Feasibility study on Ashuganj NGL Fractionation Plant

NEDO-IC—00ER37

0

Feasibility Study on Ashuganj NGL Fractionation Plant

March, 2001

020005045-8

New Energy and Industrial Technologies DeveIopment Organization (NED0)

trusted to Japan Oil Engineering Co., Ltd.


Entrusted to Japan Oil Engineering Company Limited

March, 2001

Study Purpose:

The COPS to the UNFCCC was held in Kyoto in December 1997, resulting in the

adoption of the Kyoto Protocol. The Kyoto Protocol sets GHGs reduction targets of

each developed countries intended to ensure the reduction of GHGs from developed countries at least by 5% from 1990 levels by the period from 2008 to 2012. Japan

committed to the world a 6% reduction in the Protocol.This investigation implements the feasibility study on Ashuganj NGL Fractionation Plant Project which installed the Fractionation Plant for Petrobangla and it’s

subsidiary company in Bangladesh to extract LPG for the public welfare, Motor Spirit and High Speed Diesel from NGL, and its’ implementation is expected to be

authorized as the CDM program in future.

Foreword

This report presents the results of the feasibility study on Ashuganj NGL plant,

which is entrusted to Japan Oil Engineering Company Limited by the New

Energy and Industrial Technologies Development Organization (NEDO) as the

body incharge in the implementation of “the Basic Survey Project for Joint

Implementation, etc” in 2000.

The third Session of the Conference of the Parties (COPS) to the United Nations

Framework Convention on Climate Change (UNFCCC) was held in Kyoto in

December 1997, resulting in the adoption of the Kyoto Protocol.

The Kyoto Protocol sets Greenhouse Gases (GHGs) reduction targets of each

developed countries. All of these targets are intended to ensure the reduction of

GHGs from developed countries at least by 5% of the 1990 levels through the

period from 2008 to 2012. Japan committed to the world a 6% reduction in the

Protocol.

Also, in the Kyoto Protocol, several international mechanisms was introduced in

order to achieve the target smoothly including sharing of the reduction of GHGs,

such as Joint Implementation (JI) between developed countries; and the Clean

Development Mechanism (CDM) whereby developed and developing countries

jointly reduce emissions.

Moreover, the COP6 was held on November 2000 at Hague, Netherlands for the

preparation of agreement of the details of Kyoto Protocol in order to achieve a

prompt conclusion and publishing of the Kyoto Protocol. However the mutual

consensus for the details of the Protocol was not finalized due to the many

differences of opinion among the countries, such as the measures of absorption

capabilities of forest, limitation of adoption and respect of Kyoto Mechanism,

which were related to each other and the ideal method of supporting the

developing countries. And therefore the discussion in COP6 would be carried over

till around May - June 2001.

This Feasibility Study, is intended to promote the project for the reduction of

GHGs by the introduction and utilization of advanced technology of saving-energy

and alternative petroleum energy together with the contribution of continuous

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economic development in the partner country. The Study was executed as a

worthful project under CDM project in the Basic Investigation Program of Joint

Implementation in 2000 by the Japanese cooperative organization who intends to

promote the implementation of project.

This report is made as the result of Feasibility Study on the Ashuganj NGL

Fractionation Plant, which produce LPG, Motor Spirits and High Speed Diesel from

Natural Gas Liquid (NGL) that the NGL is not utilized properly in Bangladesh, and

the plant will be constructed at Ashuganj where is considered the most convenient

location for both producer of NGL and consumer.

Japan Oil Engineering Company Limited having been entrusted by NEDO

prepared this report along with a strong commitment to promote the

implementation of Ashuganj NGL Fractionation Plant project with the

cooperation of counterpart in Bangladesh, to contribute to the social economic

development of Bangladesh as well as the restriction of deforesting and advanced

utilization of energy through the implementation of project.

Finally, we would like to sincerely express our deep gratitude to Messrs. Ministry

of Energy and Mineral Resources, Petrobangla, and other concerned parties and

organizations, who corporated with us in the data collection and providing

valuable advices necessary for carrying out this feasibility study.

March 2001

Hiroshi Takada, Project Manager Japan Oil Engineering Company Limited

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List of Study Members

Name

Hiroshi Takada

Shigenari Okubo

Makoto Fuyumuro

Shinichi Nakamura

Toyoichi Takeda

Noboru Kubota

Takao Morita

Ryoji Ikuta

Atsuko Kinoshita

Role and Major Works

Study Team Leader, Overall General and Project

Coordination

Project Planning, Technical General

Project Planning, Facility Design



Project Planning, Facility Design, and Effects of

Project


Project


Project

Clean Development Mechanism

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ABBREVIATIONS, UNIT and HEAT VALUE CONVERSION

ABBREVIATIONS

A-B Ashuganj - Bakhrabad (Pipeline)

ADB Asian Development Bank

ADP Annual Development Program

A U Activities Implemented Jointly

ALGAS Asian Least-cost Greenhouse Gas Abatement Strategy

ASTM American Society for Testing and Materials

BAPEX Bangladesh Petroleum Exploration & Production Company Ltd.

B-B Ashuganj -Elenga (Pipeline)

BCIC Bangladesh Chemical Industries Corp.

BEPZA Bangladesh Export Processing Zone Authority

BFA Bakhrabad Franchise Area

BGFCL Bangladesh Gas Fields Company Limited

BGSL Bakhrabad Gas Systems Limited

BOD Biochemical Oxygen Demand

BPC Bangladesh Petroleum Corp.

BPDB Bangladesh Power Development Board

BPI Bangladesh Petroleum Institute

CER Certified Emission Reductions

CDM Clean Development Mechanism

CGS City Gate Station

CNG Compressed Natural Gas

CO Carbon Monoxide

CO2 Carbon Di-oxide

DME Di methyl Ether

DOE Department of Environment

DRS District Regulating Station

ECNEC Executive Committee for National Economic Council

EMRD Energy & Mineral Resources Division

EPC Engineering, Procurement and Construction

ERD Economic Relation Division

ERL Eastern Refinery Limited

FS Feasibility Study

FY Fiscal Year

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FYP Five-Year Plan

GDP Gross Domestic Product

GHGs Greenhouse Gases

GIDP Gas Infrastructure Development Project

GNP Gross National Product

GOB Government of Bangladesh

GSA Gas Sales Agreements

GTA Gas Transportation Agreements

GTCL Gas Transmission Company Limited

GTP Gas Transmission Pipeline

H2O Water

HSD High Speed Diesel Oil

ICB International Competitive Bidding

ICS Intermediate Compressing Station

IOC International Oil Company

IPCC Intergovernmental Panel on Climate Change

IPP Independent Power Producer

JBIG Japan Bank for International Cooperation

JFA Jalalabad Franchise Area

JGTDSL Jalalabad Gas Transmission & Distribution Systems Limited

JI Joint Implementation

JICA Japan International Cooperation Agency

JOCL Jamuna Oil Co., Ltd.

KAFCO Kamaphuli Fertilizer Co., Ltd.

LNG Liquefied Natural Gas

LPG Liquefied Petroleum Gas

LPGAS LP-Gas Limited

MOEF Ministry of Environment & Forest

MOEMR Ministry of Energy & Mineral Resources

MOF Ministry of Finance

MPL Meghna Petroleum Ltd.

MS Motor Sprits

NEDO New Energy and Industrial Technology Development Organization

NEP National Energy Policy

NFPA National Fire Protection Association

NGL Natural Gas Liquid

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NGO Non-Governmental Organization

NHs Ammonia

NOx Nitrogen Oxides

N-S North-South (Kailastila-Ashuganj) Pipeline

ODA Official Development Assistance

O&M Operation and Maintenance

POP Project Concept Paper

PETROBANGLA

Bangladesh Oil, Gas & Mineral Corp.

POOL Padma Oil Co., Ltd.

PP Project Proforma

PSC Production Sharing Contract

R-A Rashidpur - Ashuganj

RPGCL Rupantarita Prakritik Gas Co., Ltd

RTU Remote Terminal Unit

SCADA Supervisory Control and Data Acquisition

SGFL Sylhet Gas Fields Limited

SOx Sulfur Oxides

SPEC Special Projects Evaluation Committee

TBS Town Bordering Station

TFA Titas Franchise Area

TGTDCL Titas Gas Transmission & Distribution Company Limited

UNFAO United Nations Food and Agriculture Organization

UNFCCC

United Nations Framework Convention on Climate Change

UNOCAL

Unocal Bangladesh, Ltd.

UNIT and CONVERSION

1 atmosphere

1 barrel (bbl)

1 British thermal unit (Btu)

1 British thermal unit (Btu)

1 cubic foot (CF)

1 metric ton (mt) of oil,

1 million standard cubic feet per

14.7 psia

0.159 cubic meter (m3)

0.252 kilocalories (kcal)

1.055 kilo Jouls (kJ)

0.0283 cubic meter (m3)

7.4 bbl (0.85 specific gravity)

day (MMSCFD)

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1kg

1 km

26,800 normal cubic meter per day (Nm3)

2.2 pounds (lb)

0.621 miles

1 inch 0.0254 m

1 pound per square inch (psi) 0.06895 bar

1 ton (t) 1,000 kg

BCF billion cubic feet

BPD barrel per day

BSCF biUion standard cubic feet (109ft3)

Btu/CF British thermal unit per cubic feet

Crore 107 (Bangladesh terminology)

cst centistokes

G giga (109)

GPM gallon per minute

GW gigawatt

GWh gigawatt hour

HHV High Heating Value (or Gross Heating Value)

k kilo (103)

km2 square kilometer

kN kilo Newton

KTA kilo ton per annum

kWh kilowatt-hour

Lakh 105 (Bangladesh terminology)

LHV Low Heating Value (or Net Heating Value)

M mega (106)

MCM million cubic meter

MM$ million US Dollars

MMSCF million standard cubic feet

MM SCFD million standard cubic feet per day

Mtpy metric tons per year

MW megawatt (1,000 kilowatts)

Nm3 normal cubic meter (Gas volume at O'C and 1 atom)

PJ peta joule (1015 joule)

SCF standard cubic feet (Gas volume at 60 °F and 1

atom)

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SCM standard cubic meter

Taka (Tk) Bangladesh Money Unit

TCF trillion (1,000 billion) cubic feet

TJ tera joule (1012 joule)

TPA ton per annum

TPD ton per day

TSCF trillion standard cubic feet (1012SCF)

HEAT VALUE CONVERSION

1 toe (ton of oil equivalent) = IX1010 calories

= 41.86 TJ

DEFINITIONS

NGL The term “NGL” means a liquid hydrocarbon which is produced

from a gas/condensate reservoir and recovered in a gas

processing plant, and consists of all hydrocarbons heavier than

C3 + .

Condensate The term “Condensate” means a liquid hydrocarbon which is

produced from a gas/condensate reservoir and recovered in a gas

processing plant, and consists of all hydrocarbons heavier than

Cs + .

Condensate

LIST OF TABLES, FIGURES and PHOTOS

No. TITLE Page No.TABLES1.1.1.1 The List of Bangladesh Government Administrative

Offices1-10

1.1.1.2 Principal Economical Indexes of Bangladesh 1-131.1.1.3 Investment from Japan to Bangladesh 1-151.1.1.4 Bangladesh Principal Social Index (1) 1-161.1.1.5 Bangladesh Principal Social Index (2) 1-161.1.1.6 Bangladesh Principal Social Index (3) 1-171.1.1.7 Sector Provided in the National Environmental Policy 1-181.1.1.8 National Environment Management Action Plan: Energy

Sector1-19

1.1.1.9 Classification of Project based on Site and Environmental Impact

1-23

1.1.1.10 National Environment Management Action Plan:Climate Change and Sea Level Rise

1-25

1.1.1.11 Energy Balance in Bangladesh (1990) 1-261.1.1.12 Supply of Biomass Fuels in Bangladesh (1981) 1-271.1.1.13 Greenhouse Gases Inventory (1990) 1-29/301.1.1.14 Policy Option Relating to ALGAS Project 1-381.1.1.15 Greenhouse Gases Reduction Project in Bangladesh 1-39/40/411.1.1.16 Contents of Environment and Safety Management

System1-43

1.1.2.1 Natural Gas Fields in Bangladesh 1-481.1.2.2 Transition of Natural Gas Consumption in Bangladesh by

Sectors1-53

1.1.2.3 Maximum Power Generation and Total Possible Outputs In Bangladesh

1-54

1.1.2.4 Trend of Natural Gas Supply and Demand 1-541.1.2.5 Pipelines under Construction and Planning 1-551.3.2.1 General Home Natural Gas Consumption Charge 1-632.1.1.1 Existing Facilities 2-32.1.1.2 Soil Data at Plant Site 2-62.1.1.3 Allowable Bearing Capacity 2-72.1.1.4 Monthly Highest and Lowest Temperature 2-82.1.1.5 Monthly Relative Humidity 2-82.1.1.6 Monthly Precipitation 2-92.1.1.7 Large Scale Earthquake in Bangladesh 2-102.1.1.8 Outline of Petrobangla 2-13

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No. TITLE Page No.2.1.1.9 Present Situation of PSC 2-152.1.1.10 Outline of RPGCL 2-172.2.1.1 Expectation Degree of Japan Investment Projects by

Petrobangla2-22

2.2.2.1 Production Status of Production Wells in Kailastila 2-322.2.2.2 Production Status of Production Wells in Beanibazar 2-352.2.2.3 Production Status of Production Wells in Jalalabad 2-372.2.2.4 Estimated Production Rate of Natural Gas and NGL in

Each Gas Field2-37

2.2.3.1 Construction Records of RPGCL 2-402.2.3.2 Procurement Records of RPGCL 2-412.2.4.1 Composition of Received NGL 2-482.2.4.2 NGL Receiving Condition 2-482.2.4.3 NGL Supply Rate of Gas Field 2-482.2.4.4 Specification for LPG 2-492.2.4.5 Specification for MS 2-502.2.4.G Specification for HSD 2-502.2.4.7 Electric Power Distribution Voltage 2-512.2.4.8 Fuel Gas Supply Condition 2-512.2.49 Supply Condition of Instrumentation Air 2-512.2.4.10 Supply Condition of Plant Air 2-522.2.4.11 Supply Condition of Cooling Water 2-522.2.4.12 Supply Condition of Fire Fighting Water 2-522.2.4.13 Effluent Standard ( Oil Refinery) 2-532.2.4.14 Production Rate of LPG, MS and HSD 2-542.2.4.15 Estimated Cost for Plant Construction 2-672.2.4.16 Estimated Cost for Turbo Expander Plant 2-672.2.5.1 Work Allocation Plan 2-712.2.6.1 NGL Supply Amount in Initial Plant Operation 2-732.2.7.1 Project Execution Stage and its Period 2-772.3.1.1 Breakdown of Total Investment Cost 2-802.3.1.2 General Terms and Conditions of Buyer’s Credit by JBIG 2-803.1.3.1 Effect on Alternative Energy 3-43.1.3.2 Cumulative Effect of Alternative Energy 3-53.2.3.1 Reduction of GHGs Emission

(Heating Value Conversion Case)3-8

3.2.3.2 Reduction of GHGs Emission(Stove Energy Efficiency Considered Case)

3-9

3.2.3.3 Cumulative Effects of GHGs Emission Reduction 3-10

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No. TITLE Page No.4.1.1.1 The Plant Cost 4-44.1.1.2 Other Costs before operation 4-44.1.1.3 Personnel Expenditures during the Construction Period 4-54.1.1.4 Office Materials and Vehicles Cost 4-64.1.1.5 Breakdown of the Total Investment Cost 4-74.1.2.1 Breakdown of Material 4-84.1.2.2 Price table pf LPG, MS and HSD

(Ex-Chittagong Refinery basis)4-10

4.1.2.3 Personnel Expenditure during operation period 4-104.1.3.1 Sales Sheet 4-12/134.1.3.2 Cost Accounting Sheet 4-14/154.1.3.3 Cashflow Sheet 4-16/174.1.3.4 Profitability Statement 4-18/194.1.3.5 Sensitivity analysis for the Plant cost 4-204.1.3.6 Sensitivity analysis for the raw materials costs (NGL and

Fuel Gas)4-21

4.1.3.7 Sensitivity analysis for Products prices (LPG, MS and HSD)

4-21

4.1.3.8 Sensitivity analysis for Interest rate 4-224.1.3.9 Sensitivity analysis for 0 & M cost 4-225.1.1.1 Potential Production of Petroleum Products 5-46.2.1.1 The price composition of LPG (12.5kg) 6-56.2.1.2 The price composition of kerosene 6-9

FIGURESl.l.l.l GNP per Person of Bangladesh and Neighboring

Countries1-11

1.1.1.2 Composition of Total Approved Amount of Yen Credit to Bangladesh according to Section

1-13

1.1.1.3 Projection Greenhouse Gases Emissions 1-311.1.1.4 Projection of Greenhouse Gases Emissions in Energy

Sector1-31

1.1.1.5 Land Use (1994-95) 1-331.1.1.6 Forest Distribution Map 1-341.1.2.1 Map of Main Pipeline and Oil and Gas Fields 1-491.1.2.2 Bangladesh Acreage Map 1997 1-501.1.2.3 Structure of Hydrocarbon Reservoir 1-511.1.2.4 Number of Regional LPG Traders in Bangladesh 1-561.1.2.5 LPG Distribution Terminals (Depots) in Bangladesh 1-57

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No. TITLE Page No.1.1.2.6 Transition of Amount of Regional LPG Sales in

Bangladesh1-58

2.1.1.1 Location Map of Plant Site 2-52.1.1.2 Organization of Petrobangla and Related Company 2-142.2.3.1 Project Execution Organization Chart (Construction

Period)2-44

2.2.4.1 Plant Operation Organization 2-692.2.7.1 Project Schedule 2-782.3.1.1. Finance Scheme by Buyer’s Credit (Example) 2-814.1.3.1 Sensitivity Analysis for ROI (Before Tax) 4-234.1.3.2 Sensitivity Analysis for ROE (Before Tax) 4-234.1.3.3 Sensitivity Analysis for ROI (After Tax) 4-244.1.3.4 Sensitivity Analysis for ROE (After Tax) 4-246.2.1.1 LPG Distribution Terminals (Depots) in Bangladesh 6-6

PHOTOSl.l.l.l View of Assam Height from Vicinity of Sylhet 1-51.1.1.2 View of Sunderbans from Mongla Port 1-51.1.3.1 Dung Dried on Roadside 1-321.1.3.2 Firewood Cooking Stove of Street Stall 1-322.1.1.1 Plant Construction Site, View Point from the West 2-42.1.1.2 Plant Construction Site, View Point from the Southeast 2-42.2.2.1 Existing Condensate Lorry Loading Station in Kailastila 2-292.2.2.2 Silica-gel Dehydrator (Kailastila-I) 2-2922.2.3 LPG Plant (Kailastila-I) 2-292.2.2.4 Distant View of Kailastila-II Turbo Expander Plant 2-312.2.2.5 Turbo Expander Plant (Kailastila-II) 2-312.2.2.6 Silica-gel Dehydrator (Beanibazar) 2-332.2.2.7 Gas Processing Facility (Jalalabad - UNOCAL) 2-352.2.2.8 Tie-in Point at Ashuganj Metering Station (The nearest

pipe)2-39

2.2.2.9 Condensate Loading Facilities to Transportation Barges 2-39

DRAWINGSNGL-001 Existing NGL Production Scheme 2-25/26PFD-001 Process Flow Diagram 2-55/56GEN-001 General Plot Plan 2-63/64GEN-002 Equipment Arrangement Process Plant Area 2-65/66

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TABLE of CONTENTS

EXECUTIVE SUMMARY

MAIN REPORT

Chapter 1 Project Background............................................................................. 1-1

1.1 Information on Bangladesh............................................................ 1-3

1.1.1 Political, Economy and Social Status......................................... 1-3

(1) Geography ......................................................................... 1-3

(2) Political Status ................................................................. 1-5

(3) Economical Status ............................................................ 1-11

(4) Social Status ..................................................................... 1-15

(5) Environmental Policy and Legislation........................... 1-17

1.1.2 Energy Strategy........................................................................... 1-44

(1) Energy Policy..................................................................... 1-44

(2) Energy Resources............................................................. 1-45

(3) Energy Supply and Demand............................................ 1-52

(4) LPG Utilization Status.................................................... 1-56

1.1.3 Needs of Clean Development Mechanism (CDM) Project " * * 1-58

1.2 Necessity of Technology Introduction for Alternative Energy * * 1-61

1.3 Intent, Needs and Effects of the Project....................................... 1-62

1.3.1 Intent of the Project..................................................................... 1-62

1.3.2 Need of the Project....................................................................... 1-62

1.3.3 Effect of the Project..................................................................... 1-64

Chapter 2 Project Planning................................................................................ 2-1

2.1 Project Plan...................................................................................... 2-3

2.1.1 Site Information....................................................................... 2-3

(1) Project Site .......................................................................2-3

(2) Location and Meteorological Condition......................... 2-4

(3) Outline of Counterpart Organization............................... 2-11

2.1.2 Brief of Project.................................................................................2-18

(i)

2.2 Current Status of Counterpart and Proposed Project................2-21

2.2.1 Interest of Counterpart..................................................................2-21

(1) Interest of Petrobangla...................................................... 2-21

(2) Interest of RPGCL.............................................................. 2-23

2.2.2 Current Status of Existing Infrastructure and Facilities * * * * 2-24

(1) Existing NGL and Condensate Recovery System........ 2-27

(2) Existing NGL Pipeline........................................................ 2-38

(3) Existing Condensate Storage and Loading System * *" 2-38

2.2.3 Capabibty of Counterpart ............................................................2-40

(1) Technical Capabibty............................................................2-40

(2) Management Organization.................................................2-42

(3) Management Foundation and Pobcy............................... 2-42

(4) Financial AbiUty..................................................................2-43

(5) Manpower Abibty................................................................2-43

(6) Project Execution Organization.........................................2-43

2.2.4 Concept of Proposed Project......................... .............................. 2-45

(1) Design Basis......................................................................... 2^5

(2) Outbne of NGL Fractionation Plant................................. 2-53

(3) Plant layout......................................................................... 2-61

(4) Plant Cost............................................................................. 2-62

(5) Plant Operation Plan.......................................................... 2-67

2.2.5 Scope of Supply and Work Allocation by Each Party................ 2-70

2.2.6 Conditions and Issues for Project Execution..............................2-72

2.2.7 Project Execution Schedule........................................................2-75

2.3 Financial Scheme.............................................................................2-79

2.3.1 Financing Plan for Project Execution...........................................2-79

2.3.2 Financing Prospects....................................................................... 2-82

2.4 Conditions for Clean Development Mechanism (CDM)..............2-83

2.4.1 Coordination with Host Country for CDM Implementation *' 2-83

2.4.2 Possibibty for Host Country’s Consent to Project

Implementation as CDM............................................................. 2-86

2.1.3 Greenhouse Gases to be examined................................................2-19

(ii)

3.1 Effect on Alternative Energy..........................................................3-3

3.1.1 Technical Background for Alternative Energy......................... 3-3

3.1.2 Baseline for Alternative Energy................................................ 3-3

3.1.3 Quantitative Effect *..................................................................... 3-4

3.1.4 Confirmation Method of Alternative Energy Effect................3-5

3.2 Effect on Greenhouse Gases Emission Reduction....................... 3-6

3.2.1 Technical Background for Greenhouse Gases Reduction........ 3-6

3.2.2 Baseline for Greenhouse Gases Reduction............................... 3-7

3.2.3 Quantitative Effect....................................................................... 3-8

3.2.4 Confirmation Method of GHGs Reduction............................... 3-10

3.3 Influence to Productivity................................................................. 3-11

Chapter 4 Project Profitability........................................................................... 4-1

4.1 Profitability Evaluation................................................................... 4-3

4.1.1 Capital Expenses......................................................................... 4-3

4.1.2 Operational Expenses................................................................. 4-8

4.1.3 Financial Analyses....................................................................... 4-11

4.2 Cost versus Effects * *....................................................................... 4-26

4.2.1 Cost versus Alternative Energy Effect....................................... 4-26

4.2.2 Cost versus Greenhouse Gases emission Reduction................4-27

Chapter 5 Technology Spread and Its Effects .................................................. 5-1

5.1 Possibility in Spread of the Proposed Technology....................... 5-3

5.2 Effects under Possible Spread........................................................ 5-6

5.2.1 Effects on Alternative Energy.................................................... 5-6

5.2.2 Effects on Greenhouse Gases Emission Reduction..................5-6

Chapter 3 Effects of Project................................................................................. 3-1

(iii)

Chapter 6 Effects on Other Areas 6-1

6.1 Effects on Environment................................................................... 6-3

6.2 Effects on National Economy.......................................................... 6-4

6.3 Effects on Society............................................................................. 6-11

Conclusion

Attachment

(1) List of References

(2) Field Survey Report

First Field Survey Report

Second Field Survey Report

Third Field Survey report

(iv)

EXECUTIVE SUMMARY

Conclusion and Recommendation

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EXECUTIVE SUMMARY CONCLUSION AND RECOMMENDATION

1. Purpose of Study

It is well recognized in Bangladesh that the utilization of Natural Gas is one of

the top priority theme in the country. And the countermeasures for the

increasing deforestation is also a critical issue that requires to be addressed for

saving the forest, which have a capability of absorption and accumulation of

carbon dioxide.

The Ashuganj NGL Fractionation project can be considered a solution with

importance to both themes.

This feasibility study was carried out for the Ashuganj NGL Fractionation Plant,

which is planned for installation at Ashuganj for the production of LPG, Motor

Spirits (MS) and High Speed Diesel (HSD) from NGL fractionated from Natural

Gas at gas fields.

2. Methodology

In order to carry out the project, New Energy and Industrial Technology

Development Organization (NEDO) entrusted Japan Oil Engineering Company

Limited (JOE), to execute the feasibility study. JOE likewise organized a study

team with expertise disciplines while Tomen Corporation participated in

carrying out the part related to economical analysis study.

The field investigation was executed in Bangladesh for the collection of

necessary information and data through the series of interviews conducted on

concerned organization and staffs, who are knowledgeable with the status of

energy balance of the country production of natural gas, demand of gas,

utilization of natural gas, electrical generation, distribution system of petroleum

products, trends of reduction of Greenhouse Gases, etc. including the site

visiting of planned plant area, gas fields and refinery.

At the first field investigation, the necessary information and data were

collected. While the second field investigation was carried out to collect

additional information necessary for the execution of the study.

These collected information, data and advices serve as the basis for the

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execution of the study, which was carried out in Japan. The study included the

analysis of profitability and the possibility for CDM project.

CDM stands for Clean Development Mechanism for the reduction of emission of

Greenhouse Gases. The CDM project is to be carried out through the

cooperation of a developed country and the developing country.

3. Present Status of Commercial Energy in Bangladesh

Bangladesh is recognized as a Least Less Developed Countries (LLDC), in the

world but is blessed for having plenty of natural gas reserves. However at the

present stage, the natural gas is not being fully utilized or exploited sufficiently.

It is also difficult to say today that the natural gas has made a great

contribution to the development of the country.

Specially, the lack of infrastructures, such as natural gas pipeline network, is a

serious hindrance for the great utilization of the natural energy resources for

domestic use.

Under those circumstances, the ratio of people that depends on the biomass

energy, which comes from agricultural residues, wood products (firewood) and

dung of livestock, is quite high especially in the remote areas of the country

where commercial energy, such as natural gas, petroleum products are not

available.

In the country, the forest area has been reducing rapidly due to the increase of

population and the reckless deforestation. Today the forest area totals only

19,710 km2, which is approximately 19% of the total country area.

The population of Bangladesh is estimated at approximately one hundred

twenty eight million today. Based on the data of World Bank at 1997, the per

capita energy consumption of Bangladesh accounts only for 197kgoe (kilogram

of oil equivalent), which is next to Cambodia and Nepal from the bottom in the

Asian country.

Only 18% of the population is connected to the electricity grid, and only 8% of

the population enjoys the benefit of the gas, based on the 1990 data of ALGAS

(Asian Least-cost Greenhouse Gas Abatement Strategy). The required energy in

Bangladesh comes from biomass fuels, which accounts for 66% and commercial

energy by 34%, of which 22% is by natural gas. The dependence to natural gas is

expected to increase and inevitable in the coming years. The production of

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natural gas is recorded at 282.2 BCF in 1998 and is estimated at 347 BCF in the

year 2000. Today, 44% of the natural gas is consumed in the power generation,

28% for fertilizer production, 12% for industrial allocation and the remaining

16% for commercial use.

According to the data from UNFAO, United Nations Food and Agriculture

Organization, over 80% of logging woods are used for household fuel in

Bangladesh. It is possible to say that huge manpower is required for the

collection of woods and other biomass fuels.

On the other hand, a lot of gases, especially Cs (Propane) and CU (Butane), are

flared out or injected in the pipeline as a part of sales gas.

The condensate, Cs (Pentane), is sold as natural gasoline without refining or is

send to ERL, Eastern Refinery under BPC in Chittagong for mixture with

imported crude oil.

4. Outline of Project

The study of NGL Fractionation Plant assumes that the LPG, MS and HSD are

fractionated from NGL, which is recovered from natural gas at gas fields.

The NGL as a raw material of this project are recovered and supplied from

Kailastila, Beanibazar and Jalalabad gas fields located in the Sylhet regions.

The supplied ratios from each field are 123 TPD (tones per day), 82 TPD and

262 TPD respectively, and the NGL are conveyed to the Ashuganj plant site

through the existing 6” pipeline having a length of 175km.

The planned production from NGL is 123 TPD of LPG, 262 TPD of MS and 82

TPD of HSD.

The Ashuganj NGL Fractionation project shall consists of the following;

• Receiving and storage facility of NGL

• NGL process facilities

• Products storage facilities

• Loading facilities

• Utility facilities

• Administration facilities including living camp

-ES- 5 -

5. Effects of Project

When the project is implemented, the following 5 effects are expected and

considerable.

• Effects of natural gas utilization

• Stable energy supply for Western region

• Reduction of air-pollution

• Reduction of GHG emission by the conversion of public fuels

• Effects of social development and activation of economic dynamics by the

conversion of pubhc fuels

Those effects are described as follows briefly.

1) Effects of natural gas utilization

The natural gas produced at gas fields is connected to the national gas

pipeline grid after processing. However, some Propane (Cs) and Butane (C*)

are also injected to the pipeline or flared out during the processing. It is

possible to recover those Propane and Butane gases and supplied as LPG to

the consumers without the wastefulness of limited energy resources of natural

gas. Also, MS and HSD can be refined from condensate and supplied to the

consumers as valuable commercial products.

The produced LPG through this project is recognized as an alternative energy

resource amounting to about 45,000 toe/y, and those LPG can be produced

without the necessity of an extra crude consumption.

2) Stable energy supply for Western region

The LPG produced from Ashuganj NGL Fractionation Plant can be supplied

as a valuable energy to the remote areas where commercial energy is

unavailable, such as the Western Region of the country divided by the

Jamuna River. Supplying these energy to the Western area will help to

narrow the energy gap between the Eastern area and Western area.

3) Reduction of air-pollution

Some condensates are presently used as a natural gasoline without refining,

especially for 2 cycle engines, which causes air-pollution.

By using refined MS and HSD instead of the natural gasoline, the

air-pollution can be effectively minimized.

- ES- 6 -

4) Reduction of GHGs emission by the conversion of public fuels

By the distribution of produced LPG to the areas where the commercial

energy are unavailable, the GHGs emission may be reduced by using LPG

instead of biomass fuels, such as firewood. Due to the low heat efficiency of the

firewood stoves presently used, the stoves are generating more GHGs

emission.

When the produced LPG of 123 TPD is converted for household fuel, it is

estimated that a reduction of 861,000 t-COz per year of GHGs can be

achieved.

5) Effects of social development and activation of economic dynamics by the

conversion of public fuels.

The areas where stable energy supplies are not available are visibly behind in

terms of social modernization and the economic roots Eire also so fragile for

further development.

Further, the workloads for women and children are heavier due to the task of

obtEiining the biomass fuels and spend a lot of time in the employment of the

works.

By the conversion of energy from biomass fuels to LPG, those women £md

children can be freed from those tedious works resulting to the possibility of a

better lifestyle and social modernization.

In addition to the above, it is expected that the conversion of commercial energy

from the biomass fuels may bring the promotion of industrialization and the

increase in employment, as a secondary effects.

The project will not only be an effective solution to environmental problem and

convenient utilization of natural gas, but also will provide Bangladesh several

valuable leads to help solve the country’s problems.

6. Evaluation of Project as CDM Project

The GHGs generated by biomass fuels is estimated at around 995,000 t-CCh in a

year. The heat capacity of 123 TPD of LPG produced by this project, is

equivalent to the heat capacity generated by the use of firewood.

In the other side, the Propane and Butame in the natural gas Eire injected in the

sales gas and/or Haired out at the gas field. When the LPG is recovered from the

- ES - 7 -

natural gas, distributed and used as a commercial energy instead of biomass

fuels, it will lead to the reduction of about 861,000 t-COg GHGs per year.

It is calculated that about 84 t-COg-y per one million yen is effectively reduced

to the GHGs emission when compared with the investment cost for

implementation of the project.

Also, when considering the viewpoint of the alternative energy, it replaces the

energy (C3 and C4) that isn't effectively used for the sales gas by the injection or

flare-out with the effective and available commercial energy as LPG. The

production rate of LPG is equivalent to approximately 45,000 toes.

It is calculated that approximately 4 toe-y/million yen of the alternative energy

effects is compared with the initial investment cost.

Effects Cost vs. Effects Cost vs. Effects(Accumulated in 20 years

(Annual per ¥ 1 million) per Ylmillion)Alternative Energy 4.33 toe 83.14 toeReduction of GHGs 83.47 t-COg 1,602.65 t-COgEmission

So far, the CDM selection philosophy and/or regulation issued by the GOB is not

established yet that it is impossible to discuss with GOB whether this project

conforms to be a CDM project or not.

