deregulated investment on speculation of oil Increasing deregulated investment on speculation of oil

and mineral resources create artificial crisis and more and mineral resources create artificial crisis and more distorted market. distorted market.

Package programmes in the name of development and Package programmes in the name of development and ‘economic reform’ pushed by World Bank, IMF et al is ‘economic reform’ pushed by World Bank, IMF et al is proved to be disastrous for developing economies, proved to be disastrous for developing economies, created more insecurity and unsustainibility. created more insecurity and unsustainibility.

Bangladesh: A country of Bangladesh: A country of Potential and Poverty Potential and Poverty

Area: 144000 sq kmArea: 144000 sq km Population more than 150 Population more than 150

million, density more than 1300 million, density more than 1300 per sq km.per sq km.

One of the most fertile land, One of the most fertile land, Agriculture is the main Agriculture is the main livelihood. livelihood.

Rich water system and Rich water system and biodiversity: rivers, canals, biodiversity: rivers, canals, ponds and wetlandsponds and wetlands

Industrious and creative work Industrious and creative work force force

Oil gas resources in onshore and Oil gas resources in onshore and offshore, coal in north of the offshore, coal in north of the country. country.

But trapped in a cycle of But trapped in a cycle of poverty and vulnerability.poverty and vulnerability.

Energy and Power: matter of Energy and Power: matter of concernconcern

One of the lowest energy consumption, only higher than Nepal in South Asia. One of the lowest energy consumption, only higher than Nepal in South Asia. Electricity consumption per capita in world 2875, in Bangladesh: 208 kw/h. Electricity consumption per capita in world 2875, in Bangladesh: 208 kw/h. ((World Bank: World Development Indicators, Internet, accessed 6.9.11)World Bank: World Development Indicators, Internet, accessed 6.9.11)

Only 48.5 percent of total population have access to electricity. Only 48.5 percent of total population have access to electricity.

Regular power failure and shortage create huge problems for HH, industry, Regular power failure and shortage create huge problems for HH, industry, agriculture even hospitals. agriculture even hospitals.

Demand side unregulated (while industry, hospital, agriculture suffering from Demand side unregulated (while industry, hospital, agriculture suffering from load shedding, luxurious consumption including AC use experienced highest load shedding, luxurious consumption including AC use experienced highest growth).growth).

Supply side dominated by corporate interest, becoming unstable and costly Supply side dominated by corporate interest, becoming unstable and costly (increasing IOC and IPP share, rental, quick rental..). (increasing IOC and IPP share, rental, quick rental..).

Lack of vision, no comprehensive energy policy. Compartmental initiative.Lack of vision, no comprehensive energy policy. Compartmental initiative.

National capability potential is suffering from hostile policies and National capability potential is suffering from hostile policies and

Power sector: main featuresPower sector: main features

Installed power generation Installed power generation capacity: more than 7000 capacity: more than 7000 MW. Real generation: 5935 MW. Real generation: 5935 MW high on 19.05.13 MW high on 19.05.13 (website)(website)

Government: 60%, Private Government: 60%, Private (including foreign): 40%(including foreign): 40%

Primary fuel to generate Primary fuel to generate electricity (%):electricity (%):

Gas: 77.31, Diesel:10.45, Gas: 77.31, Diesel:10.45, Furnace oil: 5.03, Coal: Furnace oil: 5.03, Coal: 3.76, Water: 3.45. 3.76, Water: 3.45.

