Russia strengthening energy ties to Bangladesh

(New Eastern Outlook) – As it is well known, the economy of the People’s Republic of Bangladesh (PRB) is one of the least developed, but one of the fastest growing economies of Asia demonstrating steady growth in the last few years. Today many countries seek to cooperate with PBR, in the hope of making profitable investments, gaining access to its growing markets and cheap labor. Among them are India, China, South Korea, Japan, the United Kingdom, USA and other states.

Russia has achieved significant success in the development of relations with Bangladesh concluding a partnership with this country in a strategically important area such as energy. The Russian Federation plays an important role in the oil and gas industry of PRB and is a key figure in its atomic project.

Fuel shortage is a major problem for Bangladesh. There is a significant reserve of oil, coal and natural gas in its territory, that country pins great expectation economic development with. However, since the early 2000’s, the exploration and development of new deposits in the PBR were not conducted.

In 2010, the Bangladesh Government turned towards Russia for assistance in such matters as exploration of new hydrocarbon deposits, their development and establishment of a unified gas supply system in its territory. Later, negotiations started between the leadership of Bangladesh and Russian state oil and the gas corporation “Gazprom”. Soon Gazprom signed a memorandum of mutual understanding with Bangladesh Minerals, Oil and Gas Corporation “Petrobangla”.

Gazprom International (GI), a company affiliate of Gazprom specializing on search and production of hydrocarbons outside of the Russian Federation, was entrusted to work with the Bangladeshi partners. In 2011, the GI proposed the leadership of the PRB its program for the development of Bangladeshi deposits and establishment of a single Bangladeshi gas supply system (a similar Russian system was taken as a model).

In 2012, GI signed a number of contracts with ВАРЕХ, BGFCL and SGFL – the subsidiaries of Petrobangla, in accordance with which the Russian company began to drill and equip ten wells with a depth of 3-4 km at the gas fields of PRB. The work began in the spring of 2013 and by November 2014, all ten wells were put on regular operational mode. The results were very satisfying to the Bangladeshi side that it readily continued to develop its cooperation with the Russian company.

In the autumn of 2015, GI signed new agreements with the same Bangladeshi companies to drill five wells more. The work was completed before the deadline at the end of 2016.

In March 2017, GI and ВАРЕХ agreed to build two more wells on the island of Bhola in the southern part of Bangladesh.

In December 2017, GI started drilling “North Bhola-1” well. Its depth is to be 3.55 Km. The area where the drilling is conducted has high terrastatic pressure, which require the use of advanced technologies that Russian drillers possess. This fact once again confirms the rightness of the decision of the Bangladeshi leadership to cooperate with Russia.

In 2017, the average level of natural gas production in Bangladesh was about 70 million cubic meters per day and the annual production amounted to about 27 billion cubic meters. It is reported that about 10% of this volume is produced in wells built by GI. It is still not sufficient to completely cover the country’s needs of natural gas (which is about 30 billion cubic meters per year). But, provided that the current pace of the construction of wells is maintained, the required volume of production can be achieved and exceeded in the coming years.

Currently, the PRB leadership is considering a new five-year programme of development of its gas fields. If it is approved, GI may obtain an order to drill about 100 more wells. Moreover, the possibility of creating a joint venture of GI and BAPEX is being discussed for implementation of joint projects in the oil and gas sector. In addition, the Russian side expressed its intention to undertake training of qualified personnel for the Bangladeshi hydrocarbon industry, both on the basis of Russian universities and in Bangladesh, where a specialized training centre is planned to be created with the support of Russian specialists.

Another important point of contact between Russia and Bangladesh is – Atomic energy. In 2011, the countries signed an Agreement on the construction of first Bangladeshi APP “Rooppur”. The work was entrusted to “AtomStroiExport”- a company within the Russian State Atomic Corporation “RosAtom” established for working abroad. In 2015, the head of “RosAtom” Sergey Kirienko arrived in Bangladesh. At that time, the main contract was signed and it became known that the cost of the project would exceed $12 billion dollars. The majority of the required amount was provided by Russia giving Bangladesh a loan of $11.38 billion dollars in 2016.

It is important to noted that the 2011 agreement was signed after the catastrophe at the Japanese nuclear power plant Fukushima-1″ which occurred in March 2011, after which many countries froze their nuclear projects or rejected them altogether. A significant role in the selection of PRB in favour of cooperation with the Russian Federation played its Enhanced Safety Standards, which are adhered to by Russian nuclear scientists and a special protection system they equip their WWER model reactors with. It is believed that nuclear power plants built by Russian technologies are able to withstand severe strokes. This is particularly important for Bangladesh, which is located in a hazardous area, periodically experiencing powerful hurricanes and floods.

Thus, one may conclude that cooperation with Russia plays an important role in the development of the Bangladeshi energy sector. This makes Russia one of the key partners of PBR and contributes to the development of relations between the two countries in all fields. Mutual Russian-Bangladeshi trade turnover increased almost twice during the period of 2012-2016, surpassing $1.4 billion dollars in 2016. Cooperation in military-technical sphere is developing, which together with nuclear cooperation testifies to a special trust between the two states. Given Bangladesh’s special relation with India and the China’s growing interest in it, a presumption can be made that cooperation with Bangladesh can strengthen the Russian positions in the Asia and Pacific region.