However, when this project is implemented, the environment effects can be

enjoyed as well as the economical and social effects, which are met under the 6

projects intended for the reduction of GHGs emission in the country, such as the

renovation of effects of energy usage and the lightening dependence on biomass

fuels.

The promotion of this project is also worthy for Japan who played an important

role in assisting for the introduction of credit for the reduction of GHG emission

which may be applied as a regulation in the near future.

Also, it is recognized that the Ashuganj NGL Plant project is a worthful project

for Japan compared with the other conventional ODA projects.

Moreover, the promotion and implementation of the project supports

Bangladesh to solve or indicate the way in solving the pending problems.

- ES - 8 -

7. Economic Analysis

After the computation and the evaluation of the economical investment analysis

and the effect of the said project based on the project implementation plan with

20 years of plant life, the project internal rate of return can be considered as

follows. The escalation factor is not considered in above figures.

Profit Ratio Before Taxes After TaxesROI 19.24% 11.17%ROE 30.63% 13.64%

As for the pretax rate of return on invested capital (ROI) of this project, it is

concluded that a profitability of 19.24% of ROI based on a 20 years depreciation

is expected.

Under the COP6, the dealings of right of GHGs emission are not concluded yet.

Therefore the economic analysis is not executed with the consideration of

profitability of the dealings. However, if taking account of the dealings of right of

GHGs emission, the result of analysis gives more higher profitability.

On the other hand, this project can be evaluated not only from the viewpoint of

the effects of reduction of GHGs but also on the economic effect as the

alternative energy for existing imported petroleum (kerosene). The produced

LPG, 123 tons per day is estimated to be equivalent to 1, 000 BPD of imported

kerosene in the calorie basis.

This import value is estimated at around US$16 million in a year.

Bangladesh desires to implement the Ashuganj NGL Fractionation Plant

immediately, due to the following reasons;

• Effective natural gas utilization by recovering Cs and Ci from the sales gas

and/or flared-out gas

• Reduction of GHGs emission by the conversion of fuel sources

• Reduce the available energy gaps between Eastern region and Western

region

• Assist Western region for economic and social development

• Others

- ES- 9 -

8. Considerable Project Schedule

Upon reaching the valuable result of the study and analysis of the project,

Bangladesh has a strong intention to start the early implementation of the

project. By assuming the implementation of this study as a starting point for the

promotion of Ashuganj NGL Fractionation Plant project, it is expected to

commence the operation of the plant in August 2004 with the following

milestones, provided that obtaining the necessary governmental approvals,

completion of EIA reports are carried out on time.

• Implementation of detailed FS

• Formation of Project Implementation Team

• Tendering of EPC

• Commencement of Plant Installation

• Commissioning and Start-up

• Commencement of Commercial Running

9. Conclusion

Through the execution of feasibility study and analysis of Ashuganj NGL

Fractionation Plant project based on the economics and CDM of GHGs emission,

the project is considered a very influential project in terms of both economics

and CDM as a conclusion.

However, there are concerns related to the big time difference that may be

generated between the strong intention of early project start-up in Bangladesh

side and the timing of conclusion of the international agreement under the CDM,

which can be gathered from the present situation of COP6.

As above-mentioned, this project is verified to contain enough economic value

even if the CDM is not considered, but in order to gain more multiplier effects in

the project, it is envisioned that the project be recognized as a CDM project.

In order to carry out the implementation of said project in Bangladesh,

Petrobangla and concerned parties in Bangladesh have pointed out the

followings matters for the execution of further detailed studies.

• The execution of further detailed study shall be required as one package,

which includes the expansion program in the gas fields for the stable

supply of NGL at upstream side and the marketability of LPG, MS and

August, 2001

January, 2002

May, 2002

August, 2002

July, 2004

August, 2004

- ES -10 -

HSD at downstream side.

• The delivery of LPG by pipeline shall be considered as well as the

utilization of pressurized tank lorry. The LPG pipeline from Ashuganj to

Elenga may be operable within 2 years upon commencement of the

installation of pipeline.

• Further detailed feasibility study

On the other hand, there are some hurdles to be cleared for the promotion and

implementation of the project, which includes some technical aspects.

As a conclusion of the feasibility study and summary, the points to be cleared

are listed below, provided that Ashuganj NGL Fractionation Plant project is

smoothly promoted.

• The stable supply of NGL to Ashuganj from the gas fields in Sylhet is not

considered in this feasibility study, but it is one of the key issues for the

implementation of the project. It is necessary to install the necessary

facilities, such as turbo-expander plant in Beanibazer and Jalalabad fields

prior to the start-up of operation of the Ashuganj NGL Fractionation Plant.

It is necessary that a strong initiative and coordination of Petrobangla for

the arrangement of concerned parties be established.

• The sole agreement between the suppliers of NGL and RPGCL as well as

the sales agreement of products, such as LPG, MS and HSD, between

RPGCL and BPC, shall be concluded with the concerned parties under the

strong leadership of Petrobangla.

• BPC shall arrange enough numbers of pressurized tank lorries for the

distribution of LPG to the remote depots and bottling plants. And those

depots and bottling plants have to install the necessary pressurized

storage facilities for receiving LPG.

• GOB and concerned parties have to formulate the policy to enlighten the

aggressive conversion of LPG from biomass fuels in the areas to promote

the LPG.

• Examination and the aggressive conversion of the support policy, which is

necessary to promote LPG purchase or use in the area instead of biomass

fuel. For the aggressive introduction of LPG in the areas, the

establishment of the community distribution system of LPG by the village

basis is recommended as a method of propagation of LPG in the remote

- ES -11 -

areas.

Japanese Oil Engineering Co., Limited (JOE) who was entrusted by NEDO to

implement this feasibility study intends to fully support the concerned parties in

Bangladesh for the promotion and implementation of Ashuganj NGL

Fractionation Plant project smoothly, in terms of asking the necessary assistant

from concerned organizations in Japan.

Finally, it has been reported that Petrobangla for its part has commenced

coordination activities between the concerned organization for the early

implementation of this project. And the examination and consideration of

Ashuganj-Elenga LPG pipeline for transport of the LPG to the Western region

also has been started.

- ES -12 -

Chapter 1

Project Background

In this chapter, considering the importance and necessity of this

project, politics/economy/social state, energy state and need for

CDM projects are described.

Chapter 1 Project Background

1.1 Information on Bangladesh

1.1.1 Political, Economy and Social Status

(1) Geography

Bangladesh is situated in the south of the Asian continent, which stretches

latitudinally between 20*34' and 26*33' North and longitudinally between

88*01' and 92*41' East, and exists on the east edge of Indies as a point of

contact with Southeast Asia. The Arakan Yoma (mountains) between

Bangladesh and Myanmar divides Southwest Asia and Southeast Asia

geographically.

The boundary with India on the west, north and east is about 4,092.62km

long. The longest distance between the north-west and the south-east

extreme points is 760km which is the distance between Banglabandha in

the northwest and St. Martin in the southeast, and the greatest width from

east to west is about 467km.

Bangladesh has an area of about 147,570 square kilometers (km2)

according to the data from the National Data Bank of the Ministry

Planning in 1997. The forest represents 19,710km2 area which is about

13% of the land area in Bangladesh, and the area of river, which is the

feature of the country, is 8,236 km2 or about 5.6% of the country.

The country is formed in a generally smooth gentle inclination to the high

ground (above sea level 280m) in the northwest from the coast zone in the

south excluding the southeast where it lies to the border with Myanmar.

The highest altitude is 1,229.6m at Keokradong Hill in the south-east end

of Bandarban district (Zila). Majority of the country is plain with delta

zone of a fertile alluvial plain and chiefly covered with lower evergreen

trees, though a hilly zone in the southeast exists. The country is

surrounded by the Bengal Bay at the south, the Ganges plain in India at

the west, the Assam plateau in India at the north and the woodland in

Myanmar at the east. Photo 1.1.1.1 shows the view from Sylhet in the

northeast to the direction of the Assam plateau.

-1 - 3 -

The littoral or swamp forest, commonly well known as the Sundarbans, is

situated in the south-west of the country, which is the world’s biggest

mangrove plants and preserved by the international organization including

UNESCO as a global property under the international conservation of

forest.

Photo 1.1.1.2 shows the view of Sundarbans from the Mongla Port.

The climate in Bangladesh is characterized by high temperature and high

humidity, heavy rainfall and marked seasonal variation due to the typical

subtropical monsoon zone. The country experiences a cool dry winter from

late October to the end of February, a hot summer with high humidity from

late March to late May, and somewhat cooler but still hot and humid

monsoon from June through September. The amount of rainfall during a

period of about two months in the monsoon period from the middle of June

to the middle of August reaches an average of 1,194 mm in the west

provinces and an average of 3,454 mm in the northeast area (based on

Bangladesh Investment Guide, March, 2000). The rain, which falls in

Bangladesh and Himalayas flows into the main rivers such as lower

Ganges (it is locally called as Padma), Brahmaputra (Jamuna), and

Meghna, and forms a fertile soil, but sometimes brings heavy damage due

to the floods in the monsoon period.

The country suffered two tragic flood damages in 1988 and 1998 wherein

almost 70% of the country was flooded. Especially the deluge in July 1998,

was recorded as the largest flood in the century, and over 100,000 km2 of

the country was inundated which continued for 2 months.

The total annual volume of water flowing into the three main rivers in the

country and poured into the Bengal bay is estimated at about 1,127.4

billion m3, and its outflow of water is second only to that of the Amazon

system. Since 90% of the flow is received from outside of Bangladesh, the

rise and fall of the rivers are greatly influenced by the amount of rainfall in

the Himalayas of Assam, Bhutan and Nepal.

The average temperature in the country ranges from 23 to 30°C annually

except in the dry season where the temperature is 7 to 12 °C. The highest

-1 -4 -

of India in 4th century B.C.

There are no writings of advancement crossing Arakan Yoma to east in

the histories of Dravidian and Aryan who immigrated in this region in

earlier time, and even in the various Islamic dynasties who immigrated

later.

Political dynamics evaluated to the Muslim rule in Mughal empire (1575

- 1757) after the Mauryans (4th to 2nd century B.C.), the Guptas (4th -

5th century A.D) of Buddhism age, the Pala empire (8th - 12th century

A.D.) of Hinduism age including Chandra dynasty, various independent

local dynasties of Turkey and Afghan ancestry in the 13th century.

Bangladesh, especially Chittagong, is the frontier of South Asian

civilization, which is the natural bridge between Bay of Bengal and

China. The region was also distinguished as an important base of the

Arab and Chinese trading since 8th century A.D.

The East India Company, a mercantile company of English was

established in the 17th century A.D., and became the virtual ruler of

Bengal (West Bengal of India and Bangladesh presently) after 1957,

which continued for over 200 years.

In 1905, the British divided Bengal into East Bengal where Hindu

comprised the large majority and West Bengal where Muslim are

concentrated. The division was intended to convert the fury of the

anti-British movement in the region to the axis of religional antagonism

between Muslim and Hindu.

The partition of the South Asian sub-continent into two independent

states, India and Pakistan, in 1947 was a defect for the British policy.

Bangladesh became East Pakistan territory as one wing of “a double

country” and subsequently renamed as East Pakistan state in 1955.

The two wings, East Pakistan and West Pakistan where Urdu is the

majority in the region, were not only separated from each other, they

were also culturally, economically and socially different.

The racialism was on the rise around 1950 - 1960 in East Bengalis,

which pushed up the Bengali Language Movement, exploitation of

autonomy, and then in 1971, as the result of third India - Pakistan war,

the Pakistan army had to be defeated physically in order to establish a

new state.

-1 - 6 -

2) Politics and Administration

Bangladesh became an independent and sovereign state on December 19,

1971, and the government and political power were succeeded from

Sheikh Mujibur Rahman of Awami League (AL) as a first government in

1972 - 1975 to present Sheikh Hasina Wased of AL from 1996, through

Ziaur Rahman of Bangladesh Nationalist Party (BNP) in 1975 - 1981,

Ershad of Jatiya Party in 1982 - 1990, Begum Khaleda Zia of BNP in

1991 - 1996. The political powers among those parties before 1991,

changes after each successful coup d ‘etat, repeatedly perpetuated by the

military.

The next general election is scheduled in July, 2001 and the bitter

contention continued between the Awami League (AL) of the present

administration and the Bangladeshi Nationalist Party (BNP) of the

ex-administration. There is not much big difference in the basic policy of

both parties, together based on the market principle economy, and it

depends on the support from the ODA supporting countries such as

Japan, as well as the World Bank and the A.D.B. As for the distinct

difference between the parties, the BNP is declaring a policy that opposes

India whereas the Awami League is undeniably a pro-Indian advocate.

This opposing view translates into a concrete theory and an unclear

policy, whether or not to allow the exportation of the natural gas

produced in the country to India, because, one gives priority to rebuilding

the domestic economy by the foreign currency acquisition through the

export of the national peculiar property (natural gas), while the other

gives priority to rebuilding the economy by promotion of the industry

contributed or associated with the national peculiar property (natural

gas), which is uncertain what time it stands up.

The population's grievances are frequently expressed and seen through

anti-government protest movement and political general strike, named

Hartal, and such political movement in the country is becoming more

intense during the election season. In the last general election in 1996,

the country was fazed with administrative confusion because the change

of power was challenged by the government and opposition parties

through the repetition of Hartal, the election boycott, the re-doing of

-1 - 7 -

election, and the political and economical stagnation including the

disorders in central government offices which continued for more than

one year.

Diplomatically, Bangladesh is developing an active diplomacy as a

moderate in the third world through the United Nations, the

Non-Aligned Movement (NAM), and the Organization of Islamic

Countries (OIC), etc. and is actively participating in Peace Keeping

Operations. Moreover, Bangladesh greatly contributes to the

strengthening of the India sub-continental nations cooperation as an

advocacy country of South Asian Association for Regional Cooperation

(SAARC).

Bangladesh has assumed office as a non-permanent member of U.N.

Security Council for a term of two years since January, 2000. Moreover,

Bangladesh ratified the Comprehensive Nuclear Test Ban Treaty (CTBT),

the first country in the southwest Asian region, in March 2000.

The political system is in the form of parliamentary cabinet system of the

people republic, and the term of office of the Prime Minister, who is the

administrative prefecture of the country, is five years. The congress is

unicameral and the Diet seat number totals 330. Among these, 30 seats

are allocated and reserve for women. Congressman's term of office is five

years. The present members of the congress were elected by the general

election in 1996 and the government party Awami League (AL) has 179

seats (including 27 women seats), the opposition party Bangladesh

Nationalist Party (BNP) has 113 seats and Jatiya Party (JP) has 35 seats

(including 3 women seats), and other party with 3 seats.

The constitution was enacted and promulgated in 1972, and 14 revisions

were done at the following;

As for administration of justice, the independence of judicial system is

guaranteed under the constitution. The judicial system is divided into the

Supreme Court and the Lower Court, and the Supreme Courst if further

sub-divided into Appeals Court and the High Court. The Lower Court is

sub-divided into Regular Trial Court and District Court.

-1 - 8 -

The administrative organization is strongly centralized, and a lot of

administrative officials are sent to the local government by the

government ministries and agencies. A central administrative

organization consists of one center, 35 ministries and 51 outside bureaus,

and there are 38 concerned public corporations and public organizations

under the supervisor of government ministries and agencies. Table

1.1.1.1 shows the fist of Bangladesh government administrative offices.

Territory wise, the country is divided into 6 Divisions, 64 Districts (Zilas),

495 Thanas (sub-district), and 4,472 Unions and over 85,650 villages as

of March, 2000.

The 6 Divisions have 64 districts (Zilas) as below;

Sylhet Division 4 Zilas (Districts)Chittagong Division 11 ZilasDhaka Division 17 ZilasRajshahi Division 16 ZilasKhulna Division 10 ZilasBarisal Division 6 Zilas

-1 - 9 -

Table 1.1.1.1 The List of Bangladesh Government Administrative Offices

English NamePrime Minister’s Office

The National Personal Authority Ministry of DefenseMinistry of Law, Justice & Parliament AffairsMinistry of AgricultureMinistry of Water ResourcesMinistry of Foreign AffairsMinistry of FinanceMinistry of Local Government, Rural Development and Co-operativesMinistry of CommunicationMinistry of Health and Family WelfareMinistry of IndustriesMinistry of CommerceMinistry of Social WelfareMinistry of Women & Child AffairsMinistry of FoodMinistry of InformationMinistry of Home AffairsMinistry of Posts and TelecommunicationsMinistry of Energy and Mineral ResourcesMinistry of Housing and Public WorksMinistry of Labour & EmploymentMinistry of EducationMinistry of Science and TechnologyMinistry of Environment and ForestMinistry of Fisheries and LivestockMinistry of JuteMinistry of PlanningMinistry of LandMinistry of Religious AffairsMinistry of Youth, Sports & Cultural AffairsMinistry of TextilesMinistry of Civil Aviation and TourismMinistry of Disaster Management and ReliefMinistry of Cultural AffairsMinistry of ShippingMinistry of Chittagong Hill Tracts Affairs___________________________(Source: Bangladesh Investment Guidance, March 2000 by Investment Agency,

Prime Minister’s Office)

-1 -10 -

condition of the poor. Moreover, the promotion of economic structural

reforms and the achievement of balance of the macro economy have not

been accomplished, and not enough progress followed in the privatization

of the government-run enterprises and financial reforms, etc.

On the other hand, the Asian monetary crisis, which affected several

Asian nations does not directly influence the country because the foreign

currency inflow scale is too small and most of the external debt is the one

under aid, etc.

The economic base of the country is focused on agriculture, which

accounts for 32% of GDP and for 63% of the work population in the fiscal

year 1996-1997. The main agricultural product is rice and about 19

million tons per year are produced, but the country’s rate of

self-sufficiency in food is still around 90% due to the delay in the

improvement of the irrigation facilities and the flood damage every year

etc.

The proportion of manufacturing and industries in GDP is about 10%

only. The major products in manufacturing are the jute fiber products,

the cotton goods, the food processing industries of farm products, and the

industries related to the agriculture such as the fertilizers and farming

tools comes next. The major industries in manufacturing are fiber

products, clothes and leather products, and they accounts for 66% of the

manufacturing work population. On the other hand, unemployment rate

is 26% based on the investigation of World Bank in 1994 (World Bank

statistics). The high level of unemployment is seen at 36.5% in 1998.

Also, in 1997 fiscal year (July, 1997 - June, 1998), the amount of

remittance of sent by workers working in foreign countries totals about

Tk 63 billion (equivalent to US$ 1,475 million). The amount is almost

equal to one third of the total annual exportation.

-1 -12 -

Relating to the economic cooperation from Japan, the Yen Credit granted

to Bangladesh till March, 2000 handled by Japan Bank For International

Cooperation (including ex-Export-Import Bank of Japan and ex-Overseas

Economic Cooperation Fund) were 65 items on the approval total basis

(including 53 items completed lend) and the amount reaches 533,296

million yen in total.

Regarding the fields covered by the previous loan granted, the commodity

loan shares 49.1% of the entire amount, the mining and manufacturing

at 17.1%, the energy (electric power and the gas) at 15%, and the

transportation at 10.7%. In the recent years, the demand for the

commodity loan have decreased because of the improvement in the

balance of international payments and the financial state of the country.

So the principal Japanese support is shifting to a private investment

promotion necessary for reducing poverty and promoting economic

development and the economic infrastructure reinforcement necessary

for the export promotion. Japan has worked out a policy to consider the

reinforcement of the social and economic infrastructure, necessary for

improving the economy as the emphasis field.

Regarding the trade, the export is kept at 100 million dollar level, and

the import was kept at 300 to 400 millions dollar level since 1994. Japan

is at the eighth place in terms of export destination and the third place as

far as import is concerned. The main exported articles are the frozen

prawn accounting for 39%, fiber products, fiber raw material, precision

machines, leather shoes, and sporting equipment, etc. and the main

imported articles are general machines, steel, machines for textile, and

cars, etc.

The investment from foreign countries reaches a total sum of

US$ 16,45 lmillions and the investment from Japan are shown in the

following Table I.I.I.3.

-1 -14 -

Table l.l.l.Z 1 Investment from Japan to BangladeshItem Publication of

Investment Agency of BangladeshPrime Minister’s Office (October, 1999)

Record reported toJapanese Ministry ofFinance (Direct Investment) (the end of March, 1998)

Investment number 89 52Amount of total investment US$811 million 22,400 million yen

The following bilateral treaties and agreements have been concluded

between Japan and Bangladesh.• Japan Overseas Cooperation Volunteers Dispatch Agreement• Aviation Accord• Cultural Agreement• Taxation Convention• Agreement of Investment Protection

(4) Social Status

As for the demography of Bangladesh, the latest census taken in 1991 shows

111.5 millions people in the country, but the official investment guidance

issued by the Bangladesh’s Investment Agency in March, 2000 presumed a

total of 127 million people. The population increase rate is 1.73 to 1.88%

annually between 1993 to 1997. It is estimated that the country’s population

will reach 210 million by 2020, compared to the 70 million people in 1971.

The census is scheduled to be carried out in 2001. The population ratio of the

provinces and the urban area is 3.7 to 1, but about 31% of the total population

is concentrated on the Metro Dhaka and the outskirts of Dhaka Zila region.

The nationwide average of the population density is 842 person/km2, but the

population density in Dhaka region reaches as high as 5,367 person/km2.

Additionally, the tendency to the population concentration is also seen in

Chittagong, where is the harbor city and Khulna, where is the center city of

the Southwest.

The life expectancy at birth is stands at 59 years old. The infant mortality

rate is 73 per 1000 live births and the rate of malnourished children under 5

years old stands at 112 per 1000 children.

Regarding the ethnic background, the overwhelming majority of the

population in Bangladesh belongs to a homogeneous ethnic group of racially

mixed blood of Austloid, Dravidian, Mongoloid, and Aryan, which composes of

about 98% and the non-Bengali at 2%.

The official language in the country is the Bengal language, which belongs to

-1 -15 -

the India-Aryan language. The people who use the Bengal language are

concentrated only on the areas including Bangladesh and the West Bengal of

India. However because of the large population of this region, the population

of native speakers of Bengal language is assumed to be the fourth in the

world following the native speakers of Chinese, English and Spanish.

The literacy rate is somewhat improved at 51.3% from the prediction

statistics in 1998 compared to the 32.4% in 1991.

As for the religion, the Muslim population accounts for 88.3%, the Hindu at

10.5%, the Buddhist at 0.6%, the Christian at 0.3%, and others at 0.3%. The

population of Muslim in the country is the second largest in the world after

Indonesia, and Muslim is enacted as the state religion.

The principal social index of Bangladesh is shown from Table 1.1.1.4 to Table

1.1.1.6.

Table 1114 Bangladesh Principal Social Index (l)

Item Year Sex Index Whole Index

Life Expectancy at Birth 1998Man N.A.

59Woman N.A.

Infant Mortality Rate (per 1,000 live birth)

1998Man N.A.

73Woman N.A.

Adult Literacy Rate (%) 1998Man 51

N.A.Woman 29

Primary School Enrollment (%)

1997Man 80

75Woman 70

Number of Doctors per 1000 people

Latest Numberof 1990-1998

Man N.A.0.2

Woman N.A.(Source: World Development Indicators 2000 by the World Bank)

Table 1.1.1.5 Bangladesh Principal Social Index (2)

Item Year 1993 1994 1995 1996 1997Population 0 -14 Years Old 51.4 49.6 48.1Composition 15 -49 Years Old N.A. 57.2 56.3 59.6

(%) Over 50 Years 11.3 16.2 16.6Population Increase Rate 1.88 1.88 1.80 1.74 1.73Population Provinces from Provinces 10.25 11.00 11.32 10.72 11.25Movement Urban from Provinces 6.89 7.76 7.80 8.30 8.35Inflow Provinces from Urban 0.93 0.90 0.87 0.83 0.92

(%) Between Urban 28.8 28.0 26.5 25.6 24.4(Source: National Statistics by Bangladesh Ministry of Planning)

-1 -16 -

Table 1.1.1.6 Bangladesh Principal Social Index (3)

Item Year Index Index ofJapan

Paved Road Rate(%) 1998 9.5 74.9Electric Power Consumption per capita (kWh)

1997 76 7,241

Use of Safe Water(%) 1990-1996 84 96Drainage Diffusion(%) 1998 35.8 56Number of Communication Lines(line/1000 people)

1998 3 503

(Source: World Development Indicators 2000 by The World Bank)

The population inflow into the urban area continues, and the official and

unconfirmed population of the Metro Dhaka is assumed at 6 million and 14

millions people respectively. Moreover, it is possible to say that the

infrastructure service for the community system development have become

inadequate with the present situation.

(5) Environmental Policy and Legislation

1) Environmental Policy

(a) National Environmental Policy 1992 and National Environmental

Management Action Plan 1995

The basic framework for the present environmental policy of Bangladesh

is provided in the National Environmental Policy 1992, approved in May

1992. Key elements of the policy are:

• Maintenance of the ecological balance and overall progress and

development of the country through the protection and improvement

of the environment.

• Protection of the country against natural disasters.

• Identification and regulation of all types of activities, which pollute

and degrade the environment.

• Ensuring sustainable utilization of all natural resources.

• Active association with all environment-related international

initiatives.

In this policy, broad sectoral guidelines relating to the environment is

provided to the following 15 sectors:

-1 -17 -

Table 1.1.1.7 Sector Provided in the National Environmental Policy1) Agriculture 9) Food2) Industry 10) Coastal and Marine3) Health & Sanitation Environment4) Energy and Fuel 11) Transportation &5) Water Development, Flood Communication

Control & Irrigation 12) Housing and Urbanization6) Land Use 13) Population7) Forest, Wildlife and 14) Education and Public

Bio-diversity Awareness8) Fisheries and Livestock 15) Science, Technology, and

Research(Source: National Environmental Policy 1992, GOB)

Relevant policies to the Energy and Fuel Sector are as follows:

• Reduce and discourage the use of pollutant fuels and encourage the

use of environmentally sound and less harmful fuels and energy

sources.

• Reduce the dependency on firewood, agricultural residue etc. and

increase the use of alternative fuel and energy.

Invent, use and rapidly expand an improved technology for saving

energy and fuel.

• Conserve the country’s fuel reserves and renewable sources of fuel

and energy.

The National Environment Management Action Plan 1995 (NEMAP) was

enacted in 1995, extending the programs set out in the National

Environmental Policy. NEMAP addresses the environment management

requirements in sectoral, locational, specific (wetland, coastal and marine

environment, etc.) and long-term issuers (climate change, urbanization,

regional water sharing and research & development) during the period

from 1995 to 2005. During the planning process, workshops were

organized at several places in the country with the government and

non governmental organization (NGO) collaboration, ensuring public

participation from every segment of society. Table 1.1.1.8 shows the

action plan in the energy sector developed in NEMAP.

-1 -18 -

Table 1.1.1.8 National Environment Management Action Plan: Energy Sector

Key Issues Recommended Actions Type of Action

Actor s/Agencie s Specific Action

Heavy reliance on bio-fuels, wood,agri-residue, cowdung for fuel

Development of awareness about the alternative use of agricultural residue and animal waste

Policy/Advocacy/Project

Community Organizations/ NGOs, DOE, People

Media Campaign and demonstration etc. on alternate energy resources

Development of alternate Energy

Policy/Advocacy

ResearchOrganizations,universities,DOE

Pilot project on solar energy and bio-gas

Large-scaledeforestation

Afforestation program involving the participation of community

Policy/Advocacy

DOF, localGovt, agencies, Community Organizations/ NGOs, people

Social forestry, Community Forestry, Agro- Forestry programs with people’s participation

Lack of Awareness on Energy Conservation

Awareness Campaign Policy/AdvocacyProject

DOE, FEJB, Community Organization/ NGO, People

Awareness raising Program through mediaT.V., Radio programs

Efficient Chula Projects ResearchOrganizations,DOE,CommunityOrganizations/NGOs

Pilot projectsResearch and Development projects on efficient chulas

(Source: National Environment Management Action Plan 1995, MOEF)

(b) Basic Policy of Each Sector

In Bangladesh, a basic policy is provided for each industrial sector, where

environmental considerations in the development activities are also

stated. Policies relating to this project are as follows:

Industrial Policy. 1991

One of the objectives of the policy is “ to take appropriate measures for

preventive environmental pollution and maintaining ecological balance”,

requesting the government agencies to supervise their implementation.

National Energy Policy. 1995

One of the objectives of the policy is “to ensure environmentally sound

sustainable energy development programs causing minimum damage to

environment”. The specific recommendations are as follows:

• Environmental impact assessment should be made mandatory and

-1 -19 -

should constitute an integral part of any new energy development

project.

• Use of economically viable environment friendly technology is to be

promoted.

• Use of fuel wood is to be discouraged and replacement fuels are to be

made available at an affordable price.

• Popular awareness to be promoted regarding environmental

conservation.

Petroleum Policy. 1995

Petroleum Policy, 1995 aims at the promotion of environmental impact

assessment in the petroleum sector. “Petroleum" here means all natural

origin hydrocarbon in the state of liquid, gas and solid according to the

definition of Bangladesh Petroleum Act 1974. The main purposes of this

policy are as follows:

• Carry out prospecting, exploration and development of the

hydrocarbon resources systematically, and use them practicably for

sustainable development of the country.

• Apply an integrated policy to both public and private sectors (of

domestic and foreign).

• Promote the exploration and development of the hydrocarbon

resources.

• Utilize the domestic and international funds and the technological

resources.

• Promote the development of gas fields.

• Replace the imported oil with the gas, and increase the supply of the

energy by LPG, coal bed methane, peat and other conventional and

non-conventional energy.

Encourage private sectors to join with the oil industry and trading.

• Create a competing market so that the products with reasonable

price and high quality are supplied for the consumer.

Under this policy, construction of new oil refineries by private sectors,

liberalization of the price settings of the lubricant and the liberalization

of LPG import are to be introduced.

-1 - 20 -

2) Administrative Organization and Legislation System

The major government institution concerned with the environmental

policy and regulatory issues is the Ministry of Environment and Forest

(MOEF). Created in 1989, MOEF is presently a permanent member of

the Executive Committee for National Economic Council (ECNEC),

which is the major decision-making body for economic policy issues,

responsible for approving all public investment projects. MOEF has two

departments under it, namely the Department of Environment (DOE)

and the Forest Department (FD). DOE is the executing agency for

planning and implementing body of all environmental issues. In terms of

industrial development, the role of the DOE is to review environmental

impact assessment and issue the environmental clearance, to implement

environmental monitoring and so on.

The fundamental law concerning the environmental preservation in

present Bangladesh is the Environmental Conservation Act, 1995 (EGA

'95) enacted in 1995. This act provides a basic framework and detailed

rules as prescribed in the Environment Conservation Rules 1997 (ECR

1997), which was promulgated in 1997. These rules set:

i) The National Environmental Quality Standards, for ambient air,

various types of water, industrial effluent, emission, noise, vehicular

exhaust etc.,

ii) Requirement for and procedure to obtain Environment Clearance,

and

iii) Requirement for Initial Environment Examination (IEE) and

Environmental Impact Assessment (EIA) according to categories of

industry and other development interventions.

3) Acquisition Procedure of Environmental Clearance

Both existing and new projects shall obtain the environmental clearances

from the Director General of the DOE in accordance with EGA ’95

(Article 12). The procedure is prescribed in ECR 1997. Projects are to be

classified into four categories as shown in Table 1.1.1.9, i.e. Green,

Orange-A, Orange-B and Red, in accordance with their environmental

impact. According to the procedure detailing each categories, any project /

development intervention is to obtain Environmental Clearance in two

-1 - 21 -

steps; first to obtain the Site/Location Clearance and then to obtain the

Environmental Clearance. A large-scale mining and industrial projects

including the oil and gas sector are classified into the red category, and

the project executor shall obtain the Environmental Clearance according

to the following procedures:

Apply Site Clearance based on IEE etc.

Obtain the Site Clearance (within 60 days from application).

• Submit the detailed ELA report.

• Approval of the EIA report (within 60 days from application).

• Start the construction of the facilities including the waste disposal

facilities.

• Apply the Environmental Clearance after completion of the

construction.

• Obtain the Environmental Clearance (within 30 days from

application).

It is preferable that the location of the project classified into orange or

red category with high environmental influence level shall be selected

considering the following points:

• Locate in the area where it has been or will be specified as industrial

zone based on the city and national land plan.

• Pay attention to the environmentally sensitive area, high tide coast,

vicinity to the boundary of the residential region, the vicinity to the

boundary of the expressway and railways.

• Avoid the forest and farm area.

• The site must have enough space to install waste storage and

treatment facilities, greenbelt, etc.

• An industrial plant with the possibility of causing pollution must

avoid the vicinity of the drinking water sources, the habitat of

valuable species, and the area where frequent flood and

earthquake occurs.

• Additionally, consider the local water’s abilities to assimilate the

waste effluent, influence on the existing local infrastructures such as

water supply, residential area, electric power supply, etc.

-1-22-

Table 1.1.1.9 Classification of Project based on Site and Environmental ImpactClassifiestion Project Documents required for Clearances

Green Assembly of TV, radio, clock, telephone and toy; bookbinding; artificial leather product; assemblies of motorcycle and bicycle; packing of teas; bamboo product etc.

Outline of projectExplanation of raw material and productMutual agreement certificate of local government (NOC: No Objection Certificate)

—►Environmental Clearance acquisition (within 15 days)—►Clearance operation

Orange A Dairy farming, poultry farming, mill, rice cleaning, cloth, shoe making, leather product, furniture, plastic and rubber product, restaurant, packing, movie theater, dry cleaning, sporting equipment, etc. (Investment scale is less than Tk. 5 lacs)

Outline of projectExplanation of raw material and productNOCProcess flow diagram (PFD)Layout plan (including a waste treatment plant (ETP))Method of exhausting wasteMove or rehabilitation plan

—►Site Clearance acquisition (within 30 days) —►Start of construction —►Environmental Clearance application —►Environmental Clearance acquisition (within 15 days)—►Start of operation

Orange B polyvinyl chloride, glasshouse, edible oil, coal tar, hotel, aluminum product, brick/tile, drinking water, food processing, water processing factory, lumbering, construction/repair/enhancing of road (provincial) and bridge (100m or less), ship dismantle, battery etc.