(GOB 2011, Bangladesh Arthanoitik Shameekkha)(GOB 2011, Bangladesh Arthanoitik Shameekkha)

0102030405060708090

installedcapacity

net production

gas

furnace oil

coal

water

diesel

Present Reserve and Production Levels Present Reserve and Production Levels of Natural Gasof Natural Gas

The existing natural gas is mainly used in electricity, The existing natural gas is mainly used in electricity, fertilizer, industry, transport and household activity. The fertilizer, industry, transport and household activity. The reserve and production situation of gas up to 2010 are reserve and production situation of gas up to 2010 are

as follows:   as follows:   Total number of gas fields- 23 Total number of gas fields- 23 Number of gas fields which are in production- 17 (number of Number of gas fields which are in production- 17 (number of

wells-79) wells-79) Total reserve of extractable gas (proven and probable)- 20.5 Total reserve of extractable gas (proven and probable)- 20.5

TCF (Trillion Cubic Feet) TCF (Trillion Cubic Feet) Total reserve remaining- 12 TCF (may increase to 20 TCF) Total reserve remaining- 12 TCF (may increase to 20 TCF) Daily gas exploration- about 2000 MMCF (Million Cubic Feet) Daily gas exploration- about 2000 MMCF (Million Cubic Feet) Production by Petrobangla- 960 MMCF Production by Petrobangla- 960 MMCF Production by International Oil Companies- 1004 MMCF Production by International Oil Companies- 1004 MMCF Daily demand of gas-2500+ MMCF Daily demand of gas-2500+ MMCF Daily shortage of gas supply- 500+ MMCF Daily shortage of gas supply- 500+ MMCF (http://www.asiatradehub.com/bangladesh/oil2.asp)(http://www.asiatradehub.com/bangladesh/oil2.asp)

BD entered into ‘resource BD entered into ‘resource curse’ group?curse’ group?

In 1974 Petrobangla was established.In 1974 Petrobangla was established. In 1975 gas fields were bought from Shell.In 1975 gas fields were bought from Shell. In 1982-83 WB came up with ‘development’ In 1982-83 WB came up with ‘development’

scheme to bring IOCs in the sector. Energy scheme to bring IOCs in the sector. Energy sector reform. sector reform.

Since 1993 signing of PSCs began. In 2004 Since 1993 signing of PSCs began. In 2004 coal contract. All secret, not even discussed coal contract. All secret, not even discussed in parliament or parliamentary committees. in parliament or parliamentary committees.

Since 1996 private sector power generation Since 1996 private sector power generation policy. IFIs stopped funding for state power policy. IFIs stopped funding for state power plant, put Bangladesh dependent on IPPs.plant, put Bangladesh dependent on IPPs.

For details see: Anu Muhammad (2008): For details see: Anu Muhammad (2008): Kothai Jachche Bangladesh,Kothai Jachche Bangladesh, Sanghati and Sanghati and Development or Development or Destruction, Essays on Global Hegemony, Corporate Grabbing and Bangladesh, Destruction, Essays on Global Hegemony, Corporate Grabbing and Bangladesh, Sraban Sraban

Bangladesh divided into blocks Bangladesh divided into blocks for PSCs with IOCsfor PSCs with IOCs

Main features of FDI in Energy Main features of FDI in Energy SectorSector

PSCs were signed with IOCs to purchase gas at average PSCs were signed with IOCs to purchase gas at average

250 taka when it could be possible to get it at around 25 250 taka when it could be possible to get it at around 25 taka from national companies.taka from national companies.

PSCs were signed to purchase its own gas by costly PSCs were signed to purchase its own gas by costly foreign currency from the IOCs when it was possible to foreign currency from the IOCs when it was possible to get it by local currency from its own company.get it by local currency from its own company.

Policy was taken to bring IOCs or Foreign national Policy was taken to bring IOCs or Foreign national company to explore gas when BAPEX, the national company to explore gas when BAPEX, the national exploration agency, had the ability to do the same.exploration agency, had the ability to do the same.

Rich blocks in eastern side were awarded for IOCs. Rich blocks in eastern side were awarded for IOCs. Common property has been turned into private property. Common property has been turned into private property.

