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ConocoPhillips deal

by Tarif Rahman

New Age Bangladesh - July 5 2011

THE lack of debate in the Bangladesh intelligentsia about the recent deal with ConocoPhillips makes a case that we may be becoming a slave of the imperialist donor nations. WikiLeaks documents exposed some of Bangladesh’s clandestine collaboration with these countries, but the recent signing of the production sharing contract, i.e. the official document signed by the Bangladesh government with ConocoPhillips to award the US oil giant with two offshore blocks and the manner in which it was done tend to indicate that the government may be ready to carry out subservient policies in the open without any remorse; it was further evident in the silly way the politicians were defending it.

Criticism was levelled at the recent awarding of two offshore blocks for oil-gas exploration to ConocoPhillips. The critics believe the signing of the contract is tantamount to allowing eighty per cent of the oil-gas resources to be exported out of the country by ConocoPhillips; in other words, Bangladesh would have to buy the resultant oil-gas production back from ConocoPhillips, which is absurd, since the oil-gas already belongs to the state of Bangladesh.

These criticisms were refuted by an anonymous Petrobangla high-up who is also known to be a PSC expert according to a Daily Star report, published on the June 21, titled ‘Govt share up to 80pc: Clarifies Petrobangla to refute critics’ claim: LNG export only if govt, private sector refuse to buy gas’. The anonymous Petrobangla official claims, as quoted in the report, ‘Petrobangla’s share will be a minimum of 55 per cent if ConocoPhillips produces gas of 75 million cubic feet per day (mmcfd), a very small quantity. Its share will go up close to 80 per cent if gas production hits 600 mmcfd (equivalent to more than one fourth of the present gas supply).’

The Petrobangla official also goes on to claim that the deal is no secret and the PSC can be found on the Petrobangla website to see the proportion of shares that each party would receive; the web link to the PSC is also mentioned in the Daily Star report. It must be stated here that the PSC document on the website does not mention ConocoPhillips directly but it uses the word contractor, which, according to the PSC preamble, is referred to the company that signs the deal, which in this case is ConocoPhillips. Anybody who reads the PSC will say with a great deal of seriousness that the claims of the official are highly contradictory. The PSC in Article 15.5.4 clearly states that Bangladesh can only get 20 per cent of the total marketable gas in the first ten years, which is also mentioned in a New Age article on June 12, which in totality contradicts the claim of the Petrobangla official. The only mention of an 80 per cent share is in article 24.1 where it states that Petrobangla can buy up to 80 per cent of ConocoPhillips’ share with a fifteen per cent discount with respect to a negotiated price. The mention of 75mmfcd and 600mmfcd are stated under table 14.6 of the PSC, which has two distinct columns for Petrobangla share (in percentage) and ConocoPhillips’ share. But for those two cases the rows remain empty, since the shared amount for each party is subject to bidding (which also contravenes the claim by the official that all the proportion of shares by each party are laid out). But this table becomes irrelevant in the presence of the Article 15.5.4 mentioned earlier.

To go even further, the PSC in Article 14.6 states that Petrobangla may receive its share of gas in the form of cash if mutually agreed between parties, and considering the level of complicity of present and past governments, selling of even the meagre share that we are supposed get from this deal is not an impossibility. This apprehension is further strengthened as the leaked diplomatic cables revealed how the US ambassador and the energy adviser were colluding to get the deal approved.

The deal itself is a farce, but the intensity of public debate on this issue is limited to certain quarters; the critics that I have mentioned are mostly limited to intellectual groups such as the National Committee to Protect Oil, Gas, Mineral Resources, Power and Ports and a few other concerned citizens. If we were to look at our parliament, it never had a constructive debate and still does not. The politicians in the opposition are too busy fighting and calling strikes about issues that have little to do with the betterment of the general people, which is not strange because they promote the same policies as well and it was not too long ago when they opened coal mines for Asia Energy and consequent strikes led to their temporary closure. Even though most dailies portray that the two parties are fighting each other, in essence, if we were to look at their foreign and economic policies, they are nothing but two sides of the same coin. The lack of inquisitiveness is also illustrated in the Daily Star report that I have mentioned earlier, as the gist of the report suggests that a Petrobangla official clarifies the issue and refutes fears, but the reporter fails to ask where in the document those claimed provisions exist. Universities and research institutes barely made any noise about it which questions the level of intellectualism that is practiced. At the end of the day, looking at all this, we have to ask ourselves whether the institutions, may it be the parliament, the media or the education and research institutions, are actually representing the masses or just a few people. The prime minister goes on to ridicule the activists of the national committee, which seems to expose her intellectual bankruptcy in defending the deal. If the institutions that are supposed to represent the general public fail to do so, then we are promoting injustice and thus are sowing the seeds of a failed state.


Tarif Rahman is a graduate student at Brandeis University, Massachusetts, USA.