FS report (new project)IEE (including PFD, layout plan, and ETP) (for new project)Environmental management plan (EMP) report (for existing plant)NOCPollution influence easing planMove or rehabilitation planAdditional necessary information

—►Site Clearance acquisition (within 60 days) —►Start of construction —►Environmental Clearance application -►Environmental Clearance acquisition (within 30 days)—►Start of operation

Red Leather tanning, fertilizer, power plant, mining (coal, lime, stone, natural gas, and oil, etc.), cement, oil refinery, paper manufacture, caustic soda, steel manufacture, medicine manufacture, oil chemistry, agricultural chemicals, industrial gas product, waste incinerator, waste burying, hospital, shipbuilding, frozen machine and air conditioner, laying/repair/expansion of pipelines, construction/repair/ enhancing of bank against flood, road (regional, national and international) etc.

FS report (new project)IEE (including outline of EIA, PFD, layout plan, and ETP) (for new project)EMP report (for existing plant)NOCPollution influence easing planMove or rehabilitation planAdditional necessary information

—♦Site Clearance acquisition (within 60 days)—►Submitting EIA report—►Approval to EIA report (within 60 days)-►Start of construction —►Environmental Clearance application —►Environmental Clearance acquisition (within 30 days)—♦Start of operation

(Source: Environment Conservation Rule 1997, MOEF)

-1-23-

The guidelines for environmental management including environmental

impact assessment have been published for the water resources by the

Ministry of Water Resources (1991), for the industries by DOE (1995) and

for the civil works by the Local Government Engineering Department

(1992/94/98). The sectoral guidelines for the environmental management

are under preparation with the support of UNDP as a part of "Capacity

Building for Environmental Legislation and Policy Analysis” in

Sustainable Environment Management Program (SEMP). World Bank is

also participating in this program as one of the execution organizations.

The guidelines for 14 sectors in all are planned, and the one for the

cement factories, the power plant, the paper manufacture and the fiber

sectors, etc. have been completed so far. As for the gas and oil sectors,

preparation of the draft guideline has been started in September 2000.

4) Approach on Climate Change

Bangladesh signed the United Nations Framework Convention on

Climate Change (UNFCCC) in June 1992, and ratified it in April 1994.

Since then, Bangladesh has taken several steps, in association with the

international agencies, through the following projects to assess the

possible impacts of climate change and sea level rise, to estimate the

Greenhouse Gases (GHGs) emissions in the country, to identify

mitigation measures or projects for GHGs reduction:

• Effect of climate change and sea level rise on Bangladesh (1989)

• Greenhouse effect and climate change: An assessment of the effects

on Bangladesh (1993)

• Climate change in Asia, ADB (1994)

• Vulnerability of Bangladesh to climate change and sea level rise

(1994)

• Climate change country study on Bangladesh under U.S. Climate

Change Study Program (1996)

• Asian Least-cost GHGs Abatement Strategy (ALGAS),

ADB-GEF-UNDP (1998)

In the National Environment Management Action Plan (NEMAP)

established in 1995, the action plans concerning the climate change

shown in Table 1.1.1.10 are provided. The Government has instituted an

-1 - 24 -

interministerial committee on climate change with the Secretary, MOEF,

as the Chairman and the Director General, DOE, as the Member

Secretary. The DOE has been designated as the administrative body of

the Government on climate change related matters and has produced a

number of reports, publications, and media awareness items on the issue.

In addition to the government sector, academic research institutions and

NGO sectors are working very actively in the area of environment and

climate change, which is the common feature in the international aide

projects in Bangladesh.

Table 1.1.1.10 National Environment Management Action Plan:

Climate Change and Sea Level RiseKey Issues Recommende

d ActionType of Action

Actors/Agencies

Specific Action

Uncertainties arising from the impacts of sea level rise on different sectors

Scientific study on the impact of sea level rise

Projects,NationalandRegional

DoE, Reserch Organizations, Universities, NGOs

Vulnerability study due to sea level rise on the bases ofIPCC scenarios studies, modeling

Uncertainties arising due to the impacts of drought and desertification on different sectors

Scientific study on the impact of drought and desertification

Projects,NationalandRegional

DoE, Reserch Organizations, Universities, NGOs

Modeling

Lack of general awareness

Advocacy andawarenessraising

Projects NGO Advocacy publications and media events

(Source: National Environment Management Action Plan 1995, MOEF)

UNFCCC requested both the Annex-1 Party, which owe the Greenhouse

Gases (GHGs) reduction obligation, and the non-Annex-1 Party, which

are the other signatories, to estimate the national GHGs inventory and

establish the national strategy and action program to the climate change

within the provided time limit. Bangladesh was to submit the country’s

report by March 1998 as a non-Annex-1 Party. To support the

preparation of these reports, Asia Development Bank (ADB) and United

Nations Development Programme (UNDP) executed ALGAS project,

which stands for “Asian Least-cost Greenhouse Gases Abatement

Strategy”, for 12 Asian countries of Bangladesh, China, South Korea,

North Korea, India, Indonesia, Mongolia, Myanmar, Pakistan,

Philippines, Thailand and Vietnam during 1995 to 1998. Based on the

-1-25-

national emissions of the GHGs in 1990 and projections to 2020, which is

estimated in accordance with the IPCC Guidelines for National

Greenhouse Gas Inventories, GHGs abatement options in different

economic sectors are analyzed and a country report is published for each

country.

This section describes the amount of the GHGs emission in Bangladesh

and outlines of the abatement options along with the ALGAS study. It is

to be noted that the statistical data in this section may have some

differences from the referred data in the other part of this report because

the data shown in this section is the 1990 base in accordance with the

ALGAS study, the definition of the forest is different between IPCC and

UNFAO, etc.

(a) Energy Balance and Greenhouse Gases Emissions

Table 1.1.1.11 shows the energy balance in 1990, based on which the

GHGs emissions are to be projected.

Table 1.1.1.11 Energy Balance in Bangladesh (1990)(Unit: PJ*2)

Sector Coal NaturalGas Oil Commercial

Energy TotalWood &

Wood Waste

OtherBiomass

BiomassTotaal

ElectricityGeneration 69.3 8.8 111 1IB11ManufacturingIndustries 9.5 14.0 7.0 30.5 1 19.1 73.6 92.7

Transport

Aviation 2.9 iiiiiiisi!Road+Railways+Navigation 2.5 22.1 22.1

Commercial 0.4 3.1 0.3 1.8 1.8

Residential 9.3(2%)

23.6(6%)

89.8(20%)

314.7(72%)

0(92%)

Agriculture 11.0 ISIllllISll

Non-energy use*1 56.8 2.0 llllfililsl 1

Losses 10.9 7.4 Illl|l:i8.3:2:

Total 12.4(1%)

154.1(22%)

61.5(11%)

2059.04(34%)

276.7(15%)

73.6(51%)

1,242.2(66%)

Notes) *1 : "Non-energy use” means the consumption for the material of fertilizer etc*2 : PJ=1018 Joule

(Source: National Report on Asian Least-cost Greenhouse Gas Abatement Strategy (ALGAS):Bangladesh 1998, Asian Development Bank)

-1 - 26 -

As shown in the above table, more than 60% of the total energy in

Bangladesh comes from biomass, especially more than 90% in residential

sector. Table 1.1.1.12 shows the supply area of the biomass fuels and the

amount of the supply from each area. The data in this table is a survey

data in 1981, because no similar survey has been conducted after this.

Therefore, a total area, etc. are different somewhat from the latest

statistical data referred in other parts of this report. According to this

survey, biomass fuels supply consist from; about 60% of agricultural

residue, about 16% of forest products (firewood) and about 16% of dung

from livestock. The total area of the agricultural land and the forest

tends to decrease because of the increased demand for land for rural

housing and urban growth and the supply capacity of the biomass fuel

has not been changing so much since 1980s. The total energy

consumption in Bangladesh is growing at a rapid rate of 5 percent or

more with the population growth and the economic activity, which will be

mainly covered by the natural gas supply.

Table 1.1.1.12 Supply of Biomass Fuels in Bangladesh (1981)

Type of LandArea Biomass Fuels Supply

millionhectare Percent million tons pj*i Percent

Forest (Public) 2.19 15.3 0.68 10.30 2.15Not available for Cultivation 2.57 18.0 0.08 1.20 0.25Village Forests 0.30 2.1 4.66 65.60 13.70Culturable Wastes 0.25 1.8 0.15 2.00 0.41Current Fallow 0.57 4.0 0.35 4.70 0.98Net Crop 8.41 58.8 23.08 288.48 60.20

Total Area 14.30 100.0 29 372.28 77.69

Livestock (20.5 million head) 6.70(dung) 77.72 16.21

Recycle Biomass 2.30 29.30 6.10

Total 38 479.30 100(Note) *1 : PJ=1015 Joule

(Source: National Report on Asian Least-cost Greenhouse Gas Abatement Strategy (ALGAS):

Bangladesh 1998, Asian Development Bank)

-1-27-

The GHGs inventory in Bangladesh in 1990 based on the energy balance

in Table 1.1.1.11 is presented in Table 1.1.1.12. The emissions and/or

removals of the GHGs are estimated in each of the following five sectors

according to the IPCC guideline:

I. Energy sector

II. Industrial sector

III. Agricultural sector

IV. Change of land use /Forest sector

V. Waste sector

The sector-wise GHGs emissions in 1990 is made up of about 30% from

the energy sector, about 2% from the industrial sector, about 40% from

the agricultural sector, about 27% from the land use change and forestry

and about 1% from the waste sector as shown in Table 1.1.1.13. As can be

seen from the GHGs emissions projection in the year 2020 in Figure

1.1.1.3, there will be a six fold increase in the energy sector emissions,

constituting almost 70 percent of the total. The fossil fuel as shown in

Figure 1.1.1.4, where about 50 percent of natural gas, 30 percent of oil,

and 10 percent of coal, accounts for more than 90 percent of the total

emissions. The share of the biomass is almost constant after 1990,

because the present biomass supply is considered to be near the limit of

the potential supply in Bangladesh.

-1 - 28 -

Table 1.1.1.13. Greenhouse Gases Inventory (1990) (1/2)

(Unit: Gg*1)

Source and Sink C02Emission

CO2

RemovalNet CO2

Other Greenhouse Gases*2 CO2 EquivalentCH4 NaO NOx CO Emission %

Tbtal (Net) NationalEmissions

39,900 5,809 34,092 1,739 4.51 203 4,309 72,000 100.00%

1 All Energy (Fuel Cembustion+Fugitive

12,863 . 12,863 331 4.40:: 200 4,205 21,186 29.43%

A. Fuel Combustion1. Energy and

TransformationIndustries

4,392 0 4,392 40 5 4,392 6.10%

2. Industry 2,420 0 2,420 24 0.44 16 394 3,050 4.24%3. Transport 1,875 0 1,875 1.50 12 1,875 2.60%1. Commercial 239 4. 239 0.80 0.01 0.20 7 259 0.36%5. Agriculture 680 0 680 680 0.94%6. Residential 2,082 0 2,082 138 1.75 63 1,699 5,523 7.67%7. Others 400 0 400 400 0.56%8. Traditional Biomass

Burned for Energy*362,084 62,084 nil! Hi liio Sii79:: 2,100 illiHli 5.67%

B. Fugitive FuelEmissions

0

1. Oil and Ntural Gas Systems

0 0 0 7 149 0.21%

2. Coal Mining 0 0 0Statistical Difference 775 0 775

2. Industrial Processes 1,491 iiip*: Mmm .;l::e;49:: 2.07%

A. Cement Production 153 0 153 153 0.21%B. Others 0 0 01. Ammonia

Production1,130 0 1,130 6.48 1,130 1.57%

2. Metal (iron & steel) 208 0 208 0.01 0.01 208 0.29%

3. Agriculture 2,384 :I:pt384:- ijlllU! 11*363 Ilo;ii:; mm 97.30 28,667 39.82%

A. Enteric Fermentation 0 0 0 519 10,892 15.13%B. Manure Mnagement 0 0 0 73 1,534 2.13%C. Rice Cultivation 0 0 0 767 16,107 22.37%D. Agricultural Soil 0 0 0E. Prescribed Burning of

Savannas0 0 0

F. Field Burning of Agricultural Residues

2,384 2,384 0 5 0.11 3.84 97 133 0.18%

G. Others (pleasespecify)

0 0 0

-1-29-

(Unit: Gg*1)

Table 1.1.1.13. Greenhouse Gases Inventory (1990) (2/2)

Source and SinkCO2

Emissionco2

RemovalNet CO2 Other Greenhouse Gases*2 CO2 Equivalent

4. Land-use Change and Forestry

23,162 3,425 19,738 r:0;: 0; 19,738 27.41%

A. Changes in Forest & Other Woody BiomassStocks

21,391 3,326 18,065 18,066 25.09%

B. Forest andGrasslandConversion

1,771 0 1,771 1,771 2.46%

C. Abandonment ofManaged Lands

0 99 -99 -99 -0.14%

D. Others (pleasespecify)

0 0 0

5. Waste in iiiii 1.27%

A. Solid Waste Disposalon Land

0 0 0 44 918 1.27%

B. WastewaterTreatment

0 0 0

C. Others (pleasespecify)

0 0 0

Notes) #1 : Gg = 109 g

*2 : COg-equivalents are based on global warming potentials (GWP) of 21 for CEL and

310 for NgO. NOx and CO are not included since GWPs have not been developed for

these gases.

*s : CO2 emission from combustion of biomass fuel (1A-8) is set off against absorption,

and it is not counted in the national total.



-1 - 30 -

The natural forest coverage area have been disappearing at an

accelerating rate: at a reduction rate of 3.14 percent annually over the

period of five years from 1990 to 1995 according to World Resources

1998-99 (by WRI, UNDP, UNEP, and World Bank). To improve the forest

sector, the Government established the Forest Master Plan 1995 (FMP).

The FMP stated that under the status quo scenario, the remaining forest

will disappear in the near future, except the Sundarbans forest, which is

located in the country’s southeastern region, remote and poor accessible

area, and managed as an international protection area of mangrove.

There are two major reasons for forest disappearance in Bangladesh:

• Regular harvesting of forest products as saw-logs, poles, low-cost

roofing and fencing material and firewood; and

• Encroachment into forested areas owing mainly to resource

constraints and poverty.

65 percent of the forest products are used as firewood (over 80 percent

according to the UNFAO statistics in 2000). The estimated demand for

round logs in 1991 was 4,260,000 m3 but only 1,280,000 m3 of logs have

been supplied domestically. As for firewood, only 6,180,000 m3 has been

supplied in 1993 against a demand of 8,270,000 m3 (FMS 1995). The

pressure to the domestic forest resources is very high.

The forest plays an important role as a sink of carbon dioxide (refer to

the lower inclosing) and the effect of forest conservation program to the

GHGs emission reduction is high. With sustainable utilization of the

forest and prevention of the excess use of firewood, some wood lots would

be preserved and in turn grow as any other capital asset for the owner ‘s

additional benefit. Appropriate forest management contributes to the

sustainable development both in economical and environmental aspects.

-1 - 35 -

In the 1996 IPCC Guidelines for National Greenhouse Gas Inventories, the GHGs inventory in the land-use change and the forestry is classified as follows:(1) Forest and Grassland Conversion

• Combustion in conversion ground (on-site)• Use such as the firewood (off-site)

(2) Changes in Forest and Other Wood Biomass Stocks (Emissions / Removals)• [Annual Growth Rate of Biomass Stocks]—[Annual Deforestation

Rate](3) Carbon Dioxide Emissions and Removals from Soil according to land

use and change in the management styleThe use of the forest products as firewood is counted by (1) and (2). If the forest is managed and utilized sustainablly, which means that the deforestation rate is lower than the growth rate, the emission of carbon dioxide due to the firewood combustion becomes 0 (However, GHGs such as methane and nitrogen oxides etc. are emitted).

(c) Greenhouse Gases Mitigation Program

Although the energy sector’s share of the total 1990 GHGs emission was

30 percent as shown in Figure 1.1.1.3, it will grow rapidly by six-fold,

contributing nearly 70 percent of the total in 2020. Therefore, the

improvement of the energy efficiency in all sectors is essential for the

GHGs emission reduction. The ALGAS study pointed out the following

two strategies for the emission reduction:

• Improvement of the energy efficiency

• Forest Preservation

Based on further analysis, various type of political options are presented

for the GHGs reduction as shown in Table 1.1.1.14. The ALGAS study

nominated the following six projects as the national GHGs abatement

action plan, considering the national priority and cost-benefit

performance. To develop the national priority fist, workshops which

consist of government agencies and non governmental organizations

(NGOs) were held.

• Project 1: Gas-based Power Generation

• Project 2: Dissemination of Improved Cooking Stoves in Rural Areas of

Bangladesh

-1-36-

• Project 3: Conversion of Gasoline-Driven Vehicles to CNG (Compressed

Natural Gas) -Driven Vehicles

• Project 4: Replacement of Incandescent Bulbs With Compact

Fluorescent Lamps (CFLs)

• Project 5: Solar Electricity With Photovoltaic (PV) System

• Project 6: Phasing-out 2-stroke Engines With 4-stroke Engines for

Auto -rickshaws

According to Mr. Md. Abdus Soghan, Deputy Director of the Department

of Environment, whom we interviewed at the first site survey on

November 2000, DOE has reviewed the ALGAS recommendations in

detail and requested the Government for the project implementation

based on the project profiles as summarized in Table 1.1.1.15.

-1 - 37 -

Table 1.1.1.14 Policy Option Relating to ALGAS Project 1

Energy sectorSupply Option:

1. Combined Cycle Power GenerationDemand Option: Efficiency Improvements

2. 4-Stroke 3-Wheelers3. Improved Biomass Cookstove4. Improved Kerosene Lamp5. CFL6. Efficient Refrigerator7. Efficient Air Conditioner8. Improved Gas Boilers9. Improved Coal Boiler10. Improved Fuel Oil Boiler11. Improved Biomass Boiler12. Efficient Motors

Demand Option: Demand-side Management13. Metering of Natural Gas14. Solar Reflective Glass Window15. Housekeeping + Energy Management

Process Improvement16. Brickmaking17. Paddy Parboiling

Forest Sector18. Long Rotation Artificial Reforestation (LR)19. Medium Rotation Artificial Reforestation (MR)20. Short Rotation Artificial Reforestation (SR)21. Sal (a tree in the coast part) Plantation (MR-Sal)22. Participatory Coast Plantation (MR-PCP)23. Participatory Woods Plantation (SR-PWP)

Agricultural sector (me thane generation control)Rice Agriculture:

24. Regulating Flooding in completely flooded land25. Draining of fields twice.26. Wheat Cultivation in place of Boo rice

Livestock:27. Molasses-Urea block liquid28. Urea treated straw



-1 - 38 -

Table 1.1.1.15 Greenhouse Gases Reduction Project in Bangladesh (1/3)

ProjectTitle

Project Costa) Total(million US$)b) Project Aid Period

Main Objective(s) and Justification of the Project Note

Gas-based Power Cost: Main Objective: Construction of 8,000MW power generations > Power is the lifeline ofGeneration a) US$8,105.48

b) US$6,791.75

Period:2001-2008

1) Gas base power generation2) Gas exploration3) Power and gas transmission

> High efficiency power generation is achieved by using the gas available as a domestic resource.

> Reduction of imported crude oil and saving of foreign currency> Reinforcement of the industrial foundation and job creation.

Reduction of poverty.Validity: Reduction of 43,840,000 tons C02

industrialization and economic development. The foreign capital investment is expected.

> From the economic point of view, the plan is one of the lowest- cost options , and it is environmentally friendly.

Dissemination of Cost: Main Objective: Other effects:Improved Cooking a) US$530 > Introduction of about a million improved cooking stoves . > Some dung is used as aStoves in Rural Areas b) US$527.58 > To cut down consumption of fuelwood and, thereby, to slow fertilizer instead of fuel.of Bangladesh

Period:2001-2005down the rate of deforestation and also to lengthen the carbon absorption period.

> In addition, the effect of saving the expense for the fuelwood, saving time and improvement of women's health in the farm villages is expected.

Validity: Reduction of 3,550,000 tons C02 yearly.

> Degradation of land is prevented.

> New capital asset from wood by forestry.

(Source: Project Profile, DOE)

Table 1.1.1.15 Greenhouse Gases Reduction Project in Bangladesh (2/3)

ProjectTitle



Conversion ofGasoline-Driven Vehicles toCNG-Driven Vehicles

Cost:a) US$16.76b) US$16.76

Period:2001-2005

Main Objective:> To convert 17,000 vehicles (about 35% of the present

gasoline-driven vehicles) into CNG (Compressed Natural Gas) driven vehicle.

> To replace the imported fuel with the domestic fuel> To reduce the harmful emission (especially, lead

compound) from car and air pollution> In addition, to increase number of CNG cars,

organization strengthening and ability developmentValidity:> Reduction of 130,000 tons CO2 through all drive period

of the car.

> The initial investment to the CNG car conversion will be paid back within the first year.

> For the government- owned cars, the payback time may be even shorter than private cars because of more frequent use.

Replacement ofIncandescent Bulbs With CompactFluorescent Lamps (CFLs)

Cost:a) US$21b) US$21

Period:2001-2020

Main Objective:> To replace at least 50% of the existing incandescent

bulbs by the year 2000.> To face the present shortage of electricity supply. Validity:Energy saving corresponding to $260,000 and reduction of 2,640,000 tons C02 per 100,000 fluorescent lamp.

> In the first stage, negative impacts such as impact to the existing bulb manufacturers (no CFLs technology in the country) and decrease of foreign currency reserve due to CFLs import are expected.

> The initial negatives will be caught up for the medium & long term.


Table 1.1.1.15 Greenhouse Gases Reduction Project in Bangladesh (3/3)ProjectTitle



Solar Electricity With Cost: Main Objective: > The government isPhotovoltaic (PV) a) US$145 > To disseminate about 100,000 Solar PV Systems in remote advancing the ruralSystem b) US$145

Period:2001-2020

areas by 2020.> To generate/increase availability of electricity to the

isolated rural people to improve their quality of life.> To reduce dependence on the biomass fuel.> To participate the private sector in Solar PV system.> To promote Solar PV Systems as a least cost rural

electrification program.Validity: Reduction Kerosene which is the fuel for the light equivalent to $4,650,000 and 1,500,000 tons.

electrification policy and Solar PV Systems which are better electrificationmethods than the conventional system, economically and environmentally.

Phasing-out 2-stroke Cost: Main Objective: > Most of the auto-rickshawsEngines With a) US$44.5 > To replace 2-stroke engines of 15,000 auto-rickshaws with drivers suffer from4-stroke Engines for Auto-rickshaws

b) US$44.5

Period:2001-2005

4-stroke engines.> To phase-out the less-efficient highly polluting 2-stroke

auto-rickshaws with high efficiency vehicles.> Energy saving> To reduce GHGs and other harmful air pollutant (lead

compound and SPM, etc.)Validity: Gasoline saving of 600 liters a year per car and reduction 44,000-ton CO2.

bronchial ailments, and air pollution in the city part is serious.


5) Approach in Oil and Gas Sector on Environment

The oil and gas sector is now preparing the environmental management

guideline under the program sponsored by UNDP, namely Capacity

Building for Environmental Legislation and Policy Analysis in

Sustainable Environment Management Program (SEMP). We

interviewed Mr. Paul Martine, who in charge of this project in World

Bank, and obtained the Draft report of Sectoral Guidelines for

Environmental Management for Oil and Gas Exploration, Production

and Distribution, September 2000. Following items are listed in this

draft guideline as the major components for EIA of the oil and gas sector

projects:

• Baseline information on species and populations issues (terrestrial

vegetation, wildlife, aquatic flora and fauna, fish population, marine

and estuarine habitats, terrestrial habitat);

Environmental impact of seismic surveys;

• Environmental impact of drilling activities;

• Environmental impact of conditioning of produced natural gas,

processing and refining other hydrocarbons including associated

waste (solid, liquid and gaseous) disposal issues;

• Environmental impact of blowouts and its safety operation;

• Environmental impact of pipeline construction and oil and gas

transmission (including socio-economic impacts such as resettlement,

historical resources, etc.)

• Risk assessment and mitigation measures for reducing impacts and

risk;

• Environmental management procedures and mitigation measures;

• Environmental monitoring.

The Environment and Safety Division is in charge of the environmental

impact assessment in Petrobangla. It draws up the terms of reference

(TOR) for the EIA and entrusts the preparation of the EIA reports to

special consultants.

Major oil/gas producing countries in the world are now introducing the

health, safety and environmental management system (HSE-MS) in oil

and gas development activities. Petrobangla is also developing its own

environment and safety management system (ESMS), through the

-1 - 42 -

technical assistance program (TA) by World Bank. Mr. A.K.M. Shafiqur

Rahman, Deputy General Manager of Environment and Safety Division,

explained to us about the outline of the ESMS of Petrobangla. The final

draft documents of the ESMS had been completed in September 2000, as

shown in Table 1.1.1.16. As for the next step to implement the ESMS in

Petrobangla, additional assistance program is now under request.

Table 1.1.1.16 Contents of Environment and Safety Management

System

Section No. TitleSection 1Section 2Section 3Section 4

IntroductionPolicy, Legislation and requirementsGas Processing (EIA and Mitigations)Seismic Exploration and Well Drilling (EIA and Mitigations)

Section 5 Gas Transmission and Distribution

Section 6(EIA and Mitigations)The Environment and Safety Management System

ESMS ProcessES Categories, Guidance Elements andProceduresStructure and Organization/ Roles and Responsibilities for Petrobangra/ Environment and Safety Division/ Operating Company

(Source • Environment and Safety Management System, Petrobangla)

-1 - 43 -

1.1.2 Energy Strategy

(1) Energy Policy

The consumption of energy per capita is 197kgoe (kilogram of oil

equivalent) in accordance with the World Bank statistics in 1997 when the

population is 128 million and this level is low following Cambodia and

Nepal in Asia. The electrification rate is also only 18% of the people

(equivalent to about 4.35 millions supply terminals), and the people who

can enjoy the natural gas, which is the only available domestic production

energy resource, and the imported petroleum products are estimated at

around 8% only.

It is therefore required to supply a stable energy continuously in order to

influence the development and for the building of industrial growth and

socio-economics. According to the Master Plan in 2000 prepared by BPDB

(Bangladesh Power Development Board), the initial power generation

capacity installed is 3,150MW maximum as of June 2000, and the

maximum peak demand is recorded at 2,823 MW in July 27, 2000.

The system losses of the electrical supply due to pilferage of the electric

power and unpaid electric power are reported at 33.3%.

The electric power demand is expected to expand at the scale of 300MW

every year according to the 5th five-year plan in the country, and the

required investment of that scale, which exceeds TkllO billions (equivalent

to US$2.3 billions ) is requested at the end of 2000.

Therefore, the government started the promotion of business development

of power plant with the public organization and the private investment by

the utilization of natural gas, solar power, nuclear and hydro-power.

The barge mounted type power generation units of 100MW class were set

up in Khulna, Haripur, and Shikaibaha through private investment in

1996. Following it, the programs for the power generation plant

construction have newly started at Meghnaghat, Haripur, Mymensingh,

and Baghabari including the construction of the gas pipeline for the

necessary fuel supply.

It is published that the remaining producible reserves of natural gas is

estimated at 11.61 trillion cubic feet (TCF) as of June, 2000 as shown in

Table 1.1.2.1. At present the government has been promoting the

-1 - 44 -

Production Sharing Contract (PSC) for 23 blocks. Through the first round

of PSC tender in 1993 and the second round of tender in 1997, the

contracts have been signed and implemented in the exploration and

development at eight blocks, and also the negotiation is on-going for other

seven blocks.

In the latest 5th five year plan which covers 1997 to 2002, the energy supply

gaps between eastern and western regions is expressed, and the further

development and production of natural gas is indispensable. Moreover, the

seclusion of the west region from the east region by the Jamuna River, was

practically eliminated by the operation of the Jamuna Bridge in 1999. The

circumstance of this vital infrastructure has been consolidated for the

installation of a natural gas pipeline which can transmit the natural gas from

the eastern region where the people now enjoys the benefits of natural gas

through the established gas pipeline networks and concentrated gas fields, to

the western region where the majority of energy is still dependent on the

traditional fuels, such as biomass energy. And the extension of railway,

transmission cable and communication lines are also considerable. The

government is intending to ask the necessary funds from the international

organizations, such as Asian Development Bank, etc., for the installation of

gas transmission pipelines in the western region, the exploration and

development of new gas fields including the drilling of new production wells

based on the increase of natural gas demand, and new development of energy

resources such as coal. However the World Bank and other international

organizations are hesitant to provide the new loan and funds for Bangladesh

due to the delay in the privatization of public organization, including

Petrobangla.

(2) Energy Resources

Bangladesh can be expressed as, "a Country which floats on gas", having

been graced with abundant natural gas which can be tapped in the country

as the primary energy. The liquid hydrocarbon produced in the country is

made up only of the condensates, which accompanies the natural gas. No

other oilfields had been found, except Haripur, a part of the Sylhet gas field

and called as oil well with the production of liquid hydrocarbon. However,

-1 - 45 -

the production of oil is being suspended now.

The coal beds whose total amount exceeds a billion tons have been

confirmed in Jamalganj Dinajpur, and Rangpur located in the northwest of

the country and the development of them is partially continued. The coal is

planned to be utilized in Barapukuria power plant (300MW) in 2005.

However, the coal has not become a potential energy resources yet because

of the problems such as; piling up depth and the quality. It is expected that

the use of coal can contribute to the country economically through the

reduction of foreign currency spending by importation of oil. On the other

hand, it is necessary to consider that the development and use of coal could

result to future environmental problems, because the discharge amount of

the carbon dioxide generated by the combustion of coal is much larger than

other energy sources.

In spite of the large amount of rainfall in the country, the hydraulic power

generation is not being given much emphasis in the country except the

power plant (230MW) in Kaptai dams at the Chittagong hill zone in the

southeast region, due to the flatness of most part of the country.

The development of the natural gas in the country can be traced back to

1910's. Neither the oilfield nor the gas fields suitable for development of a

commercial basis were found, though the prospect drilling and exploration

were done mainly on the zone where oil indications were seen in the folded

structure in the first oil development stage of 1910 - 1933. The second oil

development stage in 1951 - 1971 was in the East Pakistan days after the

independence of the country as Pakistan. The modem physical

investigation technology was adopted for the first time in the country, and

the domestic and/or international oil development companies such as Shell,

Stanvac, and Pakistan Petroleum (PPL) in addition to the government-run

oil development company Oil & Gas Development Corp (OGDC), joined the

oil business and the exploration works were commenced at onshore of the

country. As the result of exploration, 22 wells were drilled and eight gas

fields were found.

The third stage of oil and gas development started from 1972 to the present.

Petrobangra (Bangladesh Oil and Gas & Mineral Corp.), which is

responsible in carrying out the exploration and development of oil, gas and

-1 - 46 -

mineral resources in the country was established in 1974 after Bangladesh

independence in 1971 and the effectuation of Petroleum Act-1974. In

addition, the system tasked to prospect, develop and produce oil and gas

resource was formed. Furthermore, in accordance with the advice of World

Bank, the production sharing contract (PSC) was announced and opened

for international oil and gas development companies.

The oil exploration activities in the country were eventually shifted from

onshore to offshore during 1974 to 1978, which resulted in the conclusion of

PSC with six international oil companies separately and their exploration,

the Kutubdia gas field was found by Union Oil.

Because the oil fields were found in the East Indian region close to the

northeast border of Bangladesh, the oil exploration was carried out since

1980 in Sylhet area situated on the extension line of the same folded

structure of East Indian region. The Haripur oilfield was found in the

Sylhet district in 1986.

A total of 22 gas fields have been found together with the developed and

undeveloped gas field till today. The name of each gas fields and their

reserves are shown in Table 1.1.2.1, and the main gas pipeline

transmission fines and the locations of oil and gas fields are shown in the

attached Figure 1.1.2.1.

Moreover, the chart of the Petroleum Blocks developed under PSCs is

shown in the attached Figure 1.1.2.2.

-1 - 47 -

Table 1.1.2.1 Natural Gas Fields in Bangladesh(Unit: BCF)

No. Name ofField

Year of Discovery

GIIP (Prove n+ Provable)

Recoverable (Proven + Provable)

CumulativeProduction (June 2000)

NetRecoverableReserve

A. PRODUCING FI ELD1 Bakhrabad 1969 1,432 867 580.272 286.7282 Habiganj 1963 3,669 1,895 783.670 1,111.3303 Kailashtilla 1962 3,657 2,529 230.244 2,298.7564 Rashidpur 1960 2,242 1,309 191.315 1,117.6855 Sylhet 1955 444 266 166.243 99.7576 Titas 1962 4,138 2,100 1,721.177 378.8237 Narsingdi 1990 194 126 26.026 99.9748 Meghna 1990 159 104 20.107 83.8939 Sangu 1996 1,031 848 40.600 807.40010 Saldanadi 1996 200 140 12.063 127.93711 Jalalabad 1989 1,195 815 37.110 777.89012 Beanibazar 1981 243 167 3.355 163.645

Sub-Total A 18,604 11,166 3,812.183 7,353.817B. NON-PRODUCING13 Begumganj 1977 25 15 0 1514 Fenchuganj 1988 350 210 0 21015 Kutubdia 1977 780 468 0 46816 Shahbazpur 1995 514 333 0 33317 Semutang 1969 164 98 0 9818 Bibiyana 1998 3,150 2,401 0 2,40119 Moulavibazar 1999 500 400 0 400

Sub-Total B 5,483 3,925 0 3,925Sub-Total (A + B) 24,087 15,091 3,812.18 11,278.82

C P RODUCTION SUSPENDS D20 Chattak 1959 447 268 27 241.521 Kamta 1981 33 23 21.1 1.922 Feni 1981 178 125 40 85.49

Sub-Total C 658 416 87.11 328.89Grand Total (A + B + C) in

BCF24,745 15,507 3,899.29 11,607.71

Grand Total (A + B + C) in TCF 24.745 15.507 3.90 11.61(Source : ICEP International Seminar 2000, Petrobangla)

-1 - 48 -

The reserves of the natural gas in the country very much influence the

future of Bangladesh. The reservoir analysis and evaluation of the natural

gas reserve was carried out for the eight major gas fields of the country

from the end of 1980's to the beginning of 1990's through the funding from

the World Bank and Canadian International Development Agency (CIDA).