PSCs during 1990sPSCs during 1990sIn In 1993-94,1993-94, Six PSCs were awarded in the first round Six PSCs were awarded in the first round Cairn Energy-Holland Sea Search (Block 15, Block 16), Cairn Energy-Holland Sea Search (Block 15, Block 16), later later Halliburton/Santos Halliburton/Santos Block 16, Block 16, Shell/CairnShell/Cairn -Block 15 -Block 15 Occidental (Block 12, Block 13 & 14), later Occidental (Block 12, Block 13 & 14), later UNOCAl UNOCAl toto

ChevronChevron Okland-Rexwood (Block 17 & 18), later Okland-Rexwood (Block 17 & 18), later Oakland/TullowOakland/Tullow United Meridian Corporation (Block 22)United Meridian Corporation (Block 22)

In In 1997, 1997, four PSCs were awarded in second licensing four PSCs were awarded in second licensing round round

Shell-Cairn Energy-Bapex (Block 5, Block 10), Shell-Cairn Energy-Bapex (Block 5, Block 10), Tullow-Chevron-Texaco-Bapex (Block 9) Tullow-Chevron-Texaco-Bapex (Block 9) Unocal-Bapex (Block 7), later Unocal-Bapex (Block 7), later ChevronChevron -BAPEX -BAPEX

Result: Development or Result: Development or Burden? Burden?

By leasing out most resource- rich gas blocks to IOCs, By leasing out most resource- rich gas blocks to IOCs, Bangladesh becomes hostage. Bangladesh becomes hostage.

Cost of production of gas and electricity increased by Cost of production of gas and electricity increased by 10 to 30 times. Fiscal deficit increases every year. 10 to 30 times. Fiscal deficit increases every year.

Instead of saving public money, drainage and Instead of saving public money, drainage and corruption increased manifold. corruption increased manifold.

In the last 10 years IOCs received 160 billion taka by In the last 10 years IOCs received 160 billion taka by selling gas to GOB, which could be purchased by 20 selling gas to GOB, which could be purchased by 20 billion taka from national agency in local currency.billion taka from national agency in local currency.

Drainage of foreign currency equivalent to 140 billion Drainage of foreign currency equivalent to 140 billion taka is a direct result of FDI in energy sector only. taka is a direct result of FDI in energy sector only.

National agencies were made marginalised to give National agencies were made marginalised to give space to MNCs or foreign state agency. Erosion of space to MNCs or foreign state agency. Erosion of national capability. national capability.

Number speaks: construction Number speaks: construction of myth to rationalize grabbingof myth to rationalize grabbingTwo arguments behind bringing MNCs in Energy sector: Two arguments behind bringing MNCs in Energy sector:

1. capital scarcity and 2. lack of technical ability. But,1. capital scarcity and 2. lack of technical ability. But,

Every year one at least 500 MW power plant could be built Every year one at least 500 MW power plant could be built by the money spent as subsidy for buying gas from MNCs, by the money spent as subsidy for buying gas from MNCs, about 2.5 billion taka. It is increasing as their share is about 2.5 billion taka. It is increasing as their share is growing. BD spends more money with MNCs, not less. growing. BD spends more money with MNCs, not less.

When Bapex-Petrobangla spends Tk. 1 billion to drill a well, When Bapex-Petrobangla spends Tk. 1 billion to drill a well, MNCs usually do it by costing 6 to 15 times. UNOCAL spent MNCs usually do it by costing 6 to 15 times. UNOCAL spent Tk. 15.31 billion to drill a well. What is wasteful? Tk. 15.31 billion to drill a well. What is wasteful?

MNCs made big blow out, not national agency. Who is more MNCs made big blow out, not national agency. Who is more efficient? efficient?

When MNCs selling gas at $3-$4 per thousand CFT, Bapex When MNCs selling gas at $3-$4 per thousand CFT, Bapex could give it at 10% price. Who is more capable? could give it at 10% price. Who is more capable?

Confession from WB and Confession from WB and ADBADB

““Although the individual companies responsible for Although the individual companies responsible for ADB-financed gas sector projects are profitable, ADB-financed gas sector projects are profitable, Petrobangla is incurring losses due to the increasing Petrobangla is incurring losses due to the increasing share of more expensive gas from IOCs”share of more expensive gas from IOCs” ..

