Bangladesh Petroleum Exploration Company (Bapex) Tuesday during a presentation before the chief adviser sought a gas sale tariff of Tk 25 per thousand cubic metre of gas for the next two years instead of a measly Tk 7 to help the company achieve break even.

The 90-minute presentation focussed on Bapex's financial problems and how Bapex could become a self-reliant exploration and production company through immediate and mid-term support from the government.

Sources said following the presentation, Chief Adviser Fakhruddin Ahmed asked the finance and energy secretaries to jointly identify what kind of support could be given to Bapex in the next fiscal year. Special assistant to the chief adviser on energy and the secretaries for energy and finance were present at the presentation.

Since its inception in 1989, Bapex was hardly given any project to help it grow. Due to sparse and irregular approval of exploration and development projects, Bapex only has a couple of gas producing wells which supply only 31 million cubic feet of gas a day.

At different times, different governments had made big promises about investing in Bapex but in reality, none of those investments were made. Approved projects were never given funds on time due to lack of political commitment in the matter.

"In reality many policymakers do not understand that domestic gas production is keeping the economy alive. For instance, last year's total gas production was equivalent to 14 million tonnes of oil. In today's oil price of over 100 dollars per tonne, this gas saved the country oil import of about a stunning 10 billion US dollars," said a Petrobangla source.

Bapex had unfairly been labelled as a government burden since the government spends around Tk 30 crore for its overhead and administration purpose annually. But in reality, Bapex's problem originates from its unrealistic low gas sales revenue of Tk 7 per thousand cubic metre of gas whereas the international oil companies get close to three dollars (around Tk 200) per thousand cubic feet of gas. The government's bulk sale price of gas is Tk 92 per thousand cubic feet.

During Tuesday's presentation, Bapex Managing Director Muhammad Imaduddin raised the issue of the gas tariff, saying that to make the company achieve break even, Bapex's gas sale tariff should be raised to Tk 25 per thousand cubic feet of gas for the next two years, and then raised to Tk 50. Presently Bapex's gas production cost is between Tk 25 and Tk 50 per thousand cubic feet.

"If gas price is rationalised and interim support for exploration and development is given, Bapex will no longer require the government's financing for its overhead expenditure from 2011. By 2014-15, Bapex will not even need any government support for any of its activities," said a top Bapex source.

Currently, the government takes 55 percent of the gas sales revenue as tax, VAT and other charges. To support Bapex, the government may lower this total charge to 50 percent.

"Since whatever you invest in Bapex have solid returns. The government has nothing to lose," the source said.

Bapex also presented its plans to explore various hydrocarbon zones and undertake other works. These will require Tk 3,200 crore as investment in the next seven years. The schemes are: work over of Fenchuganj Well-3 and drilling a new well, procuring one work-over rig, undertake appraisal well drilling in Srikail hydrocarbon structure, development drilling on Saldanadi Gas Field, Begumganj Gas Field Development Project, drilling four exploratory wells in Block-8 and Block-11, Shailokupa Exploratory Well Drilling Project, Jaldi Exploratory Well Drilling Project and Sitakunda Exploratory Well Drilling Project.

"Since the chief adviser as well as the other policymakers of the government are keen on revitalising Bapex, we are expecting that the government would approve a package of projects along with confirmed funding so that Bapex does not have to repeatedly ask for project funding," quipped an official.

The Bapex board yesterday held a follow-up meeting, and decided to ask Petrobangla to keep track of the outcomes of the meeting with the chief adviser.