However, the estimated reserves of the natural gas shows a big difference

between the official announcements by Petrobangra as a governmental

body and other concerned private organizations, such as PSC contractors,

because of the credibility of basic data such as the seismic survey data or

the production well data which were used in the previous reservoir

evaluation work, and the technology levels of analysis, etc. As a measure of

consideration of those differences of reserves, Petrobangra and United

States Department of Interior, U. S. Geological Survey (USGS) have been

jointly executing the natural gas reserves evaluation with the support of

fund from United States Trade and Development Agency (USTDA) and the

study result is scheduled to be announced in the beginning of 2001.

(3) Energy Supply and Demand

In accordance with United Nations Food and Agriculture Organization

(UNFAO), the consumed energy ratio which depends on the biomass fuels

such as agricultural residue, forest products (firewood) and dugs from

livestock (cowpat) accounts for 73% of the whole supply source of the

energy consumed in Bangladesh in 1990 and the commercial energy such

as natural gas, imported crude oil, petroleum products, coal and

hydro-power, etc. account for the remaining 27%. The ratio of the biomass

fuels has improved from 83% in 1981 but ratio is still considered high, and

the circumstances in which the commercial energy can be enjoyed has not

been promoted yet. Moreover, about 88% of the operated power plants

(maximum output 2,908MW) are generated by use of the natural gas fuel.

The power consumption per capita is still 76 kilowatt-hour in a year

according to World Bank statistics in 1997, and the level is almost 1/100

from that of Japan.

In the other hand, about 80% of all wood production of Bangladesh is

consumed for cocking fuel as reported by the statistics of UNFAO in 2000.

-1 - 52 -

The natural gas consumed during the 1997-1998 fiscal year was around

282.2 billions cubic feet,, and 44% of it was supplied for the power

generation, 28% for the fertilizer manufacturing and 12% for the general

industries. The transition of the natural gas consumption in recent years

by the sectors is as shown in Table 1.1.2.2.

Table 1.1.2.2 Transition of Natural Gas Consumption in Bangladesh

by Sectors

Sector 1993-94 1994-95 1995-96 1996-97 1997-98 1999-00Total Natural Gas Consumption (BCF)

223.8 247.4 265.5 261.0 282.2 332

Power Generation (%) 43.6 43.4 41.7 42.5 43.7 45Fertilizer (%) 33.3 32.5 34.3 29.8 28.4 25General Industries (%) 8.9 9.8 10.3 11.4 11.9

30Seasonal Consumption, Public Use etc. (%)

8.2 8.8 9.0 10.0 10.0

System Loss (%) 6.0 5.4 4.8 6.3 5.9 N/A(Source • Petrobangla)

It is necessary to improve the power generation through the utilization of

natural gas in the country. However, the country’s policy limits the supply

of natural gas supply to the power generation sector as not exceeding 50%

of total gas production of the country. Therefore it is necessary to promote

the production of natural gas in order to increase the gas fuel base power

generation.

The power generation capacity in Bangladesh is steadily rising due to the

improvement of generating facilities in BPDP and power supplied by the

Independent Power Producers (IPPs). However, the available power is still

far from the level of stable supply against the rapid increase in power

demand. The Master Plan prepared by BPDP in June 2000, shows the

further requirements based on the actual data of 1994, however the

equipped capacity of power generation and the possible output is still too

close.

Table 1.1.2.3 shows the transition and expectations of the amount of the

maximum power generation and the total possible outputs in recent years

based on the Master Plan.

-1 - 53 -

Table 1.1.2.3 Maximum Power Generation and Total Possible Outputs

in Bangladesh

FiscalYear

Net Generation Gross GenerationEnergy(MWh)

PeakDemand

(MW)

Energy(MWh)

PeakDemand

(MW)1991 7,823,376 1,551.4 8,270,200 1,640.01992 8,394,947 1,578.2 8,894,300 1,672.01993 8,699,858 1,723.0 9,206,400 1,823.31994 9,218,771 1,766.6 9,784,300 1,875.01995 10,118,270 1,925.1 10,711,471 2,038.01996 11,019,560 2,096.6 11,665,601 2,219.61997 12,008,292 2,284.7 12,712,299 2,418.61998 13,098,515 2,492.1 13,866,438 2,638.21999 14,302,068 2,721.1 15,140,551 2,880.62000 15,632,351 2,974.2 16,548,824 3,148.62001 16,849,206 3,205.7 17,837,020 3,393.62002 18,167,389 3,456.5 19,232,483 3,659.12003 19,595,827 3,728.3 20,744,665 3,946.92004 21,144,276 4,022.9 22,383,895 4,258.72005 22,823,406 4,342.4 24,161,467 4,596.9

(Note) Load factor: 60%(Source: BPDB Power Development Program for the Next 7 Years)

Petrobangla estimates the further transition of supply and demand of

natural gas up to 2005 as shown in Table 1.1.2.4 based on the recent trend

of the supply and demand in the country and the newly adopted policy of

Fifth Five Years Plan.

Table 1.1.2.4 Trend of Natural Gas Supply and Demand

Item fiscal Year1998/99 1999/00 2000/01 2001/02 2002/03 2003/04 2004/05

Total Supply 900 1095 1200 1340 1340 1500 1500Total Demand 920 950 1130 1280 1280 1450 1450Balance -20 145 70 60 60 50 50

(Source: Petrobangla, ICEP International Seminar 2000)

It order to secure a stable supply of the natural gas in the whole regions of

Bangladesh, it is necessary to establish an extensive key pipeline network

in the country. Based on this principle, many pipeline projects have been

considered for the promotion and finding of a suitable financial

arrangement including self-finance and international loans. Table 1.1.2.5

-1 - 54 -

shows the planned pipeline projects presently.

The stable supply of the natural gas to the customers in the country for the

next 20 years may be possible when these pipeline project programs are

realized.

Table 1.1.2.5 Pipelines under Construction and PlanningMatter OutlineRashidpur-Ashuganj Gas Transmission Loopline

A new 30" pipeline is constructed to expand the amount of transportation of the present N-SPipeline; 54km pipeline between Habiganj-Ashuganj is under construction with the target of completion in June 2001 as the first stage.

Nolka-Bonpara-Ishwardi -Jessore Gas Transmission Pipeline

As a part of the west development plan, the key natural gas pipeline of 30"x 185km is constructed in the regional center of the west. Construction is scheduled to be completed by June, 2003.

Rashidpur-Kailashtilla Gas Transmission Loopline

Extended pipeline to the upstream of above-mentioned Rashidpur-Ashuganj Gas Transmission Loopline. The 30" x 100km and 30 x 30km branch line to Bibiyana Gas Field are contained. Construction is scheduled to be completed by June, 2003.

Ashuganj-Dhanua-Elenga -Nolka Gas Transmission Loopline

The pipeline of 30" x 142km is constructed to Nolka which is the key base in the west region as the loop line of the existing B-B line (Ashuganj-Elenga) to secure the amount of the natural gas transportation from the east to the west region. Construction is scheduled to be completed in June, 2003.However, the pipeline on Jamuna Bridge is assumed to use the existing.

Dhanua-Joydebpur Spur Line Construction of 20"x 30km pipeline as measures against the natural Gas demand increase in the capital Dhaka. Construction is scheduled to be completed in June, 2003.This pipeline becomes the natural gas supply route to the Dhaka City Ring Main in series.

Dhaka City Ring Main The rapid increase of the natural gas demand in the capital Dhaka causes the supply pressure unstable in the existing pipeline network. As a measure, it is planned to connect the capital Dhaka with the pipeline ring of 30"x 80km in order to provide stable supplies to a large amount of customer and to secure more supply sources.Construction is scheduled to be completed by June, 2005.

(Source: GTCL and ICEP International Seminar 2000)

-1 - 55 -

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Figure 1.1.2.5 LPG Distribution Terminals (Depots) in Bangladesh

(Source: Jamuna Oil Co., Ltd. Annual Report 1998-99)

-1-57-

and at the same time the GHGs reduction might be realized in a cost

effective manner:

• CO2 emissions per GDP ranks as one of the lowest countries in the

world;

• The energy structure is based on the natural gas domestically produced,

whose GHGs emission load is at lower level compared to the other fossil

energy; and

• The plane area with a few meters height above the sea level covers most

of the country and might suffer serious damage from sea level raising

accompanied by climate change.

As described in paragraph l.l.l(5)-4), the DOE, who reviewed the climate

change mitigation projects after the ALGAS project, which was supported

by ADB and other international organizations, selected the following six

projects as candidate for the CDM projects and requested the Government

for the projects implementation:

• Project 1: Gas-based Power Generation

• Project 2: Dissemination of Improved Cooking Stoves in Rural Areas of

Bangladesh

• Project 3: Conversion of Gasoline-Driven Vehicles to CNG (Compressed

Natural Gas) -Driven Vehicles

• Project 4: Replacement of Incandescent Bulbs With Compact Fluorescent

Lamps (CFLs)

• Project 5: Solar Electricity With Photovoltaic (PV) System

• Project 6: Phasing-out 2-stroke Engines With 4-stroke Engines for

Auto -rickshaws

Above projects are aimed not only to reduce the GHGs emission but also to

realize the sustainable development in Bangladesh, such as effective

utilization of domestic natural resources of natural gases and/or forest

resources, poverty reduction, narrow the energy gap between the eastern

and western area, that such projects are being requested for prompt

execution.

Implementation of these GHGs reduction projects by Bangladesh itself is

difficult due to both technical and financial problems. In order to

implement these projects, various energy saving and/or GHGs reduction

-1 - 59 -

technologies are indispensable; namely, NGL recovery from natural gas

and production of high value added products such as LPG, MS and HSD,

gas based power generation, production of gas-driven car, production of

fluorescent lamp, solar power generation, etc. However these technologies

are still under development in Bangladesh, the technology transfers and

capacity building from industrialized countries through the CDM might be

highly appreciated.

On the other hand, financial resource is also a serious problem. DOE is

planning to tap the financial support from the global environmental funds

(GEF) of the World Bank and/or other international development banks for

almost the full amount of the project cost in the projects above mentioned,

except for a part of the gas based generation project. Bangladesh, being a

least less development countries (LLDC) in the world, is obliged to rely on

a financial support from abroad, such as ODA loans to implement a large

scale project.

If the CDM would be applied for the project, Bangladesh might obtain an

additional option for the financial resources and the industrialized country

might obtain the Certified Emission Reductions (CERs) credit in return,

which would bring profit for both sides. Since many projects are suspended

due to the financial resources and their repayments in Bangladesh, the

CDM scheme, which will also provide benefits for the investor side, would

be attractive.

-1 - 60 *

1.2 Necessity of Technology Introduction for Alternative Energy

Considering the use of the natural gas in Bangladesh at present, it can be

said that the natural gas produced in the gas field and the accompanying

condensates produced have not been sufficiently utilized. The natural gas

fields in this country are concentrated in the east of the country and the

natural gas produced from the fields in the southeast represented by Titas

gas field contains less C3 and C4 fractions, but the one produced in the

northeast represented by Kailastila gas field contains comparatively rich

C3 and C4 fractions.

However, C3 and C4 fractions being separated by the production separator

are not utilized effectively because the facilities to extract C3, C4 and Cs+

fractions are not introduced into the gas field. Therefore some of them are

mixed with the sales gas and another part are incinerated by flaring out.

Cs+ fraction separated as a heavy condensate is either used without

refining as an inferior gasoline and emits air pollution exhaust to the

atmosphere after combustion in the internal combustion engines or, the

fractions are mixed with the imported crude oil and put out to the market

as a petroleum product after refining. On the other hand, ERL of BPC,

which is the only refinery refining imported crude oil, is hesitant in

receiving excess volume of the condensate due to the technical reasons

such as their refining plant is not designed to refine the mixture of the

imported crude oil and the condensate, and for fear of affecting their

production efficiency.

In order to improve the utilization level of the limited energy in this

country, it is desired to make separation of them in accordance with its

necessity and then utilize effectively as sales gas and LPG, and

additionally to separate and extract condensate for use as MS and HSD.

The technology to refine/produce LPG, MS, and HSD from the raw

material NGL collected from the natural gas are not considered a special

technology, in fact this technology have been existing in many oil-producing

countries worldwide.

The introduction of this technology in Bangladesh is somewhat delayed

primarily due to capital reason. However, the achievement of the project by

introducing this technology is desired from the viewpoint of effective use and

stable supply of energy, and the promotion of social development.

-1 - 61 -

1.3 Intent, Needs and Effects of the Project

1.3.1 Intent of the Project

The intent of the project execution is focused on the improvement of the

situation in which a part of the Cs and Ci fractions after the sales gas is

taken out from the natural gas in the gas field are mixed with the sales gas

or some part is incinerated and discharged as GHGs, and on effective

utilization of them as residential use by producing LPG. Additionally, it

can cause the reduction of air pollution gas emission by refining/producing

the car fuel satisfying the normal products standard and the diesel oil, etc.

from the condensate produced accompanying the natural gas production,

supplying to the market, and being used instead of inferior gasoline.

The diffusion of residential use of propane gas supports the conversion of

the energy source in Bangladesh where the ratio which depends on the

biomass fuels like agricultural residue, forest products, dung from livestock,

etc. is high and the social development.

1.3.2 Need of the Project

The fact clearly appears to the charge collection system of general homes in

the region where that natural gas and electric power is enjoyed by the

people. As for the natural gas, two charge systems are being applied at

present. One is the system where the amount of real consumption is charge

through the use of meters and the other is the fixed charge system where

the amount charged is determined by the number of gas stoves set up or

used in each households.

In the region where the availability of natural gas is widespread as a city gas,

the natural gas is chiefly used in the homes for cooking and the gas stoves

ignited in the morning are kept burning for the whole day because the

greater part of household contracts are fixed charged system. Thus, the

system leads to the gas being wasted indiscriminately.

Table 1.3.2.1 shows the charge system for gas consumption in a general home.

-1 - 62 -

Table 1.3.2.1 General Home Natural Gas Consumption Charge

Household Pricing Condition PriceMeter system 3.85 (Tk/SCM)Number of gas stoves

One furnace 210 (Tk/month)Two furnaces 350 (Tk/month)

(Source: Petrobangla)

An average of Tk 5,000-6,000 is collected as the cost for each house gas

piping construction and connection to natural gas distribution system,

though the natural gas fee rate for the household use is suppressed lower

compared with industrial charge (4.83 Tk/SCM) and general commercial

charge (6.90 Tk/SCM). This connection cost is considered a big amount and

unaffordable to the general household causing a little halt in the spread of

natural gas use.

On the other hand, as for the electric power, stealing of electricity and

illegal meter-reading, etc. are common and widespread in the country and

about 33.3% of the generated power is pointed out as a system loss that the

charge cannot be collected. This system loss was actually 40% or more

before, but it gradually improved after being pointed out by the World

Bank. The figure however, is still high.

It can be said that the dealings through the cylindered LPG provides an

effective measures to enlighten the consciousness on the energy cost because

the bought energy and the consumed energy can be recognized as factual

realities.

Table 1.1.2.2 of foregoing section 1.1.2 shows that the amount of the

natural gas consumed as household use is roughly only about 10%,

however it makes the general household aware of the necessity to depress

the emission of the exhaust gas by useless gas burning and energy

management from the viewpoint of an economic side.

Moreover, with the spread of stable supply of LPG as a handy energy

source, the promotion of social development and economic activity by

getting rid of the biomass fuel dependence becomes possible in the region

where the natural gas and the electric power are not supplied.

As an economical evaluation, MS and HSD produced with LPG would

become a possible replacement to the imported petroleum products, thus

-1 - 63 -

the foreign currency financial situation which gets stringent will be

improved.

1.3.3 Effect of the Project

When this project is promoted, the following five direct and indirect effects

are expected:

• Effective use of natural gas

• Stable energy supply to the west region

• Economic effect as the substitution of imported petroleum products and

reduction of air pollution

• Decreasing GHGs emission by conversion of the residential fuel sources

• Effects of economic activation and social development by conversion of

the residential fuel sources

The outline of each effect is as follows.

(1) Effective Use of Natural Gas

The natural gas produced from the gas field is supplied to the consumers

as the sales gas via the trunk pipelines now, but it becomes possible that

the natural gas which is a limited resource is utilized without any wasteful

dissipation by means of collecting the NGL from the part of gas mixed to

the sales gas or abandoned by incineration in the refining process of the

natural gas to the sales gas and produce LPG for residential use energy.

Furthermore the condensate can be converted to a more valuable commodity

by refining to MS and HSD, which have a value-added property as an oil

product from the present untreated state.

(2) Supply of Stable Energy to the West Region

The LPG manufactured in the Ahuganj NGL refining plant becomes

possible to be supplied as the handy fuel to the west region where the ratio

of people depending on the biomass fuel is high because the natural gas

cannot be supplied from the east region due to the two region's division by

the Jamuna river. Thus, west region’s access to LPG would reduce the

energy gap and cancellation of the energy availability difference between

the east and west in this country.

-1 - 64 -

(3) Mitigation of Air Pollution

Combustion of condensate as an inferior gasoline by the internal

combustion engines, especially two stroke engines, is worsening the air

pollution. It is expected that the air pollution will be mitigated by refining

of such unprocessed inferior fuel and commercializing them.

(4) Reduction of GHGs Emission by Conversion of Residential Use Fuel Source

The GHGs generated by combustion can be reduced by converting the fuel

to LPG from firewood, which is the biomass fuel and used as a residential

fuel in the region where energy is not stably supplied now.

(5) Effect of Economic Activation and Social Development by Conversion of

Residential Use Fuel Source

The growth of industry is sluggish and the economic fundamentals are

weak in the region where the energy is not supplied handily and stably.

Moreover, the workloads on women and children who are engaged in the

biomass fuel gathering and use, is enormous and it is one of the factors

that prevent the improvement of women and children.

Supplying LPG to such a region will reduce the workload on women and

children and improve their life style through the promotion of industry

establishment and the advancement of a new social development can be

attained.

Moreover, the fuel conversion from the biomass brings the following effects

additionally.

• Prevention of soil erosion due to deforestation and soil deterioration

• Recovery of forest and accompanied function to prevent natural disaster

such as floods, cyclones etc.

• Improvement of yield of farm products by using cow dung as fertilizer not

as fuel.

In addition to the above-mentioned effects, the possibility of increase in

employment can be enumerated because of promoted industrialization. It

is considered that not only the solution of environmental problems nor the

promotion of effective utilization of the natural gas but also a big domino

effect can be expected as the beginning of the solution of Bangladesh’s

various pending problem.

-1 - 65 -

It will lead the expansion of domestic demand for the natural gas to

produce petroleum products such as LPG, MS and HSD from NGL

produced in the home country, and PSC of the gas field development

promotes the desire for further development and activation of the energy

industries and the related industries in Bangladesh.

-1 - 66 -

Chapter 2

Project Planning

This chapter describs the definite contents of the project and the

plan adopted for the execution of the project. The NGL

fractionation plant fractionates and produces LPG, motor spirit

and light diesel oil from the raw material NGL collected from the

natural gas and transferred from Sylhet region through a

pipeline.

Chapter 2 Project Planning

2.1 Project Plan

2.1.1 Site Information

(1) Project Site

The project site for the NGL fractionation plant has an area of approximately

320 m width by 450 m length (144,000 m2 area). It is located facing the

international Meghna River, in the semi-industrial area, which was reclaimed

as a plant construction site area in 1990. It is about 75 km to the direction of

East North East of the capital Dhaka, at Ashuganj of Brahmanbaria Zila

(prefecture), Chittagong Division (province).

The project site, together with the neighboring GTCL’s metering station is

currently managed by GTCL (Gas Transmission Company Limited).

In the project site, there are metering stations and pipelines presently

operated by GTCL. A 24" diameter gas pipeline having a length of 175km, a

6” diameter NGL pipeline between Kailastila-II-Ashuganj with a length of

175km, which were laid as a part of the second natural gas development

project financed by World Bank, and a 30” diameter gas pipeline with 70km

length between Ashuganj-Bakhrabad which was laid as a part of the gas

infrastructure development project financed by World Bank.

The existing facilities (approx, area occupation: 235m x 95m) and a

condensate storage tank (approx, area occupation: 62m x 62m) relevant to the

above-mentioned metering station operated by GTCL are shown in Table

2.1.1.1.

Table 2.1.1.1 Existing FacilitiesNo. Name Number

1 Facilities1.1 Rest House 11.2 Office Room 11.3 Residential Quarter 11.4 Officers Quarter 11.5 Ware House 11.6 SC AD A Building 11.7 Scraper Traps Area 11.8 Gas Regulation and Metering Area 1

2 Condensate Storage Tank (15,000 bbl) 1(Source: As Built Layout Plan 1998 and information obtained at the site)

-2 -3 -

(c) Geographical Features and Soil Conditions

The plant site, a rectangular shape ground reserved for plant construction,

was artificially created by banking up to 9.2 m height with a 1:3 inclination

side slope on the concrete retaining wall of about 4 m height constructed

facing the Meghna River side. It seems that the 9.2 m height of levee crown

was determined in consideration of the water level of Meghna River (8 m

difference between high and low water level) plus extra banking. As for the

plant site, the northwest side faces the Meghna River and the southeast

side faces a main road, and furthermore a railway runs in the northwest

side outskirts and a service railway from this railway runs to the fertilizer

factory on the west side neighborhood of the plant site along the southeast

side main road.

As for the soil conditions of the plant site, there is a soil investigation

report on Rashidpur-Ashuganj Transmission Loopline Project dated May

1999 prepared by Delta Soil Engineers, which is a soil investigation

company in Bangladesh, consigned by GTCL. However, this soil

investigation was done for the pipeline installation work, that only shallow

soil data (up to 10.45 m depth) is available.

The excerpt of the soil data from this investigation report is shown in Table

2.1.1.2 for reference.

Table 2.1.1.2 Soil Data at Plant SiteDepth Description

of MaterialsNaturalMoistureContent

WetDensity

Triaxial Shear Test (Undrained)

N value

4> Cm - % kN/m3 degree kN/m2 -

0-3.5 Medium dense silty Fine Sand

17.2 18.8 30.0 2.0 11—21

3.5—5.8 Loose to medium dense sandy Silt

25.3 18.2 25.0 10.0 8—12

5.8—10.45

Stiff clayey Silt with fine sand

23.8 18.6 8.0 32.0 12—14

(Source: Annexure-2 Rashidpur-Ashuganj Transmission Loopline Project,

Soil Survey Report, May 1999, and GTCL)

Moreover, the bearing capacity for strip & square footing foundation

- 2 - 6 -

particularly (safety rate 3) at lm below underground of the metering

station are shown in Table 2.1.1.3.

Table 2.1.1.3 Allowable Bearing CapacityShape of Footing

Allowable Bearing Capacity (t/m)

Strip 20.5Square 22.5

In addition, the underground water level is reported as GL - 4.0 m in this

report.

Based on these figures, it is judged that the design data given below can

be adopted.

Allowable bearing capacity: 20 t/m2

Underground water level: GL - 4.0 m

(d) Ground Temperature

There are no measurement data available on the underground temperature

at the plant site, but the yearly average temperature at 1 m underground is

about 15°C according to the hearing information gathered at the site

survey. It is judged that the design data of ground temperature given below,

which were estimated taking into account of the 9 ~ 34°C yearly change of

the atmospheric temperature, can be adopted.

The design highest ground temperature: 30°C @ GL - 1 m

The design lowest ground temperature: 10%) @ GL - 1 m

(e) Transportation

As for the transportation to the plant site, the national road passing

through Ashuganj, the railway, and the water route via Meghna River can

be used.

The imported construction materials are usually transferred through the

land or water route after being unloaded at the Chittagong port. Because

the main road runs on the southeast side (the other side from the side

facing Meghna River) of the site and the railway runs in the vicinity of the

northeast side where a station exist, it is considered that there is no

obstacle in terms of transportation to the site.

- 2 - 7 -

2) Meteorological Condition

(a) Temperature

Table 2.1.1.4 shows the monthly highest and lowest temperature around

Ashuganj.

Table 2.1.1. 4 Monthly Highest and Lowest Temperature

(unit: °C)Month 1 2 3 4 5 6 7 8 9 10 11 12 Ave.

Highest 26 28 32 34 33 32 31 31 32 31 29 27 31Lowest 12 9 19 23 24 25 25 26 31 23 19 14 21

(Source: Re-powering Plan of Ashuganj Power Plant, NEDO-IC-99R44)

It is judged that the design data of the temperature given below can be

adopted.

The design highest temperature: 35°C

The design lowest temperature: 5°C

(b) Humidity

Table 2.1.1.5 shows the monthly relative humidity around Ashuganj.

Table 2.1.1. 5 Monthly Relative Humidity

(Unit: %)Month 1 2 3 4 5 6 7 8 9 10 11 12

6:00 93 91 89 91 91 93 92 92 92 93 93 949:00 77 73 72 73 78 84 83 84 83 79 76 79

18:00 66 56 53 62 75 84 83 82 82 81 76 72(Source: Re-powering Plan of Ashuganj Power Plant, NEDO-IC-99R44)

It is judged that the design standard data of the humidity given below can

be adopted.

Design highest relative humidity: 95% (but 90% for electric

equipment)

Design lowest relative humidity: 50%

(c) Precipitation

Table 2.1.1.6 shows the monthly precipitation around Ashuganj.

- 2 - 8 -

Table 2.1.1.6 Monthly Precipitation

(Unit: mm)Month 1 2 3 4 5 6 7 8 9 10 11 12 Ave.PrecipRation

10 25 70 141 283 371 305 294 230 175 33 3 162

(Source: Re-powering Plan of Ashuganj Power Plant, NEDO-IC-99R44)

It is judged that the design data of the precipitation given below can be

adopted from this table considering the squall in the rainy season

(April-October).

- The design maximum hourly precipitation: 50 mm/hour

- The design maximum daily precipitation: 100 mm/day

(d) Earthquake

Bangladesh experienced some large-scale earthquakes in the past though it

is not situated in an earthquake zone. Table 2.1.1.7 show the record of the

past large-scale earthquakes.

The earthquake division of Bangladesh is classified into the following three

regions according to this material.

ZONE I: Horizontal Seismic Intensity Kh=0.08

ZONE II: Horizontal Seismic Intensity Kh=0.05

ZONE III: Horizontal Seismic Intensity Kh=0.04

Ashuganj is located in the vicinity along the boundary between ZONE I and

ZONE II.

Therefore, it is judged that the design standard data on earthquake given

below can be adopted taking into account of some allowances.

Design maximum earthquake coefficient

(horizontal seismic intensity) : Kh = 0.1

- 2 - 9 -

Table 2.1.1.7 Large Scale Earthquake in BangladeshDate Earthquake Name Magnitude

(Richter Scale)Distance

from Dhaka to Epicenter

(km)

Damaged Region

1762.4 NA 8.4 NA Chittagong, Arakan Yoma, Myanmar

1869.1.10 Cacharearthquake

7.5 250 SylheL Cacar(Assam)

1885.7.14 Bengal earthquake 7.0 170 Bogra, Sirajganji, Jamlapur, Sherpur, Mymensingh, Dhaka

1897.6.12 Great Indian earthquake

8.7 230 Northern Bengal, Dhaka, Comilla

1918.7.8 Srimangalearthquake

7.6 150 Srimanglal and surrounding area

1930.7.2 Dhubriearthquake

7.1 250 Dhubri(Assam),Rangpur

1934.1.15 Bihar-Nepalearthquake

8.3 510 Bihar, Nepal

1960.8.15 Assam earthquake 8.5 780 Assam, Bengal(Source: WORLD ATLAS, GRAPHOSMAN, Jan. 1996)

(e) Others

As mentioned in paragraph 2.1.1 (2) 1) (b) above, majority of Bangladesh’s

land is 8 m or less above sea level. The rainfall is concentrated during the

rainy season (April-October) as shown in paragraph 2.1.1 (2) 2) (c).

Therefore, the flood is often experienced in this period.

Judging from the record of large-scale floods in Bangladesh, the plant

candidate site in Ashuganj is situated in a region where flood is not being

experienced as confirmed during the site survey.

- 2 -10 -

(3) Outline of Counterpart Organization

1) Outline of Petrobangla

The history of oil and gas exploration in Bangladesh can be roughly divided

into two stages; the initial oil development stage from 1910 up to the

country’s independence from Pakistan in 1971, and the oil development stage

when the foreign capital investment was introduced after the independence.

Especially, the technical assistance extended by foreign governments (West

Germany, Britain, old the Soviet Union, and World Bank and others) after

1977 and the production sharing contracts (PSC) are playing an important

role in the exploration of oil and gas.

After the country’s independence in 1971 and based on the 27th presidential

orders in March 1972, BMOGC (Bangladesh Mineral, Oil and Gas

Corporation), which was the antecedent of the present Petrobangla, was

established for the purpose of exploring, developing, producing and supplying

oil, gas and the mineral resources in this country. Moreover, BMEDC

(Bangladesh Mineral Exploration and Development Corporation) was

established in September of the same year for the exploration and

development of oil upstream section, and the mineral resource section was

transferred from BMOGC to BMEDC. BMOGC was renewed as BOGC

(Bangladesh Oil and Gas Corporation), and subsequently adopted

"Petrobangla" as formal abbreviation based on the enforcement of

Bangladesh Petroleum Act.-1974 in 1974.

As for the downstream section, Bangladesh Petroleum Corporation (BPC)

was independently established from BOGC in 1976, and the import,

refinement, and the sales section of oil and lubricant were transferred from

BOGC to BPC. BOGC was combined again with BMEDC in 1985, and

became Bangladesh Oil, Gas and Mineral Corporation (BOGMC), which

manage the sections relating to exploration, development, production and

transportation with the exception of the oil downstream sections.

“Petrobangla” was adopted as the formal abbreviation of BOGMC in 1989.

Table 2.1.1.8 shows the outline of Petrobangla.

- 2 -11 -

Petrobangla is the government-run enterprise, which is monopolistically

carrying out the exploration, development, production and transportation of

the natural gas and manufacturing of the compressed natural gas (CNG)

through its 11 subsidiary companies now. Figure 2.1.1.2 shows Petrobangla

and the related organization.

Petrobangla is managing, besides its own oil and gas development based on

the country’s policy, the oil and gas development by joining foreign oil

development company, which was started by enforcing a PSC along with the

promulgation of Bangladesh Petroleum Act. The highest bidder for the eight

lots among the 23 lots in Bangladesh was decided in September 1993 (First

Round Bidding), and the highest bidder for the other eight lots was decided in

July 26, 1998 (Second Round Bidding). Table 2.1.1.9 shows the current state

of PSC.

The counterpart of this study was the strategic planning division organized

under the chairman of Petrobangla. The study was carried out smoothly

through proper communication and cooperation of RPGCL, GTCL and SGFL

which were the Petrobangla subsidiary companies relating to this project and

UNOCAL who was the PSC contractor, with the site survey mission.

The corporation tasked to execute this project at Bangladesh side, is RPGCL

as confirmed from the discussion with the chairman of Petrobangla, the

director of the planning, the general manager of strategy planning division

and the deputy general manager of investigation & study project division.

Therefore, RPGCL is described as follows.

- 2 -12 -

Table 2.1.1.8 Outline of Petrobangla

Corporate Name Bangladesh Oil, Gas and Mineral Corporation (Petrobangla)Address 3 Kawran Bazar, Dhaka-1215, BangladeshRepresentative MD. Mosharraf Hossain, ChairmanTEL Number 88-2-81-4972Fax Number 88-2-81-1613E-mail [email protected] March 26, 1972History March, 1972 Establishment of Bangladesh Mineral and Oil and

Gas Corporation (BMOGC)Sept. 1972 Establishment of Bangladesh Mineral Exploration

and Development Corporation (BMEDC) andtransfer of the mineral resource section fromBMOGC to BMEDC.

Aug. 1974 Renaming of BMOGC with Bangladesh Oil andGas Corporation (BOGC) and adoption of Petrobangla as its formal abbreviation.

Nov. 1976 Establishment of Bangladesh PetroleumCorporation (BPC) and transfer of the import, refining and sales sections of oil and lubricant from Petrobangla to BPC.

April 1985 Combination of BMEDC and BOGC and becoming Bangladesh Oil Gas & Mineral Corporation (BOGMC).

Feb. 1989 Adoption of Petrobangla as the formalabbreviation of BOGMC.

Number of Employees 650 peopleMain Business Exploration/development/operation of oil & gas fields and coal

mines, operation and maintenance of pipelines, import/refining /sales of petroleum products, partnership with foreign oil development companies through PSC, execution of projects under the financial support of foreign governments and World Banketc.,

Number of Gas Fields 22 including the gas fields developed and found by PSC.Number of Gas Wells 36 well under production among the 41 wells.Gas Reserves 10.8 TCF (Producible)Gas Production 800 MMSCFD by SGFL, and BGFCL.Length of Pipeline operation distance

1,188 km (Transmission Line) and 8,328 km (Distribution network by GTCL, JGTDSL, TGTDCL, and BGSL.)