((http://www.adb.org/Documents/Reports/SAPE/BAN/SAP-BAN-2009-36/SAP-BAN-2009-36.pdf))

““Petrobangla buys gas from IOCs at a price linked to Petrobangla buys gas from IOCs at a price linked to the international price of fuel oil. Petrobangla will the international price of fuel oil. Petrobangla will incur increasing deficits, leading to a negative cash incur increasing deficits, leading to a negative cash flow.” flow.”

(World Bank: (World Bank: Foreign Direct Investment in Bangladesh: Issues of long run SustainabilityForeign Direct Investment in Bangladesh: Issues of long run Sustainability, October 1999.) , October 1999.)

and Solutions from WB and and Solutions from WB and ADBADB

Their solutions:Their solutions: To solve the fiscal To solve the fiscal

deficit, deficit, raise gas raise gas priceprice. .

To solve the To solve the pressure on foreign pressure on foreign currency, currency, export export gas.gas.

Peoples suffering and rejection:Peoples suffering and rejection: GOB has been periodically GOB has been periodically

increasing gas price and increasing gas price and price of electricity. Rising price of electricity. Rising cost of production and cost cost of production and cost of living an obvious of living an obvious outcome.outcome.

Independent experts and Independent experts and

people in general opposed people in general opposed export move taken jointly by export move taken jointly by GOB, MNCs, IFIs, embassies.GOB, MNCs, IFIs, embassies.

Otherwise present gas and Otherwise present gas and power crisis could have power crisis could have been doubly worse. been doubly worse.

For detail analysis, Anu Muhammad: For detail analysis, Anu Muhammad: Development or Development or Destruction...., 2007Destruction...., 2007

5 billion US$ due from 5 billion US$ due from US and Canadian US and Canadian

companycompany Bangladesh lost 500 bcf gas for Bangladesh lost 500 bcf gas for

blowout in Magurchhara (1997) blowout in Magurchhara (1997) and Tengratila (2005). This and Tengratila (2005). This amount of gas equals to gas amount of gas equals to gas used for power generation in 20 used for power generation in 20 months for whole Bangladesh. months for whole Bangladesh.

Compensation due from US Compensation due from US company Chevron and Canadian company Chevron and Canadian company NIKO. The price of gas company NIKO. The price of gas lost only is more than 5 billion lost only is more than 5 billion US dollar, which is 7 times of US dollar, which is 7 times of yearly budget allocation for yearly budget allocation for energy sector. Still today energy sector. Still today compensation is unpaid. compensation is unpaid.

WB, ADB or other IFIs used to WB, ADB or other IFIs used to

be very vocal about everything be very vocal about everything but collectively remain silent but collectively remain silent about this compensation issue. about this compensation issue.

““South Asia is emerging as an important region both South Asia is emerging as an important region both economically and politically. President Obama shifted focus from economically and politically. President Obama shifted focus from Iraq to South Asia as soon as he took office in 2008. The strategic Iraq to South Asia as soon as he took office in 2008. The strategic alliances in South Asia–with India, China, Pakistan and the US alliances in South Asia–with India, China, Pakistan and the US being the key players –are largely to secure control of fossil fuels, being the key players –are largely to secure control of fossil fuels, minerals, and other natural resources, and the infrastructure minerals, and other natural resources, and the infrastructure such as oil and gas pipelines and ports to import and export such as oil and gas pipelines and ports to import and export them.” them.” The Militarization of India, http://www.counterpunch.org/2011/05/27/the-militarization-of-india/)The Militarization of India, http://www.counterpunch.org/2011/05/27/the-militarization-of-india/)

Is Bangladesh becoming a Is Bangladesh becoming a victim of new global strategy?victim of new global strategy?

Wikileaks: Who decides on Wikileaks: Who decides on peoples lives and resources? peoples lives and resources?

‘‘US diplomats privately pressurised the Bangladeshi government US diplomats privately pressurised the Bangladeshi government into reinstating a controversial coal mine which had been closed into reinstating a controversial coal mine which had been closed following violent protests’.following violent protests’.

