Bangladesh’s government signed a deal with ConocoPhillips last year to explore possibilities for deep-sea drilling in the Bay of Bengal. There are some 7.3 trillion cubic feet of known gas reserves in the Bay. The deal will last nine years and will involve some production sharing with PetraBangla, the nationalized petroleum processing corporation.
Bangladesh is projected to run out of its current natural gas reserves in less than 4 years, and so it is anxious to try and find new energy sources domestically. Depending on international petroleum markets leaves the nation vulnerable.
There are a number of problems with this deal (not the least of which is the treacherous game that is played with the ecosystem every time energy corporations go hunting for profits in ever deeper waters).
The Bay of Bengal is disputed territory and Burma, India, and Bangladesh all have made competing claims about territorial boundaries. Because all three countries are oil-dependent and energy-poor, the discovery of series petroleum reserves in the Bay of Bengal will only intensify competition between the three nations. The Burmese military junta, for instance, sent warships into the Bay as a warning to Bangladesh not to go hunting for oil.
At the same time, ConocoPhillips is undergoing a major restructuring of its operations to restore profitability and investor confidence. They’re already planning on selling some $17 billion in assets and need new finds in order to prove their long-term profitability. The Bangladesh deal comes at a crucial time for them; it’s hard to imagine that ConocoPhillips won’t take advantage of Bangladesh’s relatively lax environmental restrictions in the pursuit of “exploration success.”
A citizen’s network called the Committee to Protect Oil-Gas and Mineral Resources, with allies drawn from leftist parties, workers, environmentalists and professionals staged a demonstration and clashed with riot police on Tuesday protesting that the contract would hamper national interests.
Prof Anu Mohammad, leader of the citizen’s network argue that the deal with Texas based corporation would lose ownership of the blocks once the contract was signed, which is nearly 150 miles away from the coast. It which would be suicidal for the nation, observed the economic professor of a state university.
ConocoPhillips would get to keep 80 percent of the profits, while Bangladesh would get 20%. There are a number of other clauses that make this a sweetheart deal for ConocoPhillips.
But there are other reasons to be worried. Deals struck with other Canadian (Niko Resources) and American companies in Magurchara and Tengratila in the 1990s resulted in unsafe processing facilities and massive explosions in 2003 and 2005. ConocoPhillips itself has a record of major accidents, too, in 2004, 2006, and 2008.
Some of the details of the current deal were uncovered through WikiLeaks:
The controversy further deepened after whistleblower site Wikileaks revealed that U.S. Ambassador John F. Moriarty in 2010 pressured the Bangladesh prime minister’s energy advisor to award the contracts to Conoco Phillips, Halliburton and another American company.
Over the weekend there was a student demonstration at Dhaka University. On Tuesday, they organized a protest in Dhaka and 6-hour strike that was joined by some 600 students, activists, and union members. More than a hundred protesters were arrested including several left-wing bloggers (all appear to have been released). There is a call for a black flag march this Thursday if the deal moves forward.