(Source: Hearing at the site)

- 2 -13 *

LP-Gas

Power Division

Hydrocarbon Unit Power Cell (PC)

Eastern Refinery Ltd.

(ERL)

P»«liehlm«iirinl Ges Company Ltd. (WES GAS)

ProductionCompany

Bangladesh Gas fields Company Ltd.

(BGFCL)

Sylhet Gas Fields Ltd. (SGFL)

Padma Oil Company Ltd.

(POOL)

Meghna Petroleum Ltd. (MPL)

Mining CompaniesJamnna Oil

Company Ltd. (JOCL)

Barapukuria Coal Mining Co. Ltd.

Mad dll apara Hard Rock Co. Ltd.

Compressed Natural Gas Company

Rupantarita Prakritik Gas Company Ltd.

(RPGCL)

Energy end Mineral Division

RuralElectrification Board (REB)

Bangladesh Petroleum

Corporation (BPC)

Dhaka Electricity Supply Authority

(DESA)

Bangladesh Power Development

Board (BPDP)

Geological Study Board (GSB)

Transmission and Distribution Companies

Tittas Gas Transmission and Distribution Company

Ltd. (TGTDCL)

Gas Transmission Company Ltd. (GTCL)

Bakharabad Gas Systems Ltd. (BGSL)

Dhaka Electric Supply Company

Ltd. (DESCO)

Power Grid Company of Bangladesh Ltd.

(PGCB)

Bangladesh 03. Gas and Mineral Corporation

(Petrobangla)

Ministry of Energy and Mineral Resources

Bangladesh Petroleum Exploration &

Production Company Ltd. (BAPBX)

Government of the People’s Republic of Bangladesh

Jalalabad Gas Trmnemisnon and

Distribution System Ltd. (JOTDSL)

Geological Survey

& Conservation Centre

Energy Monitoring

Petroleum Institute

Figure 2.1.1.2 Organization of Petrobangla and Related Company(Source: Petroleum Exploration Opportunities In Bangladesh, March, 1997, Petrobangla and Hearing at the site)

Table 2.1.1.9 Present Situation of PSC

(As of October 2000)Block Field name Current Status of PSC

1 Open2 Open3 Enron, Okland International4 Open5 RD/Shell, Cairn Energy6 Enron, Okland International7 Triton/Unocal, PTI Oil and Gas8 Pargaea Energy, OMV9 A memorandum of study of Block 9 was concluded between Bapex and

Nico Resources. The formal PS Contract is under negotiation.10 RD/Shell, Cairn Energy11 Petronas12 Bibiyana In June 1999, Unocal and Occidental concluded a transaction in assets

with Occidental having a 50% share of Block 12, 13 and 14 in Bangladesh and Unocal getting its share in Yemen. In substance, Unocal holds 100% share.Share ratio: Unocal 50%, Occidental (Unocal) 50%

13 Jalalabad In June 1999, Unocal and Occidental concluded a transaction in assets with Occidental having a 50% share of Block 12, 13 and 14 in Bangladesh and Unocal getting its share in Yemen. In substance, Unocal holds 100% share.First gas production in February 1999.Share ratio: Unocal 50%, Occidental (Unocal) 50%

14 Moulavi Bazar In June 1999, Unocal and Occidental concluded a transaction in assets with Occidental having a 50% share of Block 12, 13 and 14 in Bangladesh and Unocal getting its share in Yemen. In substance, Unocal holds 100% share.First gas production in February 1999.Share ratio: Unocal 50%, Occidental (Unocal) 50%

15 Semutang In February 1999, Cairn Energy transferred the operator ship to RD/Shell. Share ratio: RD/Shell 35%, Cairn Energy 35%, Midlands Power Inti 35%

16 1) Kutubdia2) Sangu

In February 1999, Cairn Energy transferred the operator ship to RD/Shell. Share ratio:1) RD/Shell 50%, Cairn Energy 50%2) RD/Shell 37.5%, Cairn Energy 37.5%, HBR Energy 25%

17 In 1999, Tullow Oil managed to buy 80% share of Rexwood.Share ratio: Tullow 80%, Rexwood 10%, Okland 10%

18 In 1999, Tullow Oil managed to buy 80% share of Rexwood.Share ratio: Tullow 80%, Rexwood 10%, Okland 10%

19 Maersk Oil & Gas AS. The formal PS Contract is under negotiation.20 Maersk Oil & Gas AS. The formal PS Contract is under negotiation.21 Open22 The establishment of " Ocean Energy Inc." on March 1998, by merging

United Meridian Corporation and Ocean Energy.Share ratio: Ocean Energy Inc. 100%

23 Open(Source: ICEP International Seminar 2000)

-2-15-

1) Outline of RPGCL

Petrobangla executed a pilot project to confirm the realization of the

conversion to CNG as an alternative fuel for gasoline/diesel driven car

through the financial support of World Bank from 1982 to 1985.

The government-run enterprise CNGCL (Compressed Natural Gas Co., Ltd),

which was the antecedent of RPGCL, was established in January 1987 for the

purpose of constructing an economical and reliable transportation and sales

system of CNG and operating it on a commercial base.

Afterwards, the production and wholesale distribution of LPG, MS, and HSD,

which were produced by fractionating NGL, were added to the articles of the

association in February 1991, and the name of the company was changed to

Rupantarita Prakritik Gas Company Ltd. (RPGCL).

The Government of Bangladesh (GOB) is promoting a policy seeking the

abolition of the light auto-tricycle with a two-stroke engine (auto-rickshaw),

considered to be one of the main causes of the air pollution in metropolitan

areas, within five years from 1999. The registered number of auto-rickshaw

in Dhaka city alone is exceeding 40,000 now, and it is assumed that the

number would swell up to about 100,000 on a nationwide scale. In addition, it

is assumed that the number of unauthorized vehicles greatly exceeds the

registered ones. As a measure aiming at this abolition, the conversion to CNG

engines and the spread of four-cycle engine driven taxi are endeavored.

According to RPGCL, the CNG cars, which were introduced into the country

in 2000, exceeded 1,000 units and it is expected to increase to 5,000 units by

2002. In the background of this policy, RPGCL is operating one CNG station

set up in the Joarshahara city in 1982 and four CNG stations set up in Dhaka

city in 1995. The amount of CNG as of 1999 totals 5 MCM, and the CNG

stations in the Chittagong and the Sylhet regions are to be expanded one by

one in the near future. Moreover, the operation of LPG plant in Kailastila

that started in 1997, produced LPG and MS that aimed to be supplied mainly

to the west region of Bangladesh, and RPGCL is endeavoring to spread the

gas products to make up for the regional difference on the energy supply in

this country according to the national policy. Table 2.1.1.10 shows the outline

of RPGCL.

- 2 -16 -

Table 2.1.1.10 Outline of RPGCL

Corporate Name Rupantarita Prakritik Gas Company Limited (RPGCL)Address 102 Kazi Nazrul Islam Avenue, BSEC Bhaban (8th & 9th Floor),

Karwan Bazar Commercial Area, Dhaka-1215, BangladeshRepresentative M. Shamsul Huq, ChairmanTEL Number 88-02-811-4677Fax Number 88-02-811-3168E-mail [email protected] January 1, 1987History Jan., 1987 Establishment of Compressed Natural Gas Company

LimitedFeb., 1991 Establishment of Rupantarita Prakritik Gas Company Limited

Number of employees 100 persons (CNG section: 35 personsN LPG section: 35 persons^ Transportation section: 30 persons)

Sales One year of July 1998 - June, 1999CNG sales Tkl0,569,152 ($220,000)LPG wholesale Tkl5,483,912 ($323,000)MS wholesale Tk67,691,795 ($1,410,000)CNG conversion kit sales Tk2,909,998 ($61,000)CNG parts sales Tk253,792 ($5,000)Total Tk96,908,649 ($2,019,000)

Ordinary Income(1999)

A Tk49,326,502 ($1,028,000)

Net Worth (1999) Tk580,107,286 ($12,086,000)The Main Stockholder 100% PetrobanglaMain business Conversion to natural gas vehicle, installation & operation of

CNG stations, and production & wholesale of LPG, MS and HSDMain Customers LP-Gas Ltd., Padma Oil Co . Ltd., Jamuna Oil Co.. Ltd., Meghna

Petroleum Ltd. and natural gas vehicle usersCNG Station 4 in Dhaka city and 1 in Joarshahara: 5 in totalMain Plant Kailastila (KTL)-l LPG Plant

Note) Application exchange rate $l=Tk48.0@1998

(Source: Annual Report 1999, RPGCL, and the hearing at the site)

-2-17-

2.1.2 Brief of Project

The purpose of this project is to construct a new NGL fractionation plant in

Ashuganj, where the raw material NGL, is fractioned/separated to LPG,

Motor Spirit (MS) and High Speed Diesel (HSD) for the utilization of NGL.

And also, it contributes to the improvement of the present energy situation

and the environment protection in the Bangladesh by fractioning petroleum

product at the plant for making a stable supply system to the market.

The required feedstock NGL is to be supplied from the natural gas production

facilities in three gas fields, Kailastila, Beanibazar and Jalalabad, in Sylhet

Division located in the northeast of Bangladesh via the existing N-S NGL

pipeline.

This fractionation facility will have a fractionation capacity of 467 ton/day of

NGL and produce 123 ton/day of LPG, 262 ton/day of MS and 82 ton/day of

HSD. The plant will consist of NGL receiving and storage facilities,

debutanizer, MS-HSD splitter, product storage facilities, product shipping

facilities, heat medium facilities, utility water facilities, electric facilities,

instrumentation, communication facilities, fire fighting equipment, etc.

In addition to the above facilities, the administration facilities necessary to

manage and secure the plant operation are installed such as office building,

security guard room, residence facilities for staff, maintenance shop, ware

houses, etc.

This project includes all activities such as design of the facilities, material

procurement, construction, start-up and commissioning, and training of

operators etc. including accompanying works such as the funding for the

plant construction, environmental impact assessment, import/customs

clearance/ transportation of the material and application and acquisition of

the various approvals and authorizations, etc.

Where, the battery limit of the raw material NGL receiving point is the

downstream side of the companion flange of the existing pipe at Ashuganj

GTCL metering station, which is adjacent to the plant site.

The corporation tasked to execute this project is RPGCL, which is

-2-18-

Petrobangla’s subsidiary company. However, because RPGCL is a

government-run enterprise, the project will be conducted under the control of

Petrobangla.

2.1.3 Targeted Greenhouse Gases

This project aims to produce LPG, Motor Spirit (MS) and High Speed Diesel

(HSD) through the NGL fractionation plant. Among these products, LPG will

serve as replacement of the biomass fuel currently used, resulting in the

Greenhouse Gases (GHGs) emission reduction. This project might contribute

to the carbon dioxide emission reduction due to flaring in the natural gas

production site, however, this effect is not considered in this feasibility study

because quantitative evaluation is difficult.

Therefore carbon dioxide, methane and nitrogen oxide, which will be reduced

through the products distribution in the project are to be considered as the

targeted GHGs in this study.

(1) LPG

The produced LPG by this project will mainly be supplied to the west region

of the Jamuna River, where natural gas, domestic energy resource, is not

accessible due to the poor infrastructures of gas pipeline network system. At

present more than 90 percent of the residential fuel (mainly for cooking)

depends on biomass fuels such as agricultural residue, forest products and

dung form livestock (cowpat). These biomass fuels sill be replaced with the

LPG produced in the project.

According to the IPCC Guidelines for National GHGs Inventory, in case that

the biomass fuel is used sustainably, the emission of carbon dioxide can be

counterbalanced to the absorption, net CO2 emission is to be zero (0), and

only methane and nitrogen oxide are emitted as GHGs. However, when the

collection of the biomass fuel continues at a speed faster than the growth rate

of the forest, C02 adsorption by forest could not be expected. In Bangladesh,

where the forest coverage compared to the total land area is small by nature,

the forest depletion has been accelerated due to the increasing demand for

agricultural land and urbanization along with the population explosion. This

- 2 -19 -

makes sustainable management and usage of the biomass resources difficult.

Therefore carbon dioxide, methane and nitrogen oxide, which will be reduced

through the products distribution and replacement with biomass fuels in the

project are to be considered as the targeted GHGs in this study.

(2) MS

As for MS, the GHGs emission remains the same before and after the

execution of the project because the condensate, which is the raw material of

MS, is already being used as energy and the amount of carbon number will

not be changed totally even if the condensate is refined and utilized.

Therefore, MS is excluded from the GHGs reduction effect.

However, MS contributes to the mitigation of the air pollution caused by car

exhaust through the reduction of inferior gasoline usage as described in

paragraph 1.3.3 (3).

(3) HSD

As for HSD, the GHGs emission remains the same before and after the

execution of the project as well as MS. Therefore, HSD is excluded from the

GHGs reduction effect.

- 2 - 20 -

2.2 Current Status of Counterpart and Proposed Project

2.2.1 Interest of Counterpart

Due to the result of the following background and the facts gathered

through the series of interviews conducted on the implementation body

of Bangladesh at field survey, we have judged that the implementation

body of Bangladesh side is strongly interested in the execution of this

project.

(1) Interest of Petrobangla

Petrobangla has been interested strongly in the execution of this project

as the top priority project among the projects being handled by

Petrobangla. The following reasons for its strong interest are as follows:

• Petrobangla announced the Ashuganj NGL Fractionation Plant Project

(the “Project”) publicly to introduce foreign and local private

investments for the promotion of this project through RPGCL, a

subsidiary of Petrobangla, on July 12, 1998. TOMEN Corporation,

JOE’s designated subcontractor for this study, attended a Pre-Bid

Meeting at RPGCL office on September 6th, 1998 and submitted a

proposal on October 22, 1998, which turned out to be the only bid

offered by a company from Japan. TOMEN’s proposal was evaluated

and eventually landed in the top group (4 companies) of bidders among

the fifteen (15) proposals submitted.

• At the ICEP International Seminar 2000, which was held in Tokyo on

November 15, 2000, JOE confirmed that Mr. Mosharraf, the chairman

of Petrobangla recognized the Project importance and also he

personally requested JOE to cooperate in the realization of the Project. •

• At the First Field Survey on November 19, 2000, JOE visited

Petrobangla to explain the main topics of the study and was able to

ascertain the full cooperation of Petrobangla through the chairman

himself. At the Third Field Survey conducted on March 19, 2001, JOE

-2-21-

explained the background, methodology, the contents of analysis and

evaluation, conclusion, etc. of the study and an intensive discussion

exchanged between JOE and Bangladesh side. In addition, JOE also

briefly explained the mechanics of CDM. Petrobangla expressed strong

interest in fund procurement method. With this final report,

Petrobangla intends to prescribe the scope of future study as an

integrated project, which includes the upstream side (gas reservoir,

gas production, etc.) and downstream side (offloading of products and

sales of products, etc.) of the Project.

Table 2.2.1.1 shows the expectation degree of the Japanese investment

projects by Petrobangla.

Table 2.2.1.1 Expectation Degree of Japanese Investment Projects by

Petrobangla

No. ExpectationDegree

Project name

1 © Ashuganj NGL Fractionation Project2 O Dhaka Ring Main Project3 O Dhaka City CNG Utilization Project4 o Nalka-Bogra-Rangpur Natural Gas Pipeline Project5 o Appraisal/Development wells in Kailastila Gas Field6 o Bibiyana-Elena Bypass Natural Gas Pipeline Project7 o Participation for Exploration and Development under

Third Bidding Round Hopefully to be held in 20018 o Power Generation/Urea Production Integrated Project9 o Gas Compressor Installation Project at Well Sites or

in the Natural Gas Pipeline Systems10 o Nalka-Ishwardi-Bheramara Natural Gas Pipeline

Project11 o Bheramara Power Generation Project12 o Khulna Power/Steel Bar Production Integrated Project13 o Gas Fired Medium Size Power Generation Projects for

Rural Electrification in Western Region of the CountryNote : ® means very high expectation degree by Petrobangla,

O means high expectation degree by Petrobangla.

(Source: ICEP Seminar-2000, Tokyo, and hearing at the site)

- 2 - 22 -

(2) Interest of RPGCL

RPGCL has been interested strongly in the execution of this project by

the intention of Petrobangla.

The Project Concept Paper for implementing this project was submitted

by RPGCL to the Ministry of Energy and Mineral Resources through

Petrobangla and approved in February 1998.

In addition, the Executive Committee for National Economic Council

(ECNEC), which is the organization in the Cabinet tasked to discuss and

decide their national projects, approved this project as a national project

on May 18, 1998. However, the prospect to cover all of the capital

expenses by the national budget has not been set up in the present time,

and the funding from the foreign country is requested.

Though funding situation is still an issue, RPGCL organized a project

management team for implementing this project in November 2000 in

response to the intention of the Ministry of Energy and Mineral

Resources and Petrobangla. The policy to recruit foreign consultants for

the implementation of this project has been established and the

preparation of the draft TOR (Terms Of Reference) for recruiting foreign

consultants by the project management team has commenced.

- 2 - 23 ■

2.2.2 Current Status of Existing Infrastructure and Facilities

Since the Construction of Ashuganj NGL Fractionation Plant is a project to

construct a new plant, there are only a few facilities to be removed or

remodeled at the proposed construction site. They therefore will affect little to

the execution of the project. On the other hand, as the existing gas production

and transportation facilities of the gas fields that will supply the feedstock

NGL to the project are closely related to the project, the current situations of

such facilities were briefly reviewed. The following are outlines of the

situations.

The gas fields that will supply NGL to this project are Kailastila and

Beanibazar operated by SGFL, who is one of the subsidiary operation

companies of Petrobangla, and Jalalabad operated by UNOCAL under PSC.

There are two gas production stations, Kailastila-I and Kailastila-II, in

Kailastila Gas Field, and one gas production station in each Beanibazar and

Jalalabad Gas Field.

The condensate produced at Beanibazar and Jalalabad Gas Fields is gathered

at Kailastila-II through a 4" dia. pipeline, and transported to Ashuganj

together with the condensate produced at Kailastila-II through the 6” dia.,

about 175km long N-S NGL Pipeline. The condensate is stored in the

condensate tank with a capacity of 15,000bbl at Ashuganj and then

transported by transportation barges to Eastern Refinery Limited (ERL) in

Chittagong over the Meghna River. There, the condensate is mixed with

imported crude oil and refined at the refinery.

In Kailastila-II, NGL is recovered from the produced natural gas by using the

turbo expander plant. This NGL is sent to Kailastila-I through the pipeline,

and part of the NGL is charged to LPG Plant as feedstock and distilled into

LPG, MS and HSD. The produced LPG is filled into cylinders and sold by

LP-Gas Limited in the region and vicinity. The capacity of the LPG Plant at

Kailastila-I is only 5,000 ton/year of LPG.

The simplified flow diagram of the existing NGL and condensate recovery and

loading facilities of each gas field mentioned above are shown in Drawing No.

NGL-001. The following is a brief description of such facilities for production,

storage, transportation, and loading in each gas field.

- 2 - 24 -

SALES GAS

SILICAGELPLANT

PRODUCTIONSEPARATOR FUEL GAS

STABILISERHevey Condensate

■2 (SHUT IN)

BEAN1BAZAR FIELD (SGFL) CONDENSATE CONDENSATE STORAGE TANK PIPELINE PUMP

SALES GASSALES GAS

TURBOEXPANDER

PLANT

SILICAGELPLANT

PRODUCTIONSEPARATOR

PRODUCTIONSEPARATOR FUEL GAS

LIGHT CONDENSATE TANK

STABILISERKTL-1 KTL-2

HEAVT CONDENSATE TANK

KTL-3Hevey CondensateKTL-4NGL PLANT (SGFL)

NGL SURGE DRUM PIG RECEIVERPIG LAUNCHER

CONDENSATE STORAGE TANK

CONDENSATE PIPELINE PUMPPRODUCT BOOSTER

PUMP15,000 BARREL LOADING

CONDENSATE PUMPTANK

ASHUGANJ (RPGCL)

6", 175km NGL PIPELINE

(GTCL)

LPG PLANT (RPGCL)

KAILASTILA-HKAILASTILA-I

KAILASTILA FIELD (SGFL)

GAS/GASHEAT

EXCHANGER

PROPANECHILLER

SEPARATOR

SILICAGELPLANT SALES GAS

29,01,2001

REVISIONHP

SEPARATORFUEL GAS

New Energy end Industrial Technology Development Organization

M.PSEPARATOR

Hevey Condensate

EXISTING NGL

PRODUCTION SCHEME

324-30-001-01 29, 01, 2001 N.T.S.

N.KUROKAWA S.OKUBO H.TAKADACONDENSATE CONDENSATE

STORAGE TANK PIPELINE PUMP NGL-001

JALALABAD FIELD (UNOCAL)596 JAPAN OIL ENGINEERING CO., LTD.

4 - 2 -25 -26-15

(1) Existing NGL and Condensate Recovery Facilities

The outlines of the NGL and condensate recovery facilities of respective gas

fields, Kailastila, Beanibazar and Jalalabad, which are related to this project,

are described as follows:

1) Kailastila Gas Field

Kailastila Gas Field has two gas production stations Kailastila-I and II.

The operation and maintenance of the NGL recovery facilities in both

stations is managed by SGFL.

(a) Kailastila-I

Kailastila-I has a gas production well KTL-1 and the following major

facilities:

• Production Separator

• Silica-gel Dehydrator Facility

• NGL Fractionation Plant

• Condensate Storage and Loading Facilities for tank-lorry loading

The condensate recovered in Kailastila-I includes heavy condensate. The

condensate separated from the natural gas at the production separator

consists of Cs+ components, whereas the fight condensate recovered at the

silica-gel dehydrator facility includes Cs and Ct components. These

condensates are not shipped to Kailastila-II but are fractionated and sold

as gasoline within the Sylhet Region.

In addition Kailastila-I has a LPG plant that fractionates the NGL

supplied from Kailastila-II. Production capacity of the LPG plant is 5,000

ton/year of LPG.

Mentioned below is an outline of the NGL recovery facilities and the LPG

plant.

i) Production Separator

Well fluid from the gas production well KTL-1 is fed to the production

separator and separated into gas and heavy condensate by natural

gravity. The separated gas is sent to the silica-gel dehydrator facility,

while the separated heavy condensate is sent to the condensate storage

- 2 - 27 -

facility.

ii) Silica-gel Dehydrator Facility

The silica-gel dehydrator facility consists of three silica-gel towers and

the silica-gel regeneration system. This facility is capable of dehydrating

the feed gas by adsorption of water moisture in the gas with silica-gel

(adsorption process) and regenerating the wetted silica-gel with hot and

dry natural gas (regeneration process). The three silica-gel towers are

operated sequentially switching the process from adsorption to

regeneration and back to adsorption.

The separated gas from the production separator is dehydrated through

the adsorption process and becomes sales gas. The water adsorbed with

the silica-gel is desorbed from the towers through the regeneration

process. The wet regeneration gas from the towers is sent to the air-fin

cooler and then the separator to condense water and light condensate. In

the separator, the condensate is separated from the water and finally

sent to the condensate storage facility as light condensate.

iii) Condensate Storage and Loading Facilities for Tank-lorry

The heavy condensate from the separator is stored in the heavy

condensate tank. The light condensate from the silica-gel dehydrator

facility is stored in the light condensate tank. These condensates are

distilled and loaded on tank-lorries and then distributed to and sold

within the Sylhet Region.

The existing tank-lorry loading station is shown in the Photo 2.2.2.1

below.

iv) LPG Plant

The LPG plant is operated by RPGCL. The feedstock is NGL of 55

ton/day supplied from Kailastila-II. The plant fractionates the NGL to

produce LPG, MS and HSD. Production capacity of the plant is 5,000

ton/year of LPG.

Photo 2.2.2.2 and 2.2.2.3 below show the silica-gel dehydrator and the

LPG plant in Kailastila-I respectively.

- 2 - 28 -

(b) Kailastila-II

Kailastila-II is located at about 1 km eastward from Kailastila-I. This

station serves not only as a gas production but also as a gathering station

that gathers the gas and the condensate shipped from Beanibazar and

Jalalabad Gas Fields and transports them to Ashuganj Metering Station

through the respective pipelines.

In Kailastila-II there are three gas production wells in total. Two of them,

named KTL-2 and KTL-3, are located in the premise and the rest named

KTL-4 located outside the premise. The natural gas produced from these

wells is processed in this station. Among the three gas fields related to this

project, only this station is equipped with a turbo-expander plant to recover

NGL.

Currently the major facilities of the NGL recovery plant in Kailastila-II

include the following:

• Production Separator

• Turbo -expander Plant

• Stabilizer Facility

• Condensate Storage Facility

According to the data acquired during the site investigation, the processing

capacity of the NGL plant is about 1,900 ton/day of gas and 67 ton/day

(about 22,000 ton/year) of liquid. No record of the plant operation under full

capacity however exists because of the constraint that the LPG plant in

Kailastila-I is only capable of processing NGL of 5,000 ton/year.

The turbo-expander plant in Kailastila-II is shown in the Photo 2.2.2.4 and

2.2.2.5 below.

The following outlines the gas processing process flow of Kailastila-II:

i) Production Separator

Well fluid produced from the three production wells is fed to the

production separator and separated into gas and condensate in the

separator by natural gravity. The gas is supplied to the turbo-expander

plant, and the condensate is sent to the stabilizer facility.

- 2 - 30 -

iii) Stabilizer Facility

The condensate from the production separator is fed to the stabilizer. In

the stabilizer, it is distilled to release the light components included and

to stabilize the vapor pressure. The condensate from the bottom of the

stabilizer, which is heavy condensate, is cooled down by the air fin cooler

and sent to the condensate storage facility. The light components from

the top of the stabilizer are used as in-house fuel gas, while the surplus

gas is flared out.

iv) Condensate Storage Facility

The light condensate from the turbo-expander plant and the heavy

condensate from the stabilizer facility are commingled and recovered at

the NGL surge drum as NGL. The NGL recovered is pumped up by the

production booster pump where part of it is sent to the LPG plant

operated by RPGCL in Kailastila-I and other part to the condensate

storage tank. The condensate stored in the tank is pumped up by the

condensate pipeline pump, commingled with the condensate from

Beanibazar and Jalalabad and shipped to the storage facility of Ashuganj

Metering Station operated by GTCL through the existing 6” dia., 175 km

long N-S NGL Pipeline.

The production status in the Kailastila Gas Field at the time of site

investigation in November 2000 is shown in the Table 2.2.2.1 below.

Table 2.2.2.1 Production Status of Production Wells in Kailastila

(As of November 28,2000)

FluidWei] No.

KTL-1 KTL-2 KTL-3 KTL-4Gas (MMSCFD) 22.93 25.88 26.13 26.50Heavy Condensate (BPD) 208.35 399.37 399.37 409.06Light Condensate (BPD) 45.89 N.A. N.A. N.A.Water (BPD) (BPD) 7.70 10.30 10.41 10.58

(Source: Daily Production, Processing and Sales Report)

2) Beanibazar Gas Field

This gas field is located at about 17 km eastward from Kailastila Gas Field.

The operation and maintenance of the field is managed by SGFL.

- 2 - 32 -

(b) Silica-gel Dehydrator Facility

The silica-gel dehydrator facility consists of three silica-gel towers and the

silica-gel regeneration system. This facility is capable of dehydrating the

feed gas by adsorption of water moisture in the gas with silica-gel

(adsorption process) and regenerating the wetted silica-gel with hot and dry

natural gas (regeneration process). The three silica-gel towers are operated

sequentially switching the process from adsorption to regeneration and

back to adsorption.

The separated gas from the production separator is dehydrated through the

adsorption process and becomes sales gas. The water adsorbed with the

silica-gel is desorbed from the towers through the regeneration process. The

wet regeneration gas from the towers is sent to the air-fin cooler and then

the separator to condense water and light condensate included in the gas.

In the separator, the condensate is separated from the water and then sent

to the stabilizer facility as light condensate.

(c) Stabilizer Facility

Both of the heavy condensate from the production separator and the light

condensate from the silica-gel dehydrator are fed to the stabilizer. In the

stabilizer, those are distilled to release the light components included and

to stabilize the vapor pressure. The condensate from the bottom of the

stabilizer, which is a heavy condensate, is cooled down by the air-fin cooler

and sent to the condensate storage facility. The light components from the

top of the stabilizer are used as in-house fuel gas, while the surplus gas is

flared out.

(d) Condensate Storage Facility

The condensate from the stabilizer facility is stored in the condensate

storage tank. The condensate stored is pumped up by the condensate

pipeline pump and shipped to Kailastila-II through the existing 4” dia., 18

km long pipeline. Then it is commingled with the condensates from

Kailastila-II and Jalalabad and finally transported to Ashuganj through

the existing 6” dia., 175 km long N-S NGL pipeline.

The production status data acquired at the time of site investigation in

Beanibazar Gas Field is shown in the Table 2.2.2.2 below.

- 2 - 34 -

(a) High Pressure Separator

Well fluids produced from each production well are fed to the high pressure

separator to separate gas and condensate. The separated gas is sent to the

silica-gel dehydrator facility, while the condensate is sent to the middle

pressure separator.

(b) Silica-gel Dehydrator Facility

The gas from the high pressure separator is sent to the silica-gel filled

towers and there dehydrated with silica-gel through the dehydration

process, and then sent to the propane chiller facility. The water adsorbed

with the silica-gel through the dehydration process is desorbed with hot

and dry regeneration natural gas through the silica-gel regeneration

process. The wet regeneration gas from the towers is sent to the air-fin

cooler and then the separator to condense water and light condensate. In

the separator, the condensate is separated from the water and sent to the

middle pressure separator as fight condensate.

(c) Propane Chiller facility

The dehydrated gas from the silica-gel dehydrator facility flows into the

gas/gas heat exchanger, and is cooled down in the exchanger with the low

temperature sales gas. This cooled gas is sent to the propane chiller, and

cooled down further. The C3+ components included in the gas are liquefied

through this cooling. The gas cooled is sent to the cold separator and

separated into liquefied hydrocarbons and gas. The dew point of the gas is

adjusted through this separation of the liquefied hydrocarbons from the gas.

The gas separated in the cold separator flows to the gas/gas heat exchanger

mentioned above as the low temperature sales gas, and exchanges its heat

with the dehydrated gas. The liquefied hydrocarbons separated in the cold

separator are sent to the middle pressure separator as fight condensate.

(d) Middle Pressure Separator

The heavy condensate from the high-pressure separator and the fight

condensate from both of the silica-gel dehydrator and the propane chiller

are sent to the middle pressure separator. The lighter components in these

condensates are liberated further from the condensates under a lower

operating pressure of the separator. The gas consisting of the fighter

- 2 - 36 -

components from the separator is used as in-house fuel gas. The condensate

after the separation flows out from the bottom of the middle pressure

separator and is sent to the condensate storage tank facility.

(e) Condensate Storage Tank Facility

The condensate from the middle pressure separator is initially sent to the

condensate storage tank. Then the condensate is pumped up by the

condensate pipeline pump and shipped through the 4” dia., 17 km long

pipeline to Kailastila-II Station. There it is commingled with the

condensates from Kailastila-II and the Beanibazar Gas Fields and finally

transported to Ashuganj through the 6” dia., 175 km long N-S NGL

Pipeline. The production status data acquired during the site investigation

in Jalalabad Gas Field are shown in Table 2.2.2.3.

Table 2.2.2.3 Production Status of Production Wells in Jalalabad

(As of November 19,2000)

Well No.Fluid JB-1 JB-2 JB-3 JB-4

Gas (MMSCFD) 39.73 10.10 32.69 26.84Condensate (BPD) 631.67 195.45 359.18 272.47Water (BPD) 9.90 53.9 4.80 17.40

(Source: Daily Production Report, Jalalabad Field)

4) Production Rate of Natural Gas and NGL

Estimated production rate of natural gas and NGL in each gas field is

shown in Table 2.2.2.4.

Table 2.2.2.4 Estimated Production Rate of Natural Gas and NGL in Each

Gas FieldGas Field

NameNatural Gas

Production Rate (MMSCFD)

NGLProduction

Rate(TPD)

Liquid Gas Ratio (bbl/MMSCF)

HeavyCondensate

LightCondensate

Kailastila 85 123 9 11Beanibazar 35 82 11 11Jalalabad 125 262 9 11

- 2 - 37 -

(2) Existing N GL Pipeline

The 6”dia., about 175 km long N-S NGL Pipeline is operated and maintained

by GTCL. It was laid from Kailastila Gas Field to Ashuganj Metering Station

of GTCL and originally intended as a pipeline for NGL transportation at its

construction time. So the operation pressure of the pipeline is designed at

ANSI 600 psig. Currently the condensates from Kailastila and Rashidpur are

transported to Ashuganj through the pipeline. The total amount of

condensate transported during the year 1996-1997 was 36,029 m3 per year

according to the record. The current pipeline operation is not continuous but

batch-wise corresponding to the situation of the storage stock and the

shipment at Ashuganj.

The transportation capacity is 7-10 m3/hr and the pressure loss across the

pipeline between Kailastila and Ashuganj is about 2 bars.

(3) Existing Condensate Storage and Shipping System

In Ashuganj, the land development for the construction of NGL fractionation

plant has already been completed. The existing condensate storage and

shipping facilities under operation are as follows:

• A 15,000 bbl condensate tank

• Loading pumps

• Shipping pier and shipping facilities with rubber hoses

• Fire fighting facilities

The amount of condensate transported from Kailastila via the N-S NGL

Pipeline is measured at Ashuganj Metering Station of GTCL and stored in

the 15,000 bbl condensate tank. The condensate stored is pumped by the

loading pump to transportation barges and shipped out over the Meghna

River to Chittagong.

Photo 2.2.2.8 shows the tie-in point of 6" NGL pipeline at Ashuganj Metering

Station to which a pipe for feedstock NGL of this project is to be tied-in.

Photo 2.2.2.9 shows the facilities for condensate loading to the transportation

barges.