‘‘Later on in the cable, Moriarty privately noted: "Asia Energy, the Later on in the cable, Moriarty privately noted: "Asia Energy, the company behind the Phulbari project, has sixty percent US company behind the Phulbari project, has sixty percent US investment. Asia Energy officials told the Ambassador they were investment. Asia Energy officials told the Ambassador they were cautiously optimistic that the project would win government cautiously optimistic that the project would win government approval in the coming months.”’ approval in the coming months.”’

‘‘Energy Adviser agreed to build support for the project through Energy Adviser agreed to build support for the project through the parliamentary process.’ the parliamentary process.’

http://www.guardian.co.uk/world/2010/dec/21/wikileaks-cables-us-bangladesh-coal-mine

The US ambassador to Bangladesh persuaded the government in The US ambassador to Bangladesh persuaded the government in July last year to award two blocks in the Bay of Bengal to Conoco July last year to award two blocks in the Bay of Bengal to Conoco Phillips and to permit Chevron to set up a compressor in Muchai, Phillips and to permit Chevron to set up a compressor in Muchai, a CNN-IBN report said on Friday quoting US diplomatic cables a CNN-IBN report said on Friday quoting US diplomatic cables leaked by Wikileaks. leaked by Wikileaks.

http://www.bdinn.com/news/conoco-phillips-chevron-contracts-pm%E2%80%99s-adviser-us-envoy-agreed-deals- wikileaks wikileaks//

Oil gas blocks in Bay of Bengal Oil gas blocks in Bay of Bengal leased out on 16.6.11leased out on 16.6.11

Main concern:Main concern: 100 per cent export opportunity 100 per cent export opportunity

for Conoco-Phillips (15.5.1 for Conoco-Phillips (15.5.1 Subject to Articles 15.5.4, Subject to Articles 15.5.4, 15.5.5 and 15.6 15.5.5 and 15.6

Bangladesh share not more than Bangladesh share not more than 20% (20% (15.5.4), but needs to build 15.5.4), but needs to build its own pipeline to bring it its own pipeline to bring it onshore.onshore.

Production limit is relaxed (to Production limit is relaxed (to more than 7.5%)more than 7.5%)

Joint Review committee and Joint Review committee and management committee are management committee are dominated by IOC.dominated by IOC.

Conoco phillips has bad records Conoco phillips has bad records for blowout, compensation for blowout, compensation conditions are not concrete.conditions are not concrete.

Authority over Bay of Bengal is Authority over Bay of Bengal is crucial for bangladesh. That is crucial for bangladesh. That is being threatened. being threatened.

PSC 2012

Amendments to meet MNCs demand (upto May 2013)

• Almost import price• Cost recovery share increased• Third party sales right• No corporate tax

Coal: location, depth and Coal: location, depth and reserve reserve Year of Year of

DiscoveryDiscoveryLocationLocation Depth (meter)Depth (meter) Reserve (million Reserve (million

ton)ton)commentcomment

19621962 Jamalganj, Jamalganj, JoypurhatJoypurhat

640-1158640-1158 10501050 Too deep to be Too deep to be technically technically feasible in the feasible in the foreseeable foreseeable future.future.

19851985 Barapukuria, Barapukuria, DinajpurDinajpur

130-506130-506 390390 Production Production since 2005, since 2005, ownership with ownership with Petrobangla, Petrobangla, Land slide and Land slide and water logging. water logging.

19891989 Khalashpir Khalashpir 257-482257-482 685685 Project is ready Project is ready to be to be implementedimplemented

19891989 Dighipara, Dighipara, DinajpurDinajpur

328-407328-407 500 (yet to be 500 (yet to be confirmed)confirmed)

Petrobangla, Petrobangla, not yet began not yet began any workany work

19971997 Phulbari, Phulbari, DinajpurDinajpur

150-240150-240 572572 Export and Export and open pit mine open pit mine based project based project was rejected by was rejected by the people the people

Phulbari coal projectPhulbari coal project

The Bangladesh Government originally awarded an The Bangladesh Government originally awarded an exploration license to the Australian company BHP Minerals in exploration license to the Australian company BHP Minerals in 1994, which however, decided against developing a coal 1994, which however, decided against developing a coal mining operation in the area. mining operation in the area.