- 2 - 38 -

2.2.3 Capability of Counterpart

(1) Technical Capability

As previously discussed, the implementation body on Bangladesh side is the

RPGCL, which is also responsible in the plant operation and maintenance

work.

It is to be noted that various coordination works are required in order to carry

out the project. This includes coordination among NGL supplier such as

SGFL and UNOCAL, coordination with GTCL of pipeline operator, and

coordination with BPC relevant to loading and offloading of the sales

products and so on. In consideration of above matters, it might be realistic to

mention that Petrobangla shall carry out the overall coordination among the

related organizations.

The technical capability of RPGCL as direct project implementation body is

described in this paragraph.

1) Project Management

RPGCL is capable to implement a project as evidenced by its successful

completion of the project Kailastila-I LPG Plant with an NGL processing

capacity of 5,000 tons/year on EPC Turnkey Contract basis.

However, their construction management experiences are only limited to

two (2) projects as shown in Table 2.2.3.1. In addition, the organization

has not been fixed yet because only little time has passed since its

establishment. Therefore, it is recommended to appoint a consultant who

will assists in the project management.

Table 2.2.3.1 Construction Records of RPGCLNo. Project Name Contractor Contract Form Contract Amount

1 CNG Pilot Plant (1985)

Compair Reveal, U.K.

EPC Turnkey Contract

Tk300,000,000.-($11,538,000.-)

2 Kailastila LPGPlant(1997)

Hyundai Engineering & ConstructionCo., Ltd., Korea

EPC Turnkey Contract

TK380,000,000.-($8,899,000.)

(Exchange Rate US$l=Tk26.0 @1985 and US$l=Tk42.7 @1997)

(Source: Hearing at Site)

-2-40-

2) Procurement

RPGCL’s procurement experiences for projects are only limited to 2 cases

as shown in Table 2.2.3.2. Depending on the construction order type, it is

recommended to appoint a consultant who will, not only be responsible in

the procurement of the main equipment, the bulk material, spare parts

etc. but will also manage the construction contractors in the same

manner mentioned in the above paragraph 1).

Table 2.2.3.2 Procurement Records of RPGCLNo. Project Content Supplier

1 CNG Pilot Plant CNG FillingStations,Conversion Kit,CNG Cylinders

Compair Reveal, U K.

2 Kailastila LPG Plant

NGL Fractionation Plant

Hyundai Engineering & Construction Co., Ltd., Korea

(Source: Hearing at Site)

3) Operation and Maintenance

The operation and maintenance manuals are available at the Kailastila-I

LPG collection plant operated by RPGCL and function as a guideline, but

it is difficult to say that they are well arranged and managed. The

current plant is not equipped with a modern computerized operation and

maintenance system, which has been commonly adopted in advanced

countries. However the plant is operated well by controlling the pressure,

the temperature, and the flow rate etc. with the analog system, and it is

considered that RPGCL possesses enough correspondence ability to the

operation and maintenance. On the other hand, because this existing

plant's scale is at the pilot plant level and the number of people who are

involved in the operation is extremely limited, the education and the

training of new talent for the operation of the Ashuganj NGL

fractionation plant is considered necessary.

(2) Management Organization

For the execution of this project, the cooperation not only inside of RPGCL

but also with and among the parent company Petrobangla, Petrobangla’s

subsidiary companies, for instance, SGFL which is the supply source of the

-2-41-

raw material of this project and GTCL which operates and maintain the gas

supply pipelines, BPC which receives the products and LP-Gas Co. which is

BPC’s subsidiary company and conducts bottling and wholesale of the LPG

produced by this project are necessary. Therefore the Project Steering

Committee organized by members from the related companies mentioned

above is necessary to be established in order to totally coordinate all

processes from the raw material supply of the upstream to the product sales

in the downstream and to manage this project smoothly.

The management system after starting the operation shall be organized in

RPGCL, which is the execution party of this project, and an external auditing

system mainly composed of Petrobangla is necessary to be maintained.

(3) Management Foundation and Policy

RPGCL was established in 1991 for the purpose of utilizing the natural gas

effectively as shown in the company name with a local word "Natural Gas

Use Promotion Company" as 100% subsidiary company of Petrobangla. Since

its establishment, RPGCL has expanded its business based on its

establishment purport like the sales of two-cycle engine conversion kit for the

purpose of the fuel conversion from an existing 2-cycle car fuel to CNG, the

running of five CNG stations, the manufacturing and wholesale of LPG and

MS and so on. Moreover, as described in the paragraph 2.2.1 (1), RPGCL is

trying to disseminate not only CNG but also the gas products in order to

reduce the energy supply difference in the west region, and their purpose

agrees with the one of this project.

(4) Financial Ability

RPGCL operated at a deficit for the past several years though the company is

expanding its business. As such, it seems difficult to defray the capital

necessary for this project from its own capital. Moreover, Petrobangla, which

is the parent company of RPGCL is collecting the gas charge by the local

currency and does not have the base to raise a foreign currency necessary for

executing this project.

However, this project is fisted up as one of the most important projects of the

energy policy in Petrobangla and the Bangladesh government as shown in

- 2 - 42 -

Table 2.2.1.4, and the capital necessary within Bangladesh is expected to be

expended from the Petrobangla’s and the government’s budgets. The prospect

of the funding is described in the section 2.3.2.

(5) Manpower Ability

RPGCL is steadily operating and maintaining Kailastila LPG Plant

(processing 55 ton/day NGL) since 1997 without any accidents up to the

present time, and has accumulated enough operation and management

knowhow of LPG plant. However, because the manpower shortage is expected

when this project is accomplished, the reinforcement of the manpower from

Petrobangla group and the education and training of new talent are needed.

(6) Project Execution Organization

Figure 2.2.3.1 below shows the outline of the execution organization of this

project for the construction period. The organization of the project execution

for the operation period is shown in Figure 2.2.4.5 of the post-paragraph

2.2.4(5).

- 2 - 43 -

PETROBANGLA & RELATED SUBSIDIARIES RPGCL

BPC & RELATED SUBSIDIARIES

Committee Member Dispatch

PROJECT STEERING COMMITTEE

PROJECT MANAGER

Committee Member Dispatch

CONSULTANT

PROJECT MANAGEMENT TEAM

(DESIGN, PROCUREMENT, CIVIL, CONSTRUCTION, ADMINISTRATION, FINANCE & ACCOUNTING)

EPC CONTRACTOR

Figure 2.2.3.1 Project Execution Organization Chart (Construction Period)

- 2 - 44 -

2.2.4 Concept of Proposed Project

(1) Design Basis

The objective of this project is to construct an NGL fractionation plant and

associated facilities, which will be used to fractionate NGL to produce

petroleum products of LPG, MS, and HSD, and also to store and unload them,

on the east side bank of the Meghna River at Ashuganj in Brahmanbaria Zila

(prefecture). The required feedstock NGL is to be supplied from the natural

gas production facilities in three gas fields, Kailastila, Beanibazar and

Jalalabad, in Sylhet Division located in the northeast of Bangladesh. The

production rates of NGL in each field are 123 ton/day in Kailastila, 82 ton/day

in Beanibazar, and 262 ton/day in Jalalabad respectively.

NGL produced at Beanibazar and Jalalabad Gas Fields is gathered to

Kailastila-II through each of the existing 4" dia. pipeline laid between them

and Kailastila-II. A NGL of 467 ton/day in amount is to be transported to the

proposed plant site at Ashuganj through the existing 6" dia., 175 km long N-S

NGL Pipeline.

The battery limit on the receiving end of the feedstock at the proposed site is

assumed to be the downstream of the companion flange of the existing pipe at

Ashuganj Metering Station.

It is assumed that the whole quantity of the products is wholesaled to BPC

(Bangladesh Petroleum Corporation) and its subsidiaries who control all sales

of the petroleum products to the domestic market in Bangladesh. In addition,

it is assumed that the petroleum products will be shipped by tank lorries, and

the scope of the project will include up to the lorry loading station for each

product but excluding the bottling plant for LPG shipment.

The plant is to be operated for 330 days a year with an operation rate

assumed at 100%.

International standards and codes were used as basis in this investigation,

though the standards and codes enacted in Bangladesh will be applied to the

design and construction of the plant during the stage of project execution.

The design bases of this project are described below:

1) Design Philosophy

To establish the concept of the plant, the philosophy and the condition for

- 2 - 45 -

the design of the plant are assumed as follows in this investigation.

(a) The plant life is 20 years.

(b) The plant site is the area land-developed for Ashuganj Fractionation

Plant of RPGCL that is adjacent to the existing GTCL Metering Station,

and there is neither restrictions nor limitations on the plant construction

in the area.

(c) As for the feedstock NGL, the amount of NGL shown in Table 2.2.4.2 is to

be supplied continuously with steady flow-rate. The existing 6" N-S NGL

pipeline that is used to transport NGL from the gas fields is to be utilized

without any modification or repair.

(d) Each product tank has a storage capacity equal to the product amount

produced inlO days full operation of the plant. However, for HSD storage,

the existing condensate storage tank is reused as it is.

(e) The shipping method of the products is as follows.

Regarding the shipping of the products by transportation barges over the

Meghna River, it must be considered that the variation of the water level

at the Meghna River between the dry season and the rainy season

reaches as high as 8m in maximum. In order to bring the barge alongside

the pier during the lowest water level period, it is required to extend the

existing fixed pier to the center part of the river or construct a new

independent pier. Such measures may raise certain problems relating

with the restriction on the use of the river. Because LPG is made up of

high-pressure gases, special precautionary measures different from

handling a general hazardous material must be paid attention when the

shipment of LPG is carried out by barges. Therefore, it is assumed in this

investigation that the shipment of the products is made by tank lorry

only.

Loading capacity of the largest tank lorry is to be 20 m3/car. Shipment by

the trailer type tank lorry will be studied in the future depending on the

improvement of road conditions in Bangladesh.

• LPG lorry loading station Two lanes

• MS lorry loading station Two lanes

• MS/HSD lorry loading station One lane

• HSD lorry loading station One lane

The time required for filling up a tank lorry is about 20 minutes for a

20m3 car.

- 2 - 46 -

As for the measurement at the shipment, all the methods by a flow meter

combined with the loading arm, tank depth measurement (MS and HSD

only) and the measurement using the weighing platform are to be

available.

Regarding LPG, the shipment by bottling also should be taken into

account. However only the space for construction of the bottling factory

where LPG is filled up to cylinders is taken into account because the

authorization for the production and the retail sales of LPG is divided

officially in Bangladesh.

(f) Neither filling to nor shipment by drums for MS and HSD is planned.

However, a necessary area for storage and filling/shipping facilities of the

hazardous material is provided within the premise.

(g) All the utility except for fuel gas and drinking water such as water,

electricity and air used in the plant is provided within the plant. The

drinking water and the electric power, etc. for operators’ residence

facilities are purchased from the outside.

(h) The fuel gas is purchased from GTCL Metering Station.

(i) The operation days of the plant are 330 days/year, and the operating

hour is 24 hours/day.

(j) The residence facilities for the personnel to be engaged in the plant

operation are installed.

2) Composition and Receiving Condition of Feedstock

(a) Feedstock Composition

The feedstock received by this plant is a natural gas liquid (NGL). The

accurate composition data are not available because there is no NGL

recovery facilities in the gas fields that are to supply NGL except in the

Kailastila Gas Field. Therefore, the data on the composition of NGL is

estimated based on the data of the natural gas obtained at the site

survey with due consideration of physical properties.

Table 2.2.4.1 shows the composition of the NGL received that is used in

this investigation.

- 2 - 47 -

Table 2.2.4.1 Composition of Received NGLComponents Content (mole%)

Methane (Ci) 0.000Ethane (Cz) 0.556Propane(Cs) 28.190Iso-Butane (iC4) 8.336Normal Butane (nCO 9.221Iso-Pentane (iCs) 5.279Normal Pentane (nCs) 3.310Hexane (Ce) 5.830Heptane (C?) 11.383Octane (Cs) 9.862Nonane (Cg) 5.762Decane (Cio) 3.209Hendecane (Cn) 1.871Dodecane (C12) 1.482Tridecane (C13) 1.349Tetradecane (C14) 1.114Pentadecane (C15) 1.240Cie+ Fractions 2.006

Total 100.000Molecular Weight 86.42Density (g/cm3) 0.6437

(b) Receiving Condition

The receiving condition of NGL at the battery limit of NGL Fractionation

Plant at Ashuganj is shown in Table 2.2.4.2, and the supply rate of the

NGL from each gas field is shown in Table 2.2.4.3.

Table 2.2.4.2 NGL Receiving ConditionItem Condition

Pressure 6.9 bargTemperature Atmospheric TemperatureAmount Max. 467 TPD

Table 2.2.4.3 NGL Supply Rate of Gas FieldGas Field Name Supply Rate (TPD)

Beanibazar 82Kailastila 123Jalalabad 262

- 2 - 48 -

3) Specification for Products

(a) LPG

The requirements for LPG produced in this plant are shown in Table

2.2.4.4 according to LPG specification in Bangladesh.

Table 2.2.4.4 Specification for LPG

Test Item Test Method Unit RequirementsDensity at 15 'C ASTM D1657 kg/L Min. 0.55

Max. 0.6Vapor Pressure at 40 °C ASTM D1267 psi Max. 213Copper Strip Corrosion (1 hour at 37.8 °C)

ASTM D1838 Max. No 1

Volatility(Evaporation temp, of 95% vol,)

ASTM D1837 r Max. 2.2

Total Volatile Sulfur ASTM D2784 % mass Max. 0.02Hydrogen Sulfide UOP-212* — Nil

*: Universal Oil Products Company Method 212

(Source: Liquefied Petroleum Gas by ERL, collected at the site investigation)

(b) Motor Spirit (MS)

The requirements for MS produced in this plant are shown in Table

2.2.4.5 according to the motor spirit specification in Bangladesh.

(c) High Speed Diesel (HSD)

The requirements for HSD produced in this plant are shown in Table

2.2.4.6 according to the HSD specification in Bangladesh.

- 2 - 49 -

Table 2.2.4.5 Specification for MS

Test Item Test Method Unit RequirementsDensity at 15 ‘C ASTM D1298 kg/L To be ReportedColor Visual — OrangeReid Vapor Pressure at 38 ‘C ASTM D323 psi Max. 10Copper Strip Corrosion ( 3 hour at 50 °C)

ASTM D130 Max. No 1

Octane Number ASTM D2699 — Min. 80Oxidation Stability ASTM D525 min Min. 240Residue on Evaporation ASTM D381 mg/lOOml Max. 4Sulfur, total % mass ASTM D1266

D2785% mass Max. 0.1

Doctor Test ASTM D235 — NegativeDistillation

Initial Boiling Point ASTM D86 °C To be reported10% vol recovery °C Max. 7550% vol recovery °c 80 -12590% vol recovery °c Max. 180Final BP °c Max. 210Residue % volume Max. 2

(Source: Motor Gasoline - Regular by ERL, collected at the site investigation)

Table 2.2.4.6 Specification for HSD

Test Item Test Method Unit RequirementsDensity at 15 'C ASTM D1298 kg/L Max. 0.87Color ASTM D1500 Max. 3.0Neutralization Valuea) Strong Acid Nob) Total Acid No

ASTM D664 ASTM D974 MgKOH/g

mNilMax. 0.2

Ash ASTM D482 % mass Max. 0.01Carbon Residue (conradson) On 10% bottom

ASTM D189 % mass Max. 0.2

Cetane No. ASTM D613 — Min. 45Cetane Index (Calculated) ASTM D976 — Min. 45Pour Point ASTM D97 °C Max. 9 for winter

Max. 15 for Summer

Copper Strip Corrosion ASTM D130 — Max. No 1Flash Point PM(cc)/A bel ASTM D93 x: Min. 32Kinematic Viscosity at 38 °C ASTM D445 cst Max. 9Sulfur, total % mass ASTM D2622 % mass Max. 0.1Sediment ASTM D473 % mass Max. 0.01Water Content ASTM D95 % volume Max. 0.1Distillation

Temp, at 90% vol recovery ASTM D86 x: Max. 379(Source: High Speed Diesel 3y ERL, collected at the site investigation)

- 2 - 50 -

4) Condition of Utilities

The condition of each utility required in NGL Fractionation Plant

planned is assumed as below.

(a) Electricity

All electric power necessary for the plant operation will be provided by

in-house generation and the power system requirement within the

premise such as residences for staffs will be independent and purchased

from the distribution network of an utility company.

Table 2.2.4.7 shows the distribution voltage of electric power in the plant.

Table 2.2.4.7 Electric Power Distribution VoltageVoltage(VAC)

Number of Phase

Frequency(Hz)

Service

3,000 3 50Hz Motors of 150kW or larger400 3 50Hz Motors of less than 150kW

200/100 1 50Hz Lighting and small consumers

(b) Fuel Gas

The fuel gas required for the plant operation will be purchased from

adjacent GTCL.

Table 2.2.4.8 shows the supply condition of the fuel gas.

Table 2.2.4.8 Fuel Gas Supply ConditionItem Requirements

Pressure 14 bargTemperature 20 t

(c) Instrumentation Air

All instrumentation air necessary for the plant operation will be provided

by in-house air compressor and dehydration system.

Table 2.2.4.9 shows the supply condition of the instrumentation air.

Table 2.2.4.9 Supply Condition of Instrumentation AirItem Requirements

Pressure 7 bargTemperature Atmospheric TemperatureDew Point -40 °C or lessQuality Free from Dust and Oil

- 2 - 51 -

(d) Plant Air

All plant air necessary for the plant operation will be provided by

in-house air compressor system.

Table 2.2.4.10 shows the supply condition of the plant air.

Table 2.2.4.10 Supply Condition of Plant AirItem Requirement

Pressure 7 bargTemperature Atmospheric Temperature

(e) Cooling Water

All cooling water necessary for the plant operation will be provided by

cooling tower system with a water well for make-up water that is to be

drilled within the premise.

Table 2.2.4.11 shows the supply condition of cooling water.

Table 2.2.4.11 Supply Condition of Cooling WaterItem Requirement

Pressure 6 bargTemperature 35 °C max.

(f) Fire Fighting Water

River water will be pumped up by the water intake pump on the existing

pier and stored in the fire fighting water pond for fire fighting water use.

In addition, underground water pumping system will be available.

Table 2.2.4.12 shows the supply condition of the fire fighting water.

Table 2.2.4.12 Supply Condition of Fire Fighting WaterItem Requirements

Pressure 8.5 bargTemperature Normal Temperature

5) Weather Conditions

Refer to the previous paragraph 2.1.1(2) 2).

6) Effluent Standard

The effluent standard in Bangladesh is complied. Table 2.2.4.13 shows

the effluent standard applied to oil refineries according to the

- 2 - 52 -

Bangladesh Environment Conservation Rule (1997).

Table 2.2.4.13 Effluent Standard (Oil Refinery)Effluent Numerical

RequirementGas EmissionSulfur Dioxide: Distillation Tower 0.25 kg/ton

Catalytic Thermal Cracking Plant 2.5 kg/tonWater Drain

Suspended Solid 10 mg/1BOD at 20%: 30 mg/1Phenol 1 mg/1Sulfur Compound (As S.) 1 mg/1Oil and Grease 10 mg/1

(Source: Environment Conservation Rules 1997 by MOEF)

(2) Outline of NGL Fractionation Plant

NGL Fractionation Plant at Ashuganj, which is the object of this

investigation, will consist of the following facilities:

• NGL receiving and storage facilities

• NGL fractionation facilities

• Products storage facility

• Products shipping facility

• Other associated facilities

In addition to the above-mentioned facilities, the administration facilities

necessary to manage and secure the plant operation are to be installed within

the premise.

The process flow of NGL Fractionation Plant to be constructed is shown in

Drawing No. PFD-001, and the outline of the plant is described below.

1) NGL Receiving and Storage Facilities

NGL from the Kailastila, Beanibazar, and Jalalabad Gas Fields will be

gathered in Kailastila-II. The amount of NGL gathered will be 467

ton/day. The NGL will be transported to Ashuganj Metering Station of

GTCL through the 6" dia., 175 km long N-S NGL Pipeline.

Because the N-S NGL Pipeline was constructed originally for the said

NGL transportation, it is assumed in this investigation that enough

transportation capacity is available, without carrying out further

- 2 - 53 -

verification on the transportation capacity or consideration to its

expansion or modification.

After passing through GTCL Ashuganj Metering Station that is the NGL

receiving terminal, the NGL will be transferred to the newly constructed

feedstock tank (T-1001) and stored under a pressure of about 7 barg. This

tank T-1001 will be of spherical type, not of horizontal type, to ensure

enough storage capacity under high pressure. The stored NGL will be

pumped up to about 17 barg by the newly installed feedstock pump

(P-1001A/B, 1 is standby), and eventually supplied to the NGL processing

plant.

• It should be noted that remodeling of the existing piping and

instrumentation at the downstream of the receiving and metering

facilities will be required due to the new installation of T-1001 and

P-1001A/B.

2) NGL Fractionation Facility

This fractionation facility will fractionate NGL of 467 ton/day to produce

LPG, MS, and HSD.

The facility will consist of two towers, Debutanizer and MS-HSD Splitter,

and heat exchangers that comprise the main equipment in the facility.

Table 2.2.4.14 shows the estimated production rate of each product based

on the received NGL composition.

Table 2.2.4.14 Production Rate of LPG, MS and HSDProduct Production Rate (TPD)LPG 123MS 262HSD 82

(a) Debutanizer

The NGL from the NGL receiving and storage facilities will be charged to

the middle stage of Debutanizer (PV-2001).

PV-2001, which is equipped with a condenser and a reboiler, is a

distillation tower where NGL is fractionated into a mixture of Cs and C4

components, and C5+ components.

The NGL charged to PV-2001 under a pressure of about 17 barg will flow

down through the trays of the tower into PV-2001 Reboiler (HE-2001A/B).

-2-54-

11 13 14 15 16

T—1001FEED STOCK TANK

P-1001A/B AC-2001FEED STOCK PUMP PV-2001 AIR FIN CONDENSER

HE-2002IPG COOLER

AC-3001 PV-3002PV—3001 AIR FIN CONDENSER PV-3001 REFLUX DRUM

P—3001A/BPV-3001 REFLUX PUMP

T—4001A/BLPG TANK

P-4001A/BLPG LOADING PUMP

T-4004ODORANT TANK

P-4004A/BODORANT INJECTION PUMP

SALES GAS

SALES GAS

EXISTINGTURBO

EXPANDERPLANT

J EXISTING |__ t'STABILISER'

KTL-I LPG PLANT

KAILASTILA FIELD (SGFL)

i—i i ii r~

ii

JALALABAD FIELD (UNOCAL)

CONDENSATE 3^

VESSEL (*) PIPELINE PUMP M

PV-2001DE-BUTANISER

PV-2002PV-2001 REFLUX DRUM

P-2001A/BPV-2001 REFLUX PUMP

HE—2001PV-2001 REBOILER

T-4001A/B

PIG LAUNCHER(EXISTING)

1 /WRWS TL_ _ _ _ _ _ _ _ _ _ _ _ _ _ !

EXISTING 6” PIPELINE

I--------- 1

PIG RECEIVER(EXISTING)

-

(EXISTING)

ASHUGANJ FRACTIONATION PLANT (AFP)NOTE 1. SOLID LINES INDICATE THE SCOPE OF PROJECT.

2. DOT LINES INDICATE THE EXISTING.3. PLANT MARKED AS WILL BE INSTALLED BY

SGFL OR UNOCAL.

PV-3001MS-HSD SPLITTER

P-3002A/BPV-3001 BOTTOM PUMP

HE-3001PV-3001 REBOILER

AC-3002HSD COOLER

HE-3002MS COOLER

T-4002MS TANK

P-4002A/BMS LOADING PUMP

T—4003HSD TANK (EXISTING)

P-4003A/BHSD LOADING PUMP

0 29,01,2001 FINAL ISSUE N.K R.l H.T

DESCRIPTION DR'WN CHK'D APP.DREVISION

hEDONew Energy end Industrial TechnologyDevelopment Organization

PROCESS FLOW DIAGRAM

JOB NO.-. 324-30-001-01 DATE: 29, 01, 2001 SOALE: N.T.S.

DRAW: N kurokAWA CHK'D. S qKUBO APP’D' H.TAKADA

DRAWING NO.PFD-001 0

dee JAPAN OIL ENGINEERING CO., LTD.TOKYO, JAPAN

10 12 13

The NGL that flowed into HE-2001A/B will be heated up to about 230°C

by hot heat medium. Lighter components of the heated NGL will

evaporate to gas, rise through the trays of the tower contacting with the

down-flow NGL, and flow out from the top of the tower. The gas, which

mainly consist of C3 and C4 components, from the top of the tower will

flow into PV-2001 Air Fin Condenser (AC-2001), which is an air-cooled

heat exchanger. In the condenser the gaseous components will be cooled

down to a temperature of about 54°C and condense to liquid.

This condensed liquid will be collected in PV-2001 Reflux Drum

(PV-2002) and pumped up to about 20 barg by PV-2001 Reflux Pump

(P-2001A/B, one is standby). Part of the pumped liquid will be returned

to PV-2001 as reflux, and the rest will flow into LPG Cooler (HE-2002),

which is a shell and tube type heat exchanger, and will be cooled down to

an atmospheric temperature by water. The cooled liquid is transferred to

the product storage facilities as LPG.

The residual liquid in the bottom of PV-2001 that consists of Cs+

components will flow out from the bottom as heavy distillate. The

flow-rate of the heavy distillate is estimated at 344 ton/day. The heavy

distillate will be transferred to MS-HSD Splitter under a pressure of

about 14 barg and a temperature of about 230%Z.

(b) MS-HSD Splitter

The heavy distillate of 344 ton/day from De butanizer will be charged to

the middle stage of MS-HSD Splitter (PV-3001) after the pressure is

reduced to about 1 barg.

PV-3001, which is equipped with a condenser and a reboiler, is the

distillation tower where the heavy distillate from De butanizer is

fractionated into MS and HSD.

The heavy distillate charged to PV-3001 will flow down through the trays

of the tower into PV-3001 Reboiler (HE-3001). The heavy distillate will be

heated up to about 270%Z in this HE-3001 by hot heat medium. Lighter

components of the heated heavy distillate will evaporate to gas, rise

through the trays of the tower contacting with the down-flow heavy

distillate, and flow out from the top of the tower under a pressure of

-2-57-

about O.Sbarg. The gas that flowed out from the tower will flow into

PV-3001 Air Fin Condenser (AC-3001), which is an air-cooled heat

exchanger, will be cooled down to a temperature of about 73 °C and

condense to liquid.

This condensed liquid will be collected in PV-3001 Reflux Drum

(PV-3002) and then pumped up to about 5 barg by PV-3001 Reflux Pump

(P-3001A/B, one is standby). Part of the pumped up liquid will be

returned to PV-3001 as reflux. The rest of liquid will flow into MS Cooler

(HE-3002), which is a shell and tube type heat exchanger. In the cooler, it

will be cooled down to an atmospheric temperature by cooling water, and

transferred to the product storage facilities as MS.

The residue in the bottom of PV-3001 will be pumped up to about 6 barg

by PV-3001 Bottom Pump (P-3002A/B, one is standby). The pumped up

HSD will flow into HSD Cooler (AC-3002), which is an air-cooled heat

exchanger. In the cooler, it will be cooled down to an atmospheric

temperature by air, and transferred to the product storage facilities as

HSD.

3) Product Storage Facilities

LPG, MS, and HSD produced by the fractionation facilities will be

transferred to each storage tank respectively as an end product.

The product LPG of 123 ton/day from LPG Cooler (HE-2002) will be

stored in two LPG Storage Tanks (T-4001A/B) under atmospheric

temperature and a pressure of about 17 barg. T-4001A/B are to be

spherical tanks with a capacity of 1,200m3 each.

The product MS of 261 ton/day from MS Cooler (HE-3002) will be stored

in MS Storage Tank (T-4002) under atmospheric temperature and

pressure. T-4002 is to be a fixed dome roof sealed tank with a capacity of

3,800m3, and equipped with a floating roof inside the tank to suppress

evaporation loss from the liquid surface.

The product HSD of 82 ton/day from HSD Cooler (AC-3002) will be stored

in HSD Storage Tank (T-4003), which will be diverted from the existing

- 2 - 58 -

condensate tank with a capacity of 2,385m3, under atmospheric

temperature and pressure. T-4003 is a fixed corn roof sealed tank.

4) Shipping Facilities

It is assumed that LPG is shipped by high-pressure tank lorries, while

MS and HSD are shipped by normal pressure tank lorries.

The LPG stored in the LPG storage tanks (T-4001A/B) will be pumped up

by LPG Loading Pump (P-4001A/B, one is standby), injected odorant,

which will be stored in Odorant Tank (T-4004), by Odorant Pump

(P-4004A/B, one is standby), and then transferred to LPG Loading

Station. At the station, the LPG will be loaded into the high-pressure

tank lorries and shipped after measurement of the freight by a weighing

platform. A spare nozzle will be provided at the station to enable the

transfer of the LPG to the bottling plant for shipment by cylinders.

The MS stored in MS Storage Tank (T-4002) will be pumped up by MS

Loading Pump (P-4002A/B, one is standby) and transferred to MS

Loading Station. At the station, the MS will be loaded into the normal

pressure tank lorries and shipped after measurement of the freight by a

weighing platform.

The HSD stored in HSD Storage Tank (T-4003) will be pumped up by

HSD Loading Pump (P-4003A/B, one is standby) and transferred to HSD

Loading Station. There the HSD will be loaded into the normal pressure

tank lorries and shipped after measurement of the freight by a weighing

platform.

5) Associated Facilities

The following associated and utility facilities will be installed to support

the operation of the process facilities mentioned above:

(a) Heat Medium Facilities

The heat medium system that supplies the heat medium to the reboiler

of each distillation tower will be installed.

(b) Utility Water Facilities

The cooling water system that supplies cooling water to various users in

the plant will be installed.

Make-up water will be taken from a water well newly drilled.

- 2 - 59 -

(c) Electric Facilities

To supply all electric power required for the plant operation, the power

generation and distribution facilities will be installed.

However, the electric power that is consumed for the operation staff

residence will be purchased from an electric power company.

(d) Instrumentation

The instrumentation for the centralized supervisory control of all plants

including the utility and the air system for the instrumentation will be

installed.

(e) Telecommunication Facilities

Explosion-proof telecommunication system will be installed in the

premise of NGL Fractionation Plant. Moreover, public telephone lines

will be provided for the communication between the plant site and

RPGCL Head Office or the relating organizations.

Currently, introduction of SCADA (Supervisory Control and Data

Acquisition) system into key pipeline networks is proceeding under

GTCL’s initiative. The system is to include telecommunication lines

through its micro wave system. Therefore it will be considered that the

external telecommunication lines of this plant will be linked with the

micro wave system in the future.

(f) Fire Fighting System

Fire fighting system will be installed in the process plant area, the

storage facilities area, the shipping facilities area, and the

administration building respectively in accordance with NFPA (National

Fire Protection Association) standard. Water spray system will be applied

to the individual LPG spherical tanks, while air foam fire fighting system

will be equipped to the individual MS and HSD storage tanks. In

addition, Air foam fire fighting system and water fire fighting system will

be provided in the plant area and the entire storage area.

In the shipping facilities area, water sprinkler system will be applied to

the LPG shipping facilities, while air foam system will be provided for

the MS/HSD shipping area.

The fire fighting water will be taken from the river by the water intake

pump on the existing pier and stored in the fire fighting water pond.

- 2 - 60 -

6) Administration Facilities

To support the plant operation, the following facilities will be installed in

the premise of the plant:

(a) Office buildings

(b) Canteen for employees

(c) Maintenance shops and warehouses

(d) Laboratory

(e) Fire fighting cars and its garage, and machine parts stockers

(f) Plant control room

(g) Power generation and distribution room

(h) Shipping pump room

(i) Fire fighting pump room

(j) Security guard room

(k) Weighing platform and shipping control room

(l) Residential buildings for the employees

However, it is assumed that the residential buildings will be constructed

at the area in the north side of the plant site where the existing GTCL

administration facilities are located. Utilities required for the residential

services such as electricity and water will be purchased from the

respective public service companies.

(3) Plant Layout

The proposed plant of this project will be constructed in the plant area

developed for construction of Assuaging Fractionation Plant of RPGCL.

At present, the area is under the management of GTCL.

The land has been already prepared, and surrounded with wire netting

fence and brick wall. The area of about 22,000m2 at the northeast comer

of the plant area is occupied by the existing facilities such as the GTCL

metering station, the offices, the residential buildings and other related

facilities. The rest of the area is almost unoccupied except the small area

where other facilities like a fixed cone roof type tank of 15,000 bbl that

stores condensate, a temporary cabin, and a barge shipping control cabin

are scattered.

However, since it has been decided that the plant area will be used for

the materials yard and the pipe coating yard for the construction of

- 2 - 61 -

Habiganj -Ashuganj (H-A) Pipeline which is managed by GTCL until

about June, 2002, it will be possible to start the construction work of this

project in the area in July, 2002 or later.

In the plant layout plan, the storage yard, the process plant yard, and the

shipping yard are arranged at the south part of the area in order from

the west to the east, while the administration buildings and the facilities

related to utility supply are arranged at the north part of the area that is

adjacent to the GTCL Metering Station.

It is taken into account that part of the central area and the area near

the city road remain unoccupied as a room for the future construction of

the facilities such as petroleum products drum filling and LPG bottling

plants and other additional plants, which may be installed related to the

new Ashuganj-Elenga LPG pipeline plan.

The existing fixed cone roof type tank will be converted to the HSD

storage tank of the project. The all other existing facilities (the shipping

pump room and the security guard room, etc.) including the condensate

shipping pipeline and the cables, etc. will be removed or remodeled for

the use of the project.

The residential facilities for the employees engaged in the plant

operation will be installed in the area that GTCL is used for the

operation of the metering station.