In 1997 Asia Energy was formed and in 1998 BHP transferred In 1997 Asia Energy was formed and in 1998 BHP transferred its licence to this newly formed company, incorporated in its licence to this newly formed company, incorporated in London Stock Exchange Alternative Investment Market, London Stock Exchange Alternative Investment Market, changed its name to Global Coal Management after August changed its name to Global Coal Management after August 2006 killings in Phulbari. 2006 killings in Phulbari.

Its major shareholders have been Polo Resources USA, RAB Its major shareholders have been Polo Resources USA, RAB Capital, UBS, Fidelity Group, Barclays, Credit Suisse, LR Capital, UBS, Fidelity Group, Barclays, Credit Suisse, LR Global, Ospraie Management, Capital Group and Argos Global, Ospraie Management, Capital Group and Argos Greater Europe Fund.Greater Europe Fund.

Project of 30-35 years, for Bangladesh only 6 per cent royalty.Project of 30-35 years, for Bangladesh only 6 per cent royalty. 75-80 per cent of the coal was planned for export through 75-80 per cent of the coal was planned for export through

Sundarban mangrove forest.Sundarban mangrove forest.

Cost for BangladeshCost for Bangladesh 3 crop, highly fertile 3 crop, highly fertile

area, free from flood area, free from flood and natural disasterand natural disaster

•656 sq km area of this region would be affected by open pit mining •Destruction of rivers, canals, water bodies, fish farms, ducks, hens and cattle, thousands of shops, and business and commercial houses.

Why to oppose open pit?Why to oppose open pit?

About 200,000 people from 150 About 200,000 people from 150 villages will have to be evacuated villages will have to be evacuated from only one mine area. from only one mine area.

Dewatering in the mining area will Dewatering in the mining area will not only disturb the major aquifer, it not only disturb the major aquifer, it will also damage the most potential will also damage the most potential and massive aquifer of north-and massive aquifer of north-western Bangladesh, making the western Bangladesh, making the area a desert-like place. area a desert-like place.

Huge area outside the mining area Huge area outside the mining area will be affected through will be affected through groundwater depletion, that groundwater depletion, that currently provides a significant currently provides a significant portion of the country’s food supply. portion of the country’s food supply. Open pit mine Project would Open pit mine Project would therefore have serious impacts for therefore have serious impacts for the food security of the entire the food security of the entire country.country.

After destroying food security and After destroying food security and human security, by exporting coal it human security, by exporting coal it was planning to destroy energy was planning to destroy energy security too. security too.

Peoples Mobilization against Peoples Mobilization against Resource CurseResource Curse

Peoples collective effortsPeoples collective efforts

Resistance against gas export by depriving people and the Resistance against gas export by depriving people and the economy (2002-2004).economy (2002-2004).

Phulbari uprising and national resistance in 2006 regarding Phulbari uprising and national resistance in 2006 regarding phulbari coal project. 3 young men gave their lives to save phulbari coal project. 3 young men gave their lives to save the country from unprecedented disaster the country from unprecedented disaster

Resisted open pit mining and export of coal in Phulbari. Resisted open pit mining and export of coal in Phulbari. Resistance is on (latest long march 24-30 Oct, 2010). Resistance is on (latest long march 24-30 Oct, 2010).

Peoples tribunal against World Bank, IMF and ADB has Peoples tribunal against World Bank, IMF and ADB has identified problems of these ‘friend philosopher guide’ identified problems of these ‘friend philosopher guide’ (2007).(2007).

Protest continuing against gas deal with conoco phillips Protest continuing against gas deal with conoco phillips with export provision since 2008, (including two general with export provision since 2008, (including two general strikes in 2009 and 2011). strikes in 2009 and 2011).

Brought energy and sustainable development in peoples Brought energy and sustainable development in peoples thinking and actions, as well as in political agenda. thinking and actions, as well as in political agenda.

Phulbari Agreement Phulbari Agreement

Phulbari Agreement was Phulbari Agreement was signed between GOB and the signed between GOB and the agitating people (August 30 agitating people (August 30

2006). The main points were:2006). The main points were: 1.1. ‘‘Phulbari coal project will be Phulbari coal project will be

scrapped and Asia energy will scrapped and Asia energy will be ousted from the country.’ be ousted from the country.’

2.2. ‘‘No open pit mining will be No open pit mining will be allowed anywhere in the allowed anywhere in the country’. country’.

3.3. ‘‘Mining method and other Mining method and other steps for coal development steps for coal development and utilization will be taken and utilization will be taken after proper consultation with after proper consultation with the people keeping national the people keeping national interest in tact’. interest in tact’.

Verdicts from Peoples Movements: Verdicts from Peoples Movements: Challenges against Resource CurseChallenges against Resource Curse

People of Bangladesh should have 100 per cent owner of its own resourcesPeople of Bangladesh should have 100 per cent owner of its own resources Neo liberal development paradigm should be replaced by people centred Neo liberal development paradigm should be replaced by people centred

development policydevelopment policy IFIs disastrous policies should be rejected, to made them accoutable, and IFIs disastrous policies should be rejected, to made them accoutable, and

their immunity should be scrappedtheir immunity should be scrapped Food and Energy should be the priority. No destruction of agri land and no Food and Energy should be the priority. No destruction of agri land and no

export of energy. export of energy. No development project that destroys peoples lives, livelihoods and No development project that destroys peoples lives, livelihoods and

environment. environment. Peoples consent and long term sustainability must be part of development Peoples consent and long term sustainability must be part of development

process. process. People will not accept ‘projects of mass destruction’ in the name of People will not accept ‘projects of mass destruction’ in the name of

development or FDI. development or FDI. More efforts should be given to explore huge potential of renewable energy. More efforts should be given to explore huge potential of renewable energy.

Renewable energy: future of Renewable energy: future of human civilizationhuman civilization

Main features:Main features: Supply of solar power and wind for power generation is infinite; Supply of solar power and wind for power generation is infinite;

available all over the year in Bangladesh. available all over the year in Bangladesh. Cost is still comparatively high, research and innovation will soon Cost is still comparatively high, research and innovation will soon

make it cheaper. make it cheaper. Possible to produce in different scales. Possible to produce in different scales. Possible to reach remote places. Possible to reach remote places. Speculation and plunder, war and conflict, crisis and scarcity not Speculation and plunder, war and conflict, crisis and scarcity not

likely from within. likely from within. Part of nature, part of Environment. Part of nature, part of Environment. Nothing to worry about future energy security. Nothing to worry about future energy security.

Yet to be done: Yet to be done: Comprehensive plan to build up own capability to escape unnecessary Comprehensive plan to build up own capability to escape unnecessary

trap by big business and global power. trap by big business and global power.

RecommendationsRecommendations

Proprietorship and authority of the people over natural resources should be Proprietorship and authority of the people over natural resources should be strictly ensured. strictly ensured.

Since it is limited and non-renewable; export of gas, coal and any product there Since it is limited and non-renewable; export of gas, coal and any product there from shall be prohibited by law.from shall be prohibited by law.

Phulbari agreement (prohibit open pit mining and expulsion of Asia Energy or GCM Phulbari agreement (prohibit open pit mining and expulsion of Asia Energy or GCM for its crime and fraudulent activities) should be implemented to earn confidence for its crime and fraudulent activities) should be implemented to earn confidence of the people. of the people.

National coal agency should be established to utilize resources in environment National coal agency should be established to utilize resources in environment friendly way.friendly way.