Drawing No. GEN-001 and GEN-002 show the plant layout plan.

(4) Plant Cost

The rough estimate of the construction cost of the proposed plant

mentioned above is as shown in Table 2.2.4.15.

- 2 - 62 -

453238

BRAHMAPUTRA BASIN P/L AREA OF TfTAS GAS T&D CO. LTD.

ASHUGANJ

KEY PLAN

ware house; ;\S REGULATION'' [ METERING AREA :SCRAPER TRAPS AREA:

WORK SHOP

ESS PLANT AREA

FUTURE AREA

NOTE :

MS/HSDHSD TANK

LPG TANK FEE) STOCK TANK

ROOM (I)

29,01,2001 FINAL ISSUEDR'WN

REVISION

Energy and Induetrial TechnologyDevelopment Organization

GENERAL PLOT PLAN

1/2000324-30-001-01 29, 01, 2001

N.KUROKAWA R.IKUTA H.TAKADA

GEN-001390 JAPAN OIL ENGINEERING CO., LTD

4 - 2 - 63 - 64 - 15

N. 200,000

P-5601A/BP-5502A/B

KEY PLAN

EQUIPMENT LISTTAG NO.

T-5401 HEAT MEDIUM TANK

PV-2001 DE-BUTANISERAC-2001AC-3001AC-3002 PV-2001 REFLUX DRUM

PV-2003 LPG OFF SPEC TANK

IA/UAPACKAGE

PV-3002 PV— 3001 REFLUX DRUM

PV-5401 HEAT MEDIUM EXPANTION VESSEL

U-5201FIT-5401 PV-5601 HP FLARE SEPARATORU—5101

PV-5602 LP FLARE SEPARATOR

PV-2001 AIR FIN CONDENSERAC-2001

PV-3001 AIR FIN CONDENSER

AC-3002 HSD COOLER

HE-2001 PV-2001 REBOILERPIPE RACK

HE-2002A/B LPG COOLER

HE-3001 PV-3001 REBOILER

HE-3002 MS COOLER

HT-5401 HEAT MEDIUM BOILER

P-2001A/B PV-2001 REFLUX PUMPP-2003A/B P-2001A/BP-3001A/B P-3002A/BP-5401A/BP-2003A/B LPG OFF SPEC PUMP

P-3001A/B PV-3001 REFLUX PUMP

P-5402A/B P-3002A/B PV-3001 BOTTOM PUMP

P-5401A/B HEAT MEDIUM CIRCULATION PUMPPV-2001PV-3001

P-5402A/B HEAT MEDIUM TRANSFER PUMP

OIL/WATERSEPARATOR

P-5601 A/B FLARE SEPARATOR PUMP

P-5602A/B LP FLARE SEPARATOR PUMP

IA/UA PACKAGEU—5101

U-5201 COOLING TOWER

N. 100,000 29,01,2001 FINAL ISSUEDR’WN CHK'D

REV

Energy and Industrial TechnologyDevelopment Organization

EQUIPMENT ARRANGEMENTPROCESS PLANT AREA

324-30-001-01 29, 01, 2001

N.KUROKAWA R.IKUTA H.TAKADA

GEN-002000 JAPAN OIL ENGINEERING CO., LTD

4 -2-65-66

Table 2.2.4.15 Estimated Cost for Plant ConstructionNo. Item Estimated Amount

(Million Yen)Estimated Amount

(Thousand US dollars)

1 Design Cost 1,049 9,4282 Equipment and

Materials Cost4,283 38,499

3 Fabrication &Installation Cost

2,334 20,978

4 TransportationCost

171 1,540

5 Insurance Cost 204 1,8316 Reserves 804 7,228

Total 8,845 79,504

The rough estimate of the equipment cost for the turbo expander plant of

which installation is planned in each gas field of Beanibazar and

Jalalabad is shown in Table 2.2.4.16 as only reference, though the plan is

not included within the scope of this investigation because the operator of

such fields is not RPGCL, who is the counter part of the investigation.

The reason why such estimate is made is that such plans relate to the

feedstock supply to the proposed plant.

The equipment cost estimated includes only the cost of a necessary

process equipment for the turbo expander plant, but the costs for the

design, the fabrication, the installation, the transportation, the insurance,

the accompanied utility facilities, etc. are not included at all.

Table 2.2.4.16 Estimated Cost for Turbo Expander PlantGas Field Plant Capacity Equipment

Cost(Million Yen)

EquipmentCost

(Thousand US dollars)

Beanibazar 35 MMSCFD 678 6,095Jalalabad 125 MMSCFD 1,263 11,355

(5) Plant Operation Plan

1) Organization of Plant Operation

The number of operation days of this plant is assumed to be 330 day/year,

and operating hours is assumed to be 24 hour/day.

The operation system is assumed to be three shifts with eight working

- 2 - 67 ■

hours each a day excluding the administrative workers who will work

only during daytime.

A total number of the employees for the plant operation is assumed to be

118 persons.

Figure 2.2.4.1 shows the organization of the plant operation.

2) Price of Raw Material

In Bangladesh, the price of the feedstock NGL is controlled in the charge

price system by the government. So it is assumed that the price of the

NGL is equal to the price of NGL shipped from the existing turbo

expander plant in Kailastila Gas Field operated by SGFL.

3) Utility Consumption

Only the fuel gas among the utilities necessary for the plant operation

will be purchased from the outside of Ashuganj Fractionation Plant. The

fuel gas will be used as a fuel of the electric power generator and the heat

medium heater installed in the plant. The all other utilities such as

water and electricity used for the plant operation will be provided

in-house.

The estimated consumption and the unit price of the fuel gas are shown

below.

• Consumption of Fuel Gas: 21,440 Nm3/day (0.8 MMSCFD)

• Unit Price of Fuel Gas: $ 0.08/Nm3

4) Chemical Consumption

Heat medium will be used to operate the plant as the heating medium of

the reboilers of De butaniser and MS-HSD Splitter.

The volume of initial filling and the consumption of the heat medium are

estimated as shown below. •

• Volume of Initial Filling: 100m3

• Consumption: negligible

- 2 - 68 -

to

3

SafetySectionOperation Section Environmental

SectionMaintenance

Section

Proceaa/MechanicalEngineer

Electric al/Inatrum ent Engineer

Planning Engineer

ProductionManager

General Affaire Manager

Safety/EnvironmentalManager

Deputy General Manager

General

ProcurementStaff

Sales Staff

Environmental Engineer

Safety Engineer

AdministrationSection

Personnel Affairs Section

Procurement/SalesSection

AccountingSection

Figure 2.2.4.1 Plant Operation Organization

2.2.5 Scope of Supply and Work allocation to Each Party

(1) Finance Arrangement

As described in section 2.3.1, regarding finance arrangement, it is

presupposing that CDM is applied to this project, Bangladesh as the host

country raises local costs such as land acquisition cost, taxes, administration

costs of project management team and their incidental expenses. And the

remaining amount is raised by a finance from a public organization in Japan

as a CDM investing country.

(2) Equipment, Materials and Engineering Service

In case the project is implemented as a CDM project based on finance from a

public organization in Japan, the rough scope allocated to the host country

and the investing country respectively in the each stage of the project

execution is shown in Table 2.2.5.1 below.

The services shown below are included in the scope of Bangladesh side.

(a) Acquisition of plant construction ground

(b) Removal of the existing facilities in the plant construction ground

(c) Utilities necessary for the plant operation

(d) Acquisition of official permissions and approvals

(e) Operation and maintenance of the plant

- 2 - 70 -

Table 2.2.5.1 Work Allocation Plan

Item Bangladesh Side Japanese SideStudy on CDM needs (this study) — Execution

Study on CDM applicationexamination (F/S)

— Execution*1

Environmental Impact Assessment (Application of EnvironmentalClearance)

Execution

Project Evaluation by CDM financing organization (incl. Evaluation of CDM application)

Execution

Discussion and adjustment with host country

Execution Execution

CDM certificate by international organizationCDM agreement (financing condition, CER taking-back condition)

Execution Execution

Raising local capital Execution —

Selection of external consultant Execution —

Basic engineering Execution Encouragement • Advice*2

Project management Execution Encouragement • Advice*2

Selection of EPC Contractor Execution Encouragement • Advice*2

Detailed engineering Execution Encouragement • Advice*2

Procurement of equipment andmaterials

Execution Encouragement • Advice*2

Start-up and commissioning of plant Execution Encouragement • Advice*2

Supervision under CDM agreement Execution Execution

(Note) n : To be carried out by an existing overseas aid.

*2 : To be carried out by external consultant using the aid from a

finance scheme to be newly established in accordance with CDM

and applied to this project.

-2-71 -

2.2.6 Conditions and Issues to be expected for the Project Execution.

(1) Precondition

The precondition on the project execution are described as follows:

• It is assumed that the plant construction ground have been acquired by

RPGCL already. Moreover, the road in the surrounding area is assumed

not to be extended nor re constructed.

• It is assumed that there are neither precious ruins nor burial things in

the plant construction ground, and not the habitats of rare species in the

vicinity too. In addition, it is assumed that no residential relocation is

required.

• It is assumed that Environmental Assessment is executed by Bangladesh

side and then the Site Clearance before the start of construction and the

Environmental Clearance before the start of operation are respectively

acquired from the Department of Environment (DOE).

• It is assumed that the environmental regulations in this country are

observed and the appropriate treatment for the exhaust gas, the drain,

the solid waste, the noise, and the vibration, etc. are taken into account

when the NGL Fractionation Plant is designed.

• It is assumed that all equipment, materials and machinery necessary for

the construction are able to be freely delivered to the plant construction

ground without any interference. And it is assumed that import of all

necessary equipment, materials, machineries and services are not

corresponded to import/export regulation in Bangladesh and RPGCL

acquires the import permission if necessary.

• It is assumed that all permissions and approval required for the project

are acquired by RPGCL from the related supervisors and authorities

before commencement of the construction.

• It is assumed that after the commercial operation the quantity of NGL

shown in Table 2.2.6.1 is supplied stably and simultaneously from the

three gas fields in Kailastila, Jalalabad, and Beanibazar.

-2-72-

Table 2.2.6.1 NGL Supply Amount in Initial Plant Operation

Gas Field NGL Supply ininitial Plant

Operation (TPD)

PresentCondensate

Production (TPD)

Beanibazar 82 48

Kailastila 123 123

Jalalabad 262 144

Total 467 315

• The price of NGL as feed in this FS adopts the one agreed between

Petrobangla and BPC in 2000. And the investment cost of the turbo

expander plants, etc to be respectively introduced into Beanibazar and

Jalalabad gas fields have been already included in the price of NGL to be

purchased by RPGCL,

(2) Problem

The problems that originate from the political circumstances and natural

situations peculiar to this country are enumerated as various general

problems when the project is carried out in Bangladesh.

As the problem due to the political reason, “Hartal" a general strike

originating from political problems occurs frequently, because the political

system and the people’s life of this country closely affect each other. There are

various sizes of Hartals depending on the cause of generation. For instance,

the small one, which covers only limited cities/villages and the large one of a

nationwide scale. Especially, Hartal tends to occur frequently during the

general election executed every five years.

In the region where Hartal is generated, the normal operation is disturbed

due to the traffic interception and the work prohibition, etc. Generally, a lot of

the main enterprises are government-run or public corporations, and the

employees of such enterprises are prohibited to join in Hartal. However the

normal activities of the government-run or public corporations including the

government offices are interrupted because the commuting becomes

impossible due to the traffic interception.

In the past cases, the period of Hartals was a day or about one week in longer

- 2 - 73 -

cases, but according to the situation it happened intermittently.

As the problem due to the natural situation, there are massive flooding that

occur due to the downpour and high tides during the monsoon season, etc.

When these natural disasters are created, the smooth traffic system is not

secured due to domestic interception of main roads, destruction of bridges,

stop of ferry services, etc.

These natural disasters occur continually and have been a fact of life in

Bangladesh. However, the surrounding area of the Ashuganj plant site did

not experienced such disaster as floods in accordance with the past flood

record. Furthermore the plant site was developed taking into account some

countermeasures against floods. Therefore, there is no possibility that the

plant will be damaged by the natural disasters.

When these problems are considered from the viewpoint of project operation,

the problems expected is how to secure the workforce at Hartal, and the plant

shutdown due to the stop of the product receipt caused by the natural

disaster.

The problem of securing manpower necessary for the plant operation can be

solved by installation of the residence facilities for the operators. However, it

is possible that the product cannot be shipped due to traffic interception

caused by natural disaster when judged from the present traffic

circumstances in this country.

The considerable countermeasure against the problem is to ensure sufficient

product storing capacity in the plant. A proper amount should be confirmed

though the product storage facility of ten days has been installed now.

When this project is promoted, it can be said that there are few other

problems relating to technical respect of construction of the NGL

fractionation plant. However, the problem is beyond the limits of this

investigation because the project executor is different but is closely related to

this project, the problem on the raw material supply which, has been clarified

during the site investigation is pointed out.

The first problem is the composition of the natural gas supplied by the gas

fields. Especially, the analysis of the heavy hydrocarbon fractions has not

been carried out. It is necessary to get the reliable basic gas composition data

- 2 - 74 -

by the detailed analysis in a laboratory. It is necessary to simulate the

process based on an actual gas composition, because it has become clear in

this investigation that the produced amount of MS seriously affects the

profitability of this project.

Secondly, the modification or reinforcement of the facilities in the gas fields is

required in order to collect NGL efficiently. For instance, as for Jalalabad and

Beanibazar, a turbo expander plant, a stabilizer and storage/shipping

facilities shall be additionally installed. For Beanibazar, the reinforcement of

the gas separator is considered necessary in addition to the above. UNOCAL

and SGFL, which operates these gas fields, are individually studying the

modification and reinforcement of their facilities in relation to this project.

However drilling of new wells is not necessary because the produced volume

of natural gas from the fields is enough.

2.2.7 Project Execution Schedule

(1) Project approving stage

An expected primary procedure upto approval of the project implementation

is itemized as follows:

1) After the evaluation of this FS in RPGCL, RPGCL as the project

executor prepares the Project Concept Paper (the “PCP”) which shall

include the configuration of the facility, basic design conditions, project

budget and fund procurement of the project and after the resolution of

the board of directors in RPGCL the PCP is submitted for approval to

Petrobangla, the parent company of RPGCL.

2) The PCP is examined by Project Steering Committee (organized with

members assigned by Petrobangla, BPC and other related Petrobangla’s

subsidiaries) and after the resolution of the board of directors in

Petrobangla the PCP is submitted to MOEMR.

3) The PCP examined and approved by MOEMR is examined by the oil and

gas sector of the planning committee in the government, and after its

approval it is recommended by Special Projects Evaluation Committee

(SPEC) organized with members from the ministries and academies

concerned.

4) Executive Committee for National Economic Council (ECNEC), which is

-2-75-

the prime organization for approving national projects in this country

and which chairperson is acted by the Prime Minister, resolves the

approval of the project execution.

5) During ordinal approving procedure for a project in oil and gas sector as

mentioned above item 1) through 4), for application of CDM, adjustment,

evaluation and approval procedure will be executed simultaneously by

mainly Department of Environment in the Ministry of Environment &

Forest. About the concrete domestic procedure, after an international

operation rule about CDM is agreed, it will be settled on. As for the

assumed adjustment item, it describes in section 2.4.1.

(2) Project execution stage

The assumed actions in project execution stage and its period are itemized in

Table 2.2.7.1 and the overall project execution schedule is shown in Figure

2.2.7.1.

- 2 - 76 -

Table 2.2.7.1 Project Execution Stage and its PeriodItem Schedule Period

(Month)

1.0 Project Set-up

1.1 FS (this study) by Japan Side Nov. 2000 - Mar. 2001 5

1.2 Evaluation of FS by Bangladesh Side Apr. 2001 - May 2001 2

1.3 Execution of Detailed FS by Bangladesh June 2001 - Aug. 2001 3

1.4 Fund Procurement Sep. 2001 - Dec. 2001 4

1.5 Establishment of Project Management Team Jan. 1, 2002 —

1.6 Selection of Consultant Jan. 2002 1

1.7 Environmental Impact Assessment Study June 2001 - Oct. 2001 5

2.0 Tender Exercise

2.1 Preparation of Pre-Qualification Feb. 2002 1

(PQ) Tender Documents

2.2 PQ Bid Period Mar. 2002 1

2.3 PQ Bid Evaluation Apr. 2002 1

2.4 Preparation of EPC Turnkey Tender Feb. 2002 - Apr. 2002 3

Documents

2.5 EPC Bid Period May 2002 - June 2002 2

2.6 EPC Bid Evaluation July 2002 1

2.7 Award to the EPC Contractor Aug. 1, 2002 —

3.0 EPC Execution

3.1 Basic Design Aug. 2002 - Sep. 2002 2

3.2 Application/Acquisition of Permission and Oct. 2002 - Dec. 2002 3

Approval

3.3 Detailed Engineering Oct. 2002 - Feb. 2003 5

3.4 Procurement of Equipment and Materials Dec. 2002 - Dec. 2003 13

3.5 Erection and Construction Mar. 2003 - June 2004 16

3.6 Start-up & Commissioning July 2004 1

4.0 Commercial Operation Aug. 1, 2004 —

- 2 - 77 -

ASHUGANJ NGL FRACTIONATION PLANT CONSTRUCTION PROJECT

to

^3oo

ID TASKrz Y3

1 12 »46 « 7 8 19110111112113114 16l16l17l16l19l20l21122l23l24l25l26 27126[29l30l31132l33l34l36l36l37l36 39140141142|43|44|46|48|47|401 Project Set-up2 Feasibility Study(FS) by Japan Side3 Evaluation of FS by Bangladesh Side ! ! t3i 1 : 1

4 Execution of Detailed FS by Bangladesh Side , CLZJl . . .

6 Fund Procurementfc=i

a Establishment of Project Management Team ► 01/01:7 Selection of Consultant 1hi M ! 18 Environmental Impact Assessment Study9 Tender Exercise10 Preparation of Pre-Qualification(PQ) Tender Documents hrj"j-i i|11 PQ Bid Period12 PQ Bid Evaluation13 Preparation of EPC Tender Documents14 EPC Bid Period16 EPC Bid Evaluation16 Award of Contract 08/0117 EPC Contract : ▼18 Basic Design i i i a19 Application/Obtain Permission and Approval20 Detailed Engineering Lz :21 Procurement jiirrzrrrr:::;:::22 Construction '.... ....!^i.'

23 Start-up ft Commissioning %24 Commercial Operation 08/01

AshugsnJ NGL Plant Date: 2001/04/09

TASK MILESTONE SUMMARY TASK 1

Figure 2.2.7.1 Project Schedule

2.3 Financial Scheme

2.3.1 Financing Plan for Project Execution

(1) Financing Method

Regarding financing method, in the view of CDM concept having been

discussed until now, all or a part of the necessary investment cost and

technology for the Project will be provided by an investing country as a

Certified Emission Reductions (CER) credit.

In case the Project is adopted as a CDM and considering the current

economic situation of Bangladesh, it is expected that most part of the

investment cost will be provided by Japan in return for all of the CER credit

to be produced by the Project. By this, the initial investment cost such as the

Plant cost, consultancy cost, financial cost and interest during the

construction period and so on (except the cost of local administration cost for

project management team), is expected to be provided by Japan's official fund

for the purpose of CDM. But the CDM is still under discussion and financing

mechanism and applicable interest rate have not been decided yet. In this

circumstance, it is difficult to estimate the total investment cost under the

scheme of CDM. Therefore, for the purpose of estimating the total investment

cost for the Project, the calculation result from the Buyer's Credit to be

provided by Japan Bank for International Cooperation (JBIG), a scheme of

export credit based on OECD guideline is mentioned in Item (2) below.

(2) Estimation of total investment cost

The Total Investment Cost for the Project in case the Buyer’s Credit to be

provided by JBIG can be adopted is estimated at Yen 10,320 million

(US$92,748 thousand). The breakdown of main items is shown in the Table

2.3.1.1.

- 2 - 79 -

Table 2.3.1.1 Breakdown of Total Investment Cost

Description Amount(Million Yen)

Amount(US$ thousand)

1. The Plant Cost 8,845 79,504

2. Consultant Cost 310 2,783

3. Personnel Expenditure, Administrative Cost, Operator Training Cost, Office Materials and Vehicles Cost & Contingency in Bangladesh side

54 479

4. Financial Cost 177 1,591

5. Initial Operating Cost 89 796

6. Interest during the Construction 845 7,596Total 10,320 92,748

General terms and conditions of Buyer’s Credit are shown in Table 2.3.1.2 for

reference.

Table 2.3.1.2 General Terms and Conditions of Buyer’s Credit by JBIG

(As of November 2000)

Lender’s name Name of facility InterestRate

RepaymentPeriod Remarks

Japan Bank for International Cooperation

Buyer’s Credit CIRR*1 +a

5-10 years (to be

discussed)

Maximum 85% of the plant cost

(Source : International Financial Operations, JBIG)

Note n : CIRR : Commercial Interest Referred Rate

The lowest interest rate to be applied when the export credit which is based

on the OECD guideline is used. Review of the rate is done every month. CIRR

of U.S. dollars over 8.5 years is 6.84% p.a. on November 30th, 2000

Since 85% of the plant cost can be funded by Buyer’s Credit, the project

executor and the Government of Bangladesh have to procure the remaining

15% of the plant cost and such other costs during the construction period by

themselves. Following Figure 2.3.1.1 shows an example of finance scheme by

Buyer’s Credit.

- 2 - 80 -

Government of

Bangladesh

Repayment Guarantee

Loan Agreement (85% of plant cost)JBIG and

Commercial

bankRepayment Disbursement

(85% of plant cost)

JBIG(60% of loan

amount)

Down Payment (15% of plant cost)

CommercialBank

(40% of loan amount)

BangladeshiBank

L/C open (100% of plant cost)

Payment (100%) by L/C

Z_ _ _ _ _ _ _ ZEPC Contract

EPCw.................................................................................... w Contractorw

Premium for Export InsurancePremium for Export Insurance i

___ zMETI

ExportInsurance

Figure 2.3.1.1 Finance Scheme by Buyer's Credit (Example)

As shown in the Table 2.3.1.1., 60% of the total loan amount can be provided

by JBIG with an interest rate calculated by CIRR plus the risk premium,

which is decided by the rank of Lessee's country and loan period regulated by

OECD guideline (It will be collected on the basis of the agreement of lowest

premium, which was agreed by OECD member in Knaepen Package on June

20, 1997). The other 40% of the total loan amount will be provided by

commercial banks. The EPC Contractor will be assumed to apply for the

export insurance to be provided by Ministry of Economics, Trade and

Industry Japan to the portion lent by commercial banks. The insurance

premium to be paid is also decided by OECD guideline, on the basis of the

- 2 - 81 -

rank of the importer’s country and loan period.

2.3.2 Financing Prospect

As mentioned in paragraph 2.3.1 (1), it is expected that no problem in terms

of finance source is foreseen if this Project can be applied to CDM and the

Japanese side as the investing country is assumed to provide most part of the

fund of the Project. However, considering priority of the Project in

Bangladesh, it is most possibly expected that the Project will be commenced

before obtaining international commitment for CDM execution. In this

circumstance, financing prospect is expected in case the Japanese side

contributes to the Project.

By Buyer’s Credit to be provided by JBIG as explained in section 2.3.1 above,

Yen 7,518 million (US$67,578 thousand) which accounts for 85% of plant cost

can be available as the loan portion (corresponding to about 73% of total

project cost) in the total project cost amounting to Yen 10,320 million

(US$ 92,748 thousand). On the other hand, the project executor and

Bangladesh side must prepare the remaining 15% of the plant cost and other

cost during construction amounting Yen 2,801 million (US$25,170 thousand)

by themselves (corresponding to about 27% of the total project cost).

Though the source for the repayment to the Buyer’s Credit will be fulfilled by

the revenue of the Project to be managed by RPGCL, the Government of

Bangladesh would be requested, as one of conditions for Buyer’s Credit, to

provide JBIG a repayment guarantee for the repayment by the Government

of the Bangladesh in case that the lessee fails to repay.

As described in paragraph 2.2.3.(4), it is considered that the Project will be

able to be implemented as a national project due to its urgency and necessity,

and therefore it is expected that the repayment guarantee by GOB will be

provided and the necessary own fund will be prepared by the national budget

and/or the budget of PETROBANGLA. Incidentally, the foreign currency

reserve in Bangladesh is about US$1.2 billon as of November 2000.

- 2 - 82 -

2.4 Conditions for Clean Development Mechanism (CDM)

2.4.1 Coordination with Host Country for CDM Implementation - Condition

Setting and Work Allocation

In order to implement a project under the CDM, the project is required to

satisfy the CDM conditions, prescribed in the Kyoto Protocol of UNFCC. The

Kyoto Protocol provides the following conditions concerning project eligibility

for the CDM:

1) To assist Parties not included in Annex I in achieving sustainable

development and in contributing to the ultimate objective of the

Convention (Article 12-2);

2) Real, measurable and long-term benefits related to the mitigation of

climate change (Article 12-5); and

3) Reduction in emissions that are additional to any that would occur in the

absence of the certified project activity (Article 12-5).

Though the detailed application rule for the CDM was originally intended to

be concluded in the COP6 held in November 2000, an agreement has not yet

been reached among the Parties due to differences in opinion, that further

discussion is to be carried over to the second part of the COP6 (COP6-Part II)

scheduled after this summer. However, the Certified Emission Reductions

(CERs) credit obtained during the period from the year 2000 up to the

beginning of the first commitment period can be used to assist in achieving

compliance in the first commitment period, from 2008 to 2012. In order to

implement this Ashuganji Project under the CDM, coordination with the

relevant authorities in Bangladesh should be commenced immediately,

ensuring the project meets the CDM eligibility as mentioned below:

(1) Coordination concerning sustainable development in Bangladesh (with

Department of Environment, Ministry of Environment and Forest)

Indicators on the sustainable development in Bangladesh have not yet been

established according to the manager in charge in the Department of

Environment. In parallel with the international discussion concerning the

CDM application rule, which shall be prescribed in the COP6-Part II ,

-2-83

national priorities for the sustainable development in Bangladesh would be

clearly defined. The CDM eligibility of this project should be discussed with

the DOE based on these priority lists or indicators.

(2) Coordination for making the GHGs emission reductions real and long-term

1) Coordination in LPG supply side (with Petrobangla /RPGCL /SGFL

/UNOCAL /GTCL /BPC)

In this study the GHGs emission reductions will be realized by selling

the LPG products produced in Ashuganji NGL fractionation plant to the

western region and replacing the biomass fuels currently consumed. To

make the reduction effect by the project real and long-term, stable supply

of NGL as the raw material and promotion of the LPG distribution and

marketing are essential.

As for the NGL supply, RPGCL and Petrobanbla, the project

implementation body and its mother company, shall be required to

discuss and coordinate with SGFL and UNOCAL, who are responsible for

the NGL supply. As for the LPG distribution and sales, discussion and

coordination with Bangladesh Petroleum Corp. (BPC) and its subsidiary

sales companies of JAMNA, PADMA and MEGHNA shall be required,

concerning the constant dealings and the distribution network

improvement in the western region.

Though the utilization of pressurized tank lorries are assumed for the

LPG delivery from Ashuganji to the western region in this study, pipeline

distribution system might be the most efficient from economic,

environmental and safety viewpoints considering the poor

infrastructures on road in Bangladesh. Discussion and coordination on

the delivery method of LPG shall be required including GTCL, who is

responsible for pipeline construction and operation.

2) Coordination in LPG consumption side (with Local Government

Engineering Department, Local Government, NGOs)

In order to make the GHGs reductions real and long-term, promotion of

the energy conversion of the traditional biomass fuels to the LPG shall be

encouraged. The following supporting programs are to be considered for

example:

-2-84

Initial support for LPG conversion: purchases of LPG cooking stoves,

setting up of community kitchens, etc.

• Support for LPG purchase: smaller and cheaper sized LPG-bottle,

community-based purchase system, etc.

• Operation and Maintenance: guidance on LPG safety utilization,

technical training for maintenance of LPG cooking stoves, etc.

• Environmental education: campaign for energy savings,

environment protection, etc.

Local Government Engineering Department (LGED) is a candidate for

the coordination authority on these supporting programs. LGED is in

charge of the executing agency for Sustainable Rural Energy Program,

which is one component of the comprehensive environmental program of

The Sustainable Environment Management Program, sponsored by

UNDP. This program aims at improving supply of community based

rural energy, using different renewable energy technologies in

cooperation with local NGOs. The program execution technique might be

in common with the LPG promotion programs above mentioned.

In Bangladesh a lot of community-based NGOs are working actively in

various areas, assisted by bilateral aid agencies and international organs,

and have many experience for executing environmental projects.

Cooperation and work allocation with these NGOs might be effective for

the execution the LPG promotion and education activities in rural area.

(3) Coordination concerning measurement of GHGs emission reduction effect and

verification of “Additionality” - Baseline setting and monitoring of GHGs

emission (with Department of Environment, NGOs)

The baseline, which will be the basis for the GHGs emission reduction is

estimated in Chapter 3 in this study, however, more accurate study on the

baseline setting shall be required in order to implement the project under the

CDM scheme and acquire certified emission reduction units (CERs),

including the following items:

Survey on the current energy structure in rural area (sampling survey)

• Projection for change of the energy structure in witbout-project-case

scenario

-2-85

• Measurement of the carbon emission factor of firewood used in

Bangladesh

• Measurement of the energy efficiency of the firewood stove currently

used in the rural area

These surveys will be carried out jointly with the Department of

Environment as the authorized agency for CDM in Bangladesh and the

project implementation body of Japanese side. As for the site survey at the

rural area in the western region, entrustment to the international

environmental NGOs such as IUCN (The World Conservation Union), who is

actively working in Bangladesh, might be effective.

As for the measurement of the GHGs emission reduction effect with the

project implementation, the DOE and the project implementation body of

Japanese side will jointly investigate and decide the detailed monitoring

procedures as same as the baseline setting. Monitoring activities during the

project operation stage will be entrusted to the local government and/or local

NGOs and carried out under the administration of the DOE in accordance

with the procedures, which is provided in advance.

2.4.2 Possibility for Host Country's Consent to Project Implementation as CDM

The government of Bangladesh has a strong intention of early start-up for the

Ashuganji NGL project from the viewpoint of both the energy and

environmental policy, however, it has been delayed due to the financial reason.

Under these circumstances, the possibility that the government will consent

to implement this project under the CDM scheme is extremely high.

To reduce dependence on the biomass fuel in the rural area is one of the

major environmental policy stipulated in the National Environmental Policy

1992 and National Environment Management Action Plan 1995. Two of the

six GHGs reduction projects planned by the DOE, are aimed at the reduction

of biomass fuel consumption directly. It is an important political issue for the

Sustainable Development in Bangladesh.

Mr. Ad. Abdus, Deputy Director of the DOE, the responsible agency for CDM,

-2-86

showed us a favorable opinion for our explanation on the CDM application

scenario in our first site survey on November 2000. Ashuganji NGL

Fractionation Plant Project is generally known as a high priority project in

Bangladesh, not only among the energy interest, and he gave us the following

comments for the CDM scenario of reduction of firewood consumption by

selling the LPG products to the western region:

• NGL is currently sent to Chittagong and refined there, however, it is

reasonable to construct a new plant in Ashuganji from the viewpoint of

economics and accessibility to the western region.

• It is expected to slow down the rate of deforestation through the

conversion of biomass fuel to LPG.

• The firewood stove generates heavy soot, which is bad for health, and

workloads for firewood collection are becoming heavier due to the forest

regression. Since these loads are mainly borne by women and children,

the project might contribute to the WID, Women in Development.

Judging from the survey results described above, not only the project

implementation body of RPGCL and Petrobangla but also the DOE show

strong interests in this project and the possibility that the government of

Bangladesh will consent to the project implementation under the CDM would

be very high.

-2-87

Chapter 3

Effects of Project

In this chapter, effects achievable by implementation of the

project such as alternative energy recovery and Greenhouse

Gases reduction are described, discussing technical backgrounds,

applied baselines, quantitative effects and confirmation method

of the effects.

Chapter 3 Effects of Project

3.1 Effect on Alternative Energy

3.1.1 Technical Backgrounds for Alternative Energy

This project aims to produce LPG, Motor Spirit (MS) and High Speed Diesel

(HSD) from NGL through the NGL fractionation plant newly constructed in

Ahsuganj. The NGL consists of Cs and C* fractions, which are currently

mixed to the sales gas or flared out at the gas field, and Cs+ fraction, which is

treated with the imported crude oil.

(1) LPG

With this project implementation, LPG is to be obtained from the NGL, which

is not being utilized effectively at present. This will contribute to the

alternative energy recovery with the crude oil equivalent.

(2) MS and HSD

The condensate (Cs+ fraction) as the raw material of MS and HSD is

currently transported to the Eastern Refinery Limited (ERL) in Chittagong

by barges after gathering to Ashuganj through pipelines, and then refined

and treated together with the imported crude. A part of the condensate is

sold as natural gasoline without refining in each gas field. After this project

implementation, the condensate will not be mixed with the imported crude,

which will contribute to the improvement of the refinery’s productivity.

However, the refinery is not included in the scope of this project and the

alternative energy effect created by this is not considered in this study.

Based on the above mentioned, since the condensate is currently used as

energy, no resultant energy effect by MS and HSD is considered in this study.

3.1.2 Baseline for Alternative Energy

(1) LPG

The present situation in which the NGL in the natural gas is not effectively

used will continue without the project. Accordingly, the baseline for the

alternative energy effect is set to be zero (0).

- 3 - 3 -

(2) MS and HSD

As for MS and HSD, no alternative energy effect is considered.

3.1.3 Quantitative Effect

(1) Quantity of Alternative Energy Effect

The quantity of the alternative energy effect is the crude oil equivalent to the

LPG produced by the project as shown in Table 3.1.3.1.