Maritime boundary and maritime resources should be protected to ensure energy Maritime boundary and maritime resources should be protected to ensure energy and national security. and national security.

Realization of compensation for losses in Magurchara and Tengratila and penalty Realization of compensation for losses in Magurchara and Tengratila and penalty for crimes and irregularities. And to use this money to build energy infrastructure.for crimes and irregularities. And to use this money to build energy infrastructure.

National energy policy with a clear vision to ensure energy security with National energy policy with a clear vision to ensure energy security with sustainable development. sustainable development.

National capacity building, BAPEX, Petrobangla, Geological Survey of Bangladesh National capacity building, BAPEX, Petrobangla, Geological Survey of Bangladesh (GSB) and Bureau of mineral development (BND) shall be adequately developed. (GSB) and Bureau of mineral development (BND) shall be adequately developed. More departments at university level and also research institutes shall be More departments at university level and also research institutes shall be established at national level to develop skilled manpower for mineral resources established at national level to develop skilled manpower for mineral resources development and their best utilization. For this purpose, the services of expatriate development and their best utilization. For this purpose, the services of expatriate Bangladeshi experts and foreign experts, if needed, shall be utilized. Bangladeshi experts and foreign experts, if needed, shall be utilized.

Huge potential of renewable energy should be explored, national capability to be Huge potential of renewable energy should be explored, national capability to be developed. Production of solar panel, wind mill, tools for biogas plant should be developed. Production of solar panel, wind mill, tools for biogas plant should be encouraged through different incentives. encouraged through different incentives.

Immediate steps necessary to ease Immediate steps necessary to ease gas and power crisis. gas and power crisis.

Increase production of gas from rich gas fields like Titas and Hobiganj under national Increase production of gas from rich gas fields like Titas and Hobiganj under national agencies.agencies.

To make 12 gas points, closed for technical reasons, operational. To make 12 gas points, closed for technical reasons, operational. To ask IOCs to explore all blocks under their domain, takeover blocks which they To ask IOCs to explore all blocks under their domain, takeover blocks which they

unable to do and the expired ones.unable to do and the expired ones. Renovate and repair power plants including Barapukuria power plant, transmission Renovate and repair power plants including Barapukuria power plant, transmission

line and gas pipe line.line and gas pipe line.All these steps should cost only 9.5 billion taka but will be able to add about 1400 MW in All these steps should cost only 9.5 billion taka but will be able to add about 1400 MW in

the national grid. the national grid. Development of ‘Sunetra’ gas field with probability of 4.5 TCF should be done by Development of ‘Sunetra’ gas field with probability of 4.5 TCF should be done by

BAPEX, cost: 2.79 billion taka. PSC 2011 process should be stopped. BAPEX, cost: 2.79 billion taka. PSC 2011 process should be stopped.

Moreover, Moreover, Installing small power plants by local entrepreneur should be encouraged. Installing small power plants by local entrepreneur should be encouraged. Local entrepreneur also should be encouraged to produce solar panel and more Local entrepreneur also should be encouraged to produce solar panel and more

battery. battery. Shopping malls and high rise apartment and office buildings should be discouraged. Shopping malls and high rise apartment and office buildings should be discouraged. Hospitals, industry, agriculture should get priority to get electricity over shopping Hospitals, industry, agriculture should get priority to get electricity over shopping

malls and VIP residence, ad bill boards. malls and VIP residence, ad bill boards. Use of AC should be discouraged. (one small AC consume power by which 50 HH can Use of AC should be discouraged. (one small AC consume power by which 50 HH can

get one fan each). get one fan each).

Countries like Bangladesh need to change the Countries like Bangladesh need to change the approaches of Development to challenge ‘Resource approaches of Development to challenge ‘Resource

curse’ model to ensure energy security and sustainable curse’ model to ensure energy security and sustainable development. development.

Energy Energy sovereignty is the sovereignty is the key to energy key to energy security and security and development. development.

Thank youThank you

Photo: Taslima Akhtar