Table 3.1.3.1 Effect on Alternative EnergyItem A B C D

ProductionRate

ton/day

Heatingvalue

kcal/kg

Crude Oil Equivalent

toe/day

Crude Oil Equivalent

toe/year

LPG 123 11,010 135 44,690

The crude oil equivalent of LPG is calculated according to the following

procedures:

A : Production rate (ton/day)

B : Heating value (kcal/kg)

C : Alternative energy effect per day, equivalent to crude oil

(1 ton of oil equivalent (toe) = 1010 cal)

=AxBxl03xl03 (cal/day)/1010

D : Alternative energy effect per year (crude oil equivalent)

= C x (annual operation day)

The annual operation day is assumed to be 330 days.

The alternative energy effect of LPG per year will be approximately 45,000

toe/year with a 100% operation ratio.

(2) Period and Cumulative Effect

The alternative energy effect will continue over the project life with LPG

production. The cumulative effect of the alternative energy over the project

-3-4-

life of twenty years will be 858,000 toe, considering the operation ratio, which

is assumed in the profitability analysis in section 4.1.2.

Table 3.1.3.2 Cumulative Effect of Alternative Energy

Period Operation Ratio Alternative Energy Effect (toe)Base 100% 44,690First Year 80% 35,752Second Year 90% 40,2213rd-15th Year 100% 580,97016th-20th Year 90% 201,105Cumulative 96% on average 858,048

3.1.4 Confirmation Method of Alternative Energy Effect

The alternative energy effect after the project implementation can be

confirmed by the measurement of the LPG products at the plant site in

Ashuganj:

(a) Analyze the composition of LPG and calculate its accurate heating value.

(b) Install the flow meter devices on the LPG shipping lines and measure

each shipping amount accurately.

(c) Calculate and confirm the alternative energy effect based on the heating

value and the shipping amount.

-3-5-

3.2 Effect on Greenhouse Gases Emission Reduction

3.2.1 Technical Backgrounds for Greenhouse Gases Reduction

(1) LPG

The domestic production rate of LPG in Bangladesh was 11,000 tons/year in

1998 and the maximum production capacity is 20,000 ton/year (ERL: 15,000

ton/year, Kailastila: 5,000 ton/year). The total supply is less than 70,000

tons/year, even adding the 45,000 tons/year of the imported LPG products

which begun in 2000, that figure is still way below the potential demand of

200,000-250,000 ton/year (hearing from BPC). The fuel supply for the

residential use is highly dependent on biomass fuels such as agricultural

residues, wood products (firewood) or dung of livestock (cowpat), accounting

for more than 90% as shown in Table 1.1.3.2. The total consumption of

biomass fuels is 404.5xl015 Joules, which roughly corresponds to 8,780,000

tons LPG-equivalent with the LPG heating conversion coefficient of

46.09xl012 Joules/103 ton-LPG (refer to section 3.2.3). That exceeds far the

present LPG supply capacity.

Under those circumstances, the Government of Bangladesh is taking up the

distribution of the natural gas resource to the western region and the

protection of the forest resource as one of the important political issues. In

addition, the dissemination of LPG to the western region is promoted as a

national policy. The LPG produced by this project will mainly be supplied to

the western region of the Jamuna River, and serve as replacement of the

biomass fuel currently used. The amount of carbon dioxide per heating value

generated from firewood is 110 t-COz/TJ, and the one from LPG is 63

t-COz/TJ, which is about 60% less of firewood. In addition, the energy

efficiency of the firewood stove commonly used in Bangladesh is said to be

7-8%, while the LPG stove is 35-50% in general. Assuming the efficiency of

the firewood stove being 10% and the LPG stove being 40%, the firewood

stove may require at least four times calorie to obtain the calorie equivalent

of the LPG stove.

Therefore, the GHGs emission will be reduced by about 15% when LPG

produced by this project replaces the firewood with equivalent heating value.

- 3 - 6 -

(2) MS and HSD

The condensate, which is the raw material of MS and HSD, is already being

used as energy, that no change in the amount of the carbon number will be

seen even if the condensate is refined and commercialized as MS and HSD in

this project. Therefore no GHGs reduction effect will be expected.

3.2.2 Baseline for Greenhouse Gases Reduction

In the IPCC Guidelines for National GHGs Inventory, the GHGs inventory is

estimated for the following five sectors:

(a) Energy Sector

(b) Industrial Sector

(c) Agricultural Sector

(d) Change of Land Use and Forestry Sector

(e) Waste Sector

The combustion of the biomass fuel is covered in the energy sector of (a).

If the biomass fuel is used sustainably, the emission of carbon dioxide can be

counterbalanced to the absorption, and only methane and nitrogen oxide are

emitted as GHGs. However, when the collection of the biomass fuel continues

at a speed faster than the growth rate of the forest, the carbon-dioxide

emission generated by combustion [corresponding to (annual growth rate of

biomass stocks) - (annual deforestation rate)] is regarded as the change in the

inventory originated in the land use change and forestry of (d).

In Bangladesh, where the forest coverage compared to the total land area is

small by nature, the forest depletion has been accelerated due to the

increasing demand for agricultural land and urbanization along with the

population explosion. This makes sustainable management and usage of the

biomass resources difficult.

Under these circumstances, the energy supply structure for the residential

sector in the planned LPG supply area, mainly the western region of the

Jamuna River, will be maintained with the status quo of without-project case.

The baseline for the GHGs emission is therefore assumed to be the same level

as the current emission; i.e. the energy structure of biomass dependence will

remain and carbon dioxide will be emitted with the continuous use of

-3-7-

biomass.

3.2.3 Quantitative Effect

(1) Reduction of GHGs Emission

The reduction of the GHGs emission is the subtracted balance between the

emission after the project implementation of LPG fuel conversion and the

emission at the baseline conditions of the biomass dependence, summarized

in Table 3.2.3.1.

Table 3.2.3.1. Reduction of GHGs Emission

(Heating Value Conversion Case)Item A B C D E F G

Production/Consumption

ton/day

ConversionFactorTJ/ton


TJ/day

CarbonEmission

Factort-C/TJ

CarbonEmissiont-C/day

CO2

Equivalentt-COs/day

CO2

Equivalentt-CCh/year

Baseline 248,708Firewood

(CO2) 5.678 29.9 169.77 622.50 205,424(CH4) 5.678 0.3*i 1.70 131.16*2 43,283

After the Project 133,407LPG 123.0 0.04609 5.678 17.2 97.66 358.09 118,171Utility Consumption

• Fuel Gas16.6

(O.SMMscfd)0.04958 0.823 15.3 12.59 46.17 15,236

Emission Reduction 115,301

The GHGs emission (CO2 equivalent) is to be calculated according to the

following procedures:

A • Production or Consumption (ton/day)

B : Conversion Factor (TJ=1012 Joules) (given by the Process Simulator)

• LPG: 11,010 kcal/kg = 0.04609 TJ/ton

• Fuel gas: 11,845 kcal/kg = 0.04958 TJ/ton

C : Production or Consumption (calorie conversion)

• LPG: A x B

• Firewood: LPG equivalent

D : Carbon Emission Factor (given by IPCC guideline )

*1) Unit of column D is t-CH4/TJ

E : Carbon Emission = C x D

F : CO2 emission per day = E x 44 /12

*2) The global warming coefficient of methane is 21 times of carbon

- 3 - 8 -

dioxide.

G : CO2 emission per year. (t-COg/year) =F X (Annual Operation Day)

The annual operation day is assumed to be 330 days.

The energy efficiency of the firewood stove commonly used in Bangladesh is

said to be very low at 7-8%. The Department of Environment has nominated

a project aiming to the improvement of the firewood stove efficiency for the

GHGs reduction projects ("Dissemination of Improves Cooking Stoves in

Rural Area of Bangladesh", refer to section 1.1.3). The efficiency of the LPG

stove is 35-50% in general. Assuming the efficiency of the firewood stove

being 10% and the LPG stove being 40%, the firewood stove may require at

least four times calorie to obtain the calorie equivalent of the LPG stove.

Therefore, the necessary calorie of firewood is to be 5.678x4=22.712 TJ/day

and the reduction of the GHGs emission is as shown in Table 3.2.3.2.

Table 3.2.3.2 Reduction of GHGs Emission

(Stove Energy Efficiency Considered Case)Item A B C D E F G


ton/day

ConversionFactorTJ/ton


TJ/day

CarbonEmission

Factort-C/TJ

CarbonEmissiont-C/day

COzEquivalentt-COs/day

C02Equivalentt-CCk/year

Baseline 994,831Firewood

(CO2) 22.712 29.9 679.09 2,489.99 821,697(CH4) 22.712 0.3*i 6.81 524.65*2 173,134

After the Project 133,40LPG 123 0.04609 5.678 17.2 97.66 358.09 118,171

Utility Consumption • Fuel Gas

16.6(0.8MMscfd)

0.04958 0.823 15.3 12.59 46.17 15,236

Emission Reduction 861,42

The calculation procedure is same as Table 3.2.3.1. However, column C is

calculated as follows:

C : Production or consumption (calorie conversion)

• LPG: AxB = 123.2x0.04609 = 5.678 TJ/day

• Firewood: Assuming the efficiency of the firewood stove being 10%

and the one of LPG being 40%, the firewood stove may require four

times of calorie to obtain the calorie equivalent of the LPG stove:

Required calorie of firewood is 5.678x4=22.712 TJ/day.

- 3 - 9 -

The annual reduction of the GHGs emission is the subtracted balance

between the emission after the project implementation and the emission at

the baseline condition; 115,000 t-C02/year in the heating value conversion

case and 861,000t-CO2/year in stove energy efficiency considered case,

assuming 330-day-operation with 100% operation ratio.

(2) Period and Cumulative Effect

The reduction of GHGs will continue over the project life with LPG

production. The cumulative effect of the GHGs emission reductions over the

project life of twenty years will be 16,540,000 t-COg, applying the operation

ratio in each year, which is assumed in the profitability analysis in section

4.1.2.

Table 3.2.3.3 Cumulative Effects of GHGs Emission Reduction

Period Operation Ratio Reduction of GHGs Emission(t-COz)

Base 100% 861,424First Year 80% 689,139Second Year 90% 775,2823rd-15th Year 100% 11,198,51216th-2 0 th Year 90% 3,876,408Accumulation 96% on average 16,539,341

3.2.4 Confirmation Method of GHGs Reduction

The effect of GHGs emission reduction after the project implementation can

be confirmed by the measurement of the LPG products at the plant site in

Ashuganji and the sampling survey on the baseline and utilization at the

consumption area as follows:

Plant Site in Ashuerani

(a) Analyze the composition of LPG and the fuel gas and calculate its

accurate heating value.

(b) Install the flow meter devices on the LPG shipping lines and measure

each shipping amount accurately.

(c) Install the flow meter devices on the fuel gas lines and measure the

consumption accurately.

- 3 -10 -

LPG Bottling Plant

(d) Record the shipping amount of the LPG cylinders at each LPG

distribution terminal.

LPG Consumption Area (sampling survey in rural area)

(e) Study on the firewood consumption by the traditional firewood cooking

stoves (Baseline Survey on Without Project Case)(f) Study on the dissemination of the energy conversion to LPG and

consumption amounts of LPG cylinders (Follow-up Survey on With

Project Case)

3.3 Influence to Productivity

Since the new NGL fractionation plant will be constructed in Ashuganj by

this project, comparison of the productivity before and after the project

implementation is impossible.

- 3 -11 -

Chapter 4

Project Profitability

In this chapter, the profitability of the Project is described. It

analyzes based on the project planning, the precondition, the

operation plan, etc to be examined in the preceding chapters and

then it evaluates a sensibility analysis. Moreover, effects of the

anti-alternative energy and effects of reducing the anti-green

house effect gases are also evaluated as the cost versus the

project effect.

- 4 -1 -

Chapter 4 Project Profitability

4.1 Profitability Evaluation

4.1.1 Capital Expenses

In this chapter, the profitability of the Project is computed and evaluated in

accordance with the project implementation plan as described in preceding

chapters. The basic assumptions for the computation and evaluation are

described as follows:

(1) Assumptions for total investment cost

• Plant Site : Ashuganj, Brahmanbaria Zila (Province),

Chittagong Division

(the land have been acquired by RPGCL)

• Capacity to fractionate LPG of 123TPD, MS of

262TPD and HSD of 82TPD from NGL of

467TPD

• Facilities to be installed :

• Construction start year

• Construction period

• Number of staff of PMT

• Escalation

• Customs Duty and VAT

• Exchange Rate

NGL receiving and storage facility

NGL processing facilities

Products storage facilities

Loading facilities

Utility Facilities

Administration facilities including living

camp

2002

2 years (24 months)

41

0.0% p.a. (not to be considered)

to be exempted

Following exchange rates as of

November 30, 2000 are adopted in this

FS.

— United States Dollar 1 = Japanese Yen 111.25

— United States Dollar 1 = 54.10 Bangladesh Taka

• Costs before the construction period to be borne by Bangladesh side.

- 4 - 3 -

(2) The Plant Cost

The Plant cost is estimated at Yen 8,845 million (US$79,504 thousand), the

details are shown in the Table 4.1.1.1.

Table 4.1.1.1 The Plant Cost

No. Description Amount(Million Yen)


1. Engineering Cost 1,049 9,428

2. Equipment & Materials Cost 4,283 38,499

3. Constructions Cost 2,334 20,978

4. Inland Transportation Cost 171 1,540

5. Construction Insurance 204 1,831

6. Contingency 804 7,228

Total 8,845 79,504

(3) Other Costs before operation

Other costs before operation are estimated at Yen 1,475 million (US$13,245

thousand), the details are shown in the Table 4.1.1.2.

Table 4.1.1.2 Other Costs before operation

No. Description Amount(Million Yen)



2. Personnel Expenditures 19 167

3. Administration Cost 15 134

4. Operator Training Cost 4 36

5. Office materials and Vehiclescost

11 98

6. Contingency 5 44


8. Initial Operation Cost 89 796

9. Interest during construction (9% p.a.)

845 7,596

Total 1,475 13,245

- 4 - 4 -

1) Consultant Cost is estimated at Yen 310 million (US$2,783 thousand),

the service period is estimated about 31 months (7 months before

construction + 24 months during construction period, 100

men-month) and the services are as follows:

To prepare Tender Package and to assist in Tender Evaluation

Project Management (Construction Management after

establishment of Project Management Team up to the

Completion)

To assist Pre-commissioning & Commissioning

2) Personnel Expenditures are estimated at Yen 19 million (US$167

thousand). The Project Management Team is formed by 41 staffs and

will work during the construction period (24 months). Annual salary is

calculated at 16 times of the monthly salary. The designation of the

staffs and total personnel expenditure is shown in the Table 4.1.1.3.

Table 4.1.1.3. Personnel Expenditures during the Construction

Period

ItemNo.

Designation No(s)

1 Project Manager 12 Deputy Project Manager 13 Manager (Financial • Accounting) 1

4Assistant Manager(Process • Mechanical • Civil • Administration • Accounting • Procurement)

9

5 Assistant Engineer 56 Officer & Sub-Assistant Engineer 47 Skilled Worker 88 Unskilled Worker 12

Total 41Annual Personnel Expenditure (Thousand Yen) 9,289Annual Personnel Expenditure (US$) 83,500Personnel Expenditure during the Construction Period (Thousand Yen) 18,579Personnel Expenditure during the Construction Period (US$) 167,000

(Source: Salary table heard at the site)

-4-5-

3) Administration Cost is estimated at 80% of the amount of Personnel

Expenditures.

4) Operator Training Cost is estimated at Yen 4 million (US$36 thousand).

The details (including Per-diem, Round air tickets, domestic

transportation fee) is as follows:

Process, O&M, Environmental Engineers : 2 staffs each (total 6 staffs)

x 15 days = 90 men-day = Yen 4 million (US$36 thousand)

5) Office Materials and Vehicles cost is estimated at Yen 11 million

(UD$98 thousand). The details are shown in the Table 4.1.1.4.

Table 4.1.1.4 Office Materials and Vehicles Cost

ItemNo.

Description Unit No Price(10 thousand

Yen)

Price(US$ thousand)

1. Office Materials(Furniture, OfficeMaterials,Stationeries, etc.)

1 lot 315 28

2. Sedan Car 1 315 283. Microbus 1 335 304. Motor Cycle 6 135 12

Total 1,100 98

6) Contingency

The Contingency is estimated at Yen 5 million (US$44 thousand)

covering 10% of the total sum of above 1) - 5).

7) Financial Cost

Financial Cost is estimated at Yen 177 million (US$1,591 thousand)

covering 2% of the Plant Cost.

8) Initial Operation Cost

Initial Operation Cost is estimated at Yen 89 million (US$796

thousand) covering 1% of the Plant Cost.

- 4 - 6 -

9) Interest during the Construction Period (9% per annum)

The Interest during the Construction Period is calculated at Yen 845

million (US$7,596 thousand).

(4) The Total Investment Cost for the Project

The Total Investment Cost for the Project is estimated at Yen 10,320 million

(US$92,748 thousand) and major items are shown in the Table 4.1.1.5.

The ratio of debt and own fund in the total investment cost is assumed as

follows:

Debt : Yen 7,519 million (US$67,578 thousand)

(About 73% of Total Investment Cost for the Project)

Own Fund : Yen 2,801 million (US$25,170 thousand)

(About 27% of Total Investment Cost for the Project)

Table 4.1.1.5 Breakdown of the Total Investment Cost

Description Amount(Million Yen)


1. Plant Cost 8,845 79,504


3. Costs before operation (Personnel Expenditure, Administration Cost, Operator Training Cost, Office Materials and Vehicles Cost & Contingency)

54 479


5. Initial Operating Cost 89 796

6. Interest during the Construction 845 7,596

Total 10,320 92,748

-4*7*

4.1.2 Operational Expenses

Following assumptions and conditions are made for operation plan for the Project:

(1) Annual Operation Days

330 days / year

(2) Operation Ratio

In the 20 years of the plant life,

commercial operation date:

• 1st year

• 2nd year

• 3rd — 15th years

• 16th — 20th years

(3) Material Supply

It is assumed that NGL of 467 TPD will be constantly supplied to the Plant

from 3 gas fields, Kailashtila, Jalalabad and Beanibazar after the commercial

operation, and the purchasing price of NGL will be adopted at Tk 9.00/Liter

(Yen 28,409.- / ton : US$255.36 /ton), which is currently sold to RPGCL by

SGFL at the gate of LPG plant in Kailastila plus Tk0.51/Liter for

transportation cost of GTCL (Yen 1,608.-/ton : US$14.45/ton). The escalation

is not considered. The material price of the Plant is shown in the Table

4.1.2.1.

following operation ratio is assumed since the

80%

90%

100%

90%

Table 4.1.2.1 Breakdown of MaterialNo. Description Price

(Tk/Liter)Price

(Yen/ton)Price

(US$/ton)1. Price Ex-Gas field 9.00 28,409 255.36

2. Transportation Cost to GTCL

0.51 1,608 14.45

3. Price at Plant gate 9.51 30,017 269.81

- 4 - 8 -

(4) Utilities (Fuel Gas, Electricity and Water)

• The required fuel gas for the plant operation is 0.8MMSCFD. The fuel

gas supplied from a metering station of GTCL is purchased. The

purchasing price of fuel gas is estimated at Yen 252,018.-

(US$2,265.33)/MMSCF.

• The electricity for the plant operation will be provided by its own

generating system (the fuel gas for power generation is purchased from

GTCL) .

• Water for the plant operation will use underground water from wells to

be equipped in the Project Site.

• Water for fire-fighting will be taken from Meghna River by using fire

pump installed on the pier and then stored in fire-fighting water tank.

• Residences for staffs are constructed in the GTCL area. The electricity

and water for the residences will be purchased from outside and not from

the Plant side. The fees for utilities are to be paid by the staffs and not

affect to the budget of the Project.

(5) Produced amounts in operating ratio of 100%

• LPG : 123 TPD

• MS : 262 TPD

• HSD 82 TPD

(6) Marketing Products and Delivery

• The products (LPG, MS and HSD) of the Plant will be wholly taken by

BPC at the governmentally controlled prices. And BPC has to take

responsibility for marketing and retailing the products. Selling prices of

LPG, MS and HSD adopted in this FS is wholesaling prices to the BPC's

marketing companies from Chittagong Refinery. And the escalation to the

products is not considered. Wholesaling prices of LPG, MS and HSD to

BPC is shown in the Table 4.1.2.2.

• All the products are delivered by injection to tank lorry owned by BPC

(Maximum 20m3 truck lorry).

• Delivery by river barges through Meghna River is not considered.

• Delivery by cylinders injecting LPG and drums of LPG, MS and HSD are

not considered

- 4 - 9 -

(Ex-Chittagong Refinery basis)

Table 4.1.2.2 Price table pf LPG, MS and HSD

Description

Price(Tk/Liter)

(LPG: Tk/12.5kg)

Price(Yen/Ton)

Price(US$/ton)

LPG 173.60 28,559 256.71MS 22.06 65,641 590.03HSD 14.78 39,603 355.98

(Source: Bangladesh Gazette, August 14, 2000)

(7) Personnel Expenditure, Administration Cost and other O & M Costs

Personnel Expenditure, Administration Cost and O & M Cost are estimated

at 128 million yen (US$1,155 thousand) annually equivalent to 3% of the

Plant cost. The breakdown is shown as follows:

* Personnel Expenditure: 22 million yen annually (US$196 thousand)

118 staffs to work for O & M of the Plant.

The detail is shown in the Table 4.12.3.

Table 4.1.2.3 Personnel Expenditure during operation period

ItemNo.

Designation Nos.

1 General Manager 12 Deputy General Manager 2

3Manager (Finance, Accountings, Operation and Safety & Environment) 4

4Assistant Manager(Production, Maintenance, Procurement, Administration and Accountings)

12

5 Assistant Engineer 106 Officer and Sub-Assistant Engineer 207 Skilled worker 128 Unskilled worker 57

Total 118Annual salary (thousand yen) 21,761Annual salary (US$) 195,600

(Source: Salary table heard at the site)

- 4 -10 -

• Administration costs : 17 million yen annually (US$157 thousand)

Administration cost is estimated at 80% of

the Personnel Expenditure.

• Other O & M costs : 89 million yen annually (US$802 thousand)

(8) Fire and third party liability insurance

Fire and third party liability insurance is estimated as 1.0% depreciated book

value of the Plant.

(9) Fixed Assets Tax

Not to be considered.

(10) Depreciation and Amortization

In Bangladesh, methods and years for depreciation and amortization were set

for each item in details. Followings are adopted in this FS.The Plant cost: 20 years straight line methodOther costs during construction period: 10 years straight line method

(11) Corporate income tax

40%.

(12) VAT (Value Added Tax)

VAT onto raw materials, products and other costs for O & M are not

considered in this FS.

4.1.3 Financial Analyses

Sales sheet, Cost accounting sheet, Cashflow sheet and Profitability

statement are prepared and then the profitability of the Project is examined.

(1) Conditions of Financial Evaluation

1) Sales Sheet Refer to the Table 4.1.3.1.

2) Cost Accounting Sheet Refer to the Table 4.1.3.2.

3) Cashflow Sheet Refer to the Table 4.I.3.3.

4) Profitability Statement Refer to the Table 4.1.3.4.

-4-11

-12-

Table 4.1.3.1 Sales Sheet (1/2)

Calender year 2002 2002 2004 2000 2000 2007 2008 2009 2010 2011 2012 2013Year after operation ...........-2 . ! ............ 1 2 3 4 6 6 7 1 9 10Project year 1 i —r 4 0 0 7 8 9 Id 11 12

Operating Rate 60% 60% 100% 100% 100% 100% 100% 100% 100% 100%

Product* amount (Ten)LPQ 32.472 30.531 40,580 40,680 40,580 40,080 40,590 40,690 40,690 40,680M3 06.100 77,814 80,480 88,400 86,400 80,400 80,460 66,400 86,460 86,460H8D 21.040 24,354 27,080 27,000 27,060 27,000 27,060 27,000 27,060 27,060

Belee (Yen)LPQ 827,307.442 1,043,200,372 1,108,208,303 1,168,209,303 1,159,208,303 1,156,209,303 1,169,209.303 1,169,209,303 1,159,209,303 1.169.209,303MS 4,340,245,440 5,107,770,129 0,075,300,010 5.075,306,610 5,075.306,610 5,075,306,810 5,075,306,810 5,075,300,810 5,675,309,610 6,076,306,810HSD 807,320.073 804 485802 1,071,051,082 1,071,051,082 1,071,051,092 1,071,851,092 1,071,661,092 1,071,051,092 1,071,661,092 1,071,061,082

Total Revenue 0 0 6.124.632.714 7.115.660.484 7.908.167.204 7.606.107.204 7.900.167.204 7.900.107.204 7.906.107.204 7.906.107.204 7.909.167.204 7.900.107.204

Table 4.1.3.1 Sales Sheet (2/2)

Calender year 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 Tote)Year alter operation 11 12 13 14 If 16 17 18 19 |2Project year IS 14 16 16 17 16 19 20 21 22

Operating Rate 100% 100% 100% 100% 100% 90% 90% 90% 90% 90%

Product* amount (Ton)LPOMSHSD

40.690M.46027,060

40,69066,46027,060

40,69066,46027,060

40,69066,46027,060

40,69086,46027,060

36,63177,81424,364

36,63177.81424,364

36.63177,81424.364

38,63177.61424,364

36.63177,61424,364

779,3281,660,032

519,652

Sales (Yen)LPOMSHSD

1,169,209,8036,676,306,6101,071,661,092

1,169,209,3036,676,306,6101,071,661,092

1,159,209,3035,676,306,8101,071,661,092

1,169,209,3036,676,306,6101,071,651,092

1,169,209,3035,675,306,6101,071,651,092

1,043,268.3726,107,776,129

984,486,962

1,043,288,3726,107,776,129

964,466,982

1,043,268,3726,107,776,129

964,486,982

1,043,268,3726,107,778,129

964,486,982

1,043,286,3726,107,776,129

964,466,982

22,258,616,610106,966,890,76720,676,700,967

Total Revenue 7,666.167.264 7.908.147.264 7.664.117.264 7.908.167.264 7.906.167,204 7.116,660.484 7.116.550.484 7,115.550.484 7.11S.S50.484 7.115.650.464 141.764.416.424

-14 -

Table 4.1.3.2 Cost Accounting Sheet (1/2)

CelenderyeerYeer liter operation

2002-a

2003-1

20041

20052

20003

20074

20005

20090

20107

20110

20129

201810

Project yeer I i i 1 S 1 7 4 t M w 11Operating Rite 00% 00% 100% 100% 100% 100% 100% 100% 100% 100%

NQL Feed Amount (Ton) 123,201 130,000 154,110 154,110 164,110 164.110 154,110 164,110 164,110 164,110Feed Gee Amount (MMCF) 211 230 204 204 204 204 204 204 204 204

NGL Feed coot 3,700,057,300 4.103,230.402 4,025.021,025 4,025,021,025 4,025,021,025 4,026,021,025 4,026,021,025 4,026,021.025 4,025,021,026 4,026,021.025Feed Gee coot 53,220,104 59,079,400 00,532,742 00,532,742 00.532,742 00,532,742 00,532,742 06,632.742 00,532,742 00,532,742GAM oost 120,490,000 120,490,000 120,490,000 120,400,000 120,400,000 120,490,000 120,490,000 120,490,000 120,490,000 120,490,000bieuroneo coot during operation period (Book Velue x 1.0%) 110,009,751 111,070,647 106,000,344 00,310.140 01,638,037 84,760.733 77,970,620 71,190,326 04,410,122 67,037,019

Tolel Oeeretlee Coot 0 0 4.001.033.245 4.4fl3.465.4#i 4.025.943.711 4.010.103.607 4,912,303.304 4.006.903.100 4 090022000 4.092.042.003 4.066.202.400 4.070.402.205

Table 4.1.3.2 Cost Accounting Sheet (2/2)

Calender year 2014 2016 2018 2017 2016 2019 2020 2021 2022 2023 TotalYear alter ocemtion 11 12 13 14 16 16 17 16 18 20Project year 15 14 l5 16 17 18 19 2d 21 22

Operating Rate 100% 100% 100% 100% 100% 90% 90% 80% 90% 90%

NGL Feed Amount (Ton)Feed Gee Amount (MMCF)

164,110284

154.110264

154,110264

154,110284

164,110 136,699264 238

136,698236

138,699238

136,699238

136,699236

2,966.9126,066

NGL Feed costFeed Gee costO&M costInsurance coat during operation period (Book Value x

4,028,821.82666,532,742

126,490,00060,857,718

4,626,621.62686,632,742

126,490,00046,771,944

4,626,821.62566,532,742

128,490,00040,696,172

4,625,621,82566,532.742

126,490,00036,600,401

4 626 821 626 4,163,239,462 66,532,742 69 879 488

128,490,000 126,490,00030,614,629 25,426,658

4,163,238,46269679468

128,480,00020,343,086

4,163,238,46269,878,466

128,490,00016,267,316

4,163,238,46269.676,466

126,460,00010,171,643

4,163,238,46266,878,488

126,490,0006,086,772

89,616,776,1961,277,428,6482,569,800,0001,161,206,781

Total Operation Coat 4,671,702,062 4,666,616,310 4.661.540.539 4.856.444.767 4.651.358.966 4.477.037.766 4.371,052.016 4,366.660.245 4.361.760.473 4.356.664.702 83.824.208.627

-91

-

Table 4.1.3.3 Cashflow Sheet (1/2)

Calender yearYMr alter operation

2002-2

2003-1

20041

20062

20068

20074

20006

20096

20107

20118

2012•

201810

Project year 1 2 a 4 5 8 7 6 8 10 11 12

Operadng Rate 00% 90% 100% 100% 100% 100% 100% 100% 100% 100%

Net Income alar TaxDep deletionAmortizationEquity In (actionLean Disbursement

1.064.034,7444.000,464,097

1,146,307,400

1,040,690,669442,241,000147,341,922

1,237,467,460442,241,000147,341,622

1,434,364,348442,241,000147,341,922

1,436,462,466442,241,000147,341,822

1,442,520,667442,241,000147.341,022

1,448,599,709442,241,000147,341,822

1,450,060,831442,241,000147,341,022

1,464,724,953442,241,000147,341,922

1,450,763,078442,241,000147,341,922

1,482,881,198442,241,000147,341,922

Total 6eeh inflow 8,720,289,041 4.897.646,866 1.936.1)3.490 1.627.070.373 2.623.667.26$ 2.626.635.387 2.632.163.566 2.636.171.632 2.040.239.764 2.044.307.870 2.646.375.998 2.652.444.126

Initial Investment CostEPC costConsulting costManagement 1 Training costIOCFinancial CoatInitial Working CapitalLoan RepaymentInterest

6,300,092,000106,706,25031,973,26009,459,091

100,199,260

1,537,926,000123,943,50021.315.500

765,600,09070.796.500 69,555,000

751,009,701070,020.731

761,909,701000,965,050

761,009,701541,302,904

751,809,701473,040,111

761,809,701405,977,230

761,808,701330,314,306

761,009,701270,651,492

751,609,701202,808.619

751,809,701136,326,740

761,109,70107.082,873

Total Cash Outflow 8.7*6.299.941 4.597.949.690 1.426.430.431 1.300.775.864 1.293.112.008 1.226.449.812 WTOT 1,090.124,066 1,022,401.193 954.798.320 117.118.447 619.472.874

Net Cashflow IT 0 201.736.049 400.294.915 730.854.500 002.505.575 674.316.576 940.047.560 1.617.776.561 1.669.609.556 1.161.246.551 1.232 971.547

Ae»u*tilel»d N«t Ceehfltw 6 0 261,736.656 666.629.684 1.366,664.444 2.201.476.616 3.675.786.596 4.621.634.156 6,039,812.718 9.129,122,272 7.296.362,624 8.623.334.370

- LI -

Table 4.1.3.3 Cashflow Sheet (2/2)

Calender yew 2014 2018 2018 2017 2018 2019 2020 2021 2022 2023 TotalYear alter operation 11 12 13 14 15 16 17 19 19 20Projaot year 11 14 16 it 17 16 14 20 ii 22

Operating Rate 100% 100% 100% 100% 100% 90% 80% 90% 90% 80%

Net Income after TaxDepreciationAmortizationEquity InjectionLoan Dlsbumement

1,550,334,473442,241,000

1,558,365,838442,241,000

1,681,437,399442,241,000

1,504,489,882442,241,000

1,587,540,325442,241,000

1,377,783,018442,241,000

1,380,814,481442,241.000

1,383,805,943442,241,000

1,386,917,408442,241,000

1,369,986,889442,241,000

28 593 578 383 8,644,820,0001.473.419.2252.600.142.226 7.616,097.008

Total Caah Inflow 0571707T 2.000.628.838 TWST7IW 2.006.729.862 2.006.761.328 1.820.004.616 1.823.056.481 1.828.108.946 1.829.158.406 1.642.209.889 49.236.056.669

Initial Investment CoatEPC costConsulting costManagement A Training costIDCFinancial CostInitial Wotting CapitalLoan RepaymentInteract

6,844,620,000309.808.750

53,288,750844,987,981178.998.750 88,555,000

7,618,097,0083,721,456,016

Total Caah Outflow r IT 0 0 0 IT 0 0 0 21.557.794.255

Net Cashflow 1.847.57S.47S 2.000.628.936 2.004676446 2.006.729.662 2.009.781.325 1.820.004.018 1.624.055.461 1.626.106.944 1.626.166.406 1.642.208.668 27.672.261.084

Accumulated Net Cashflow 10,620,406,144 12.621.63S.7I0 14.525.216.174 16.541.645,041 18,641.725.354 20.351.740.464 22.184.765.685 24.010.892.608 26.840.051.216 27.872.281.084

Table 4.1.3.4 Profitability Statement (1/2)

Calender year 2002 2003 2004 2006 2006 2007 2008 1008 2010 2011 2012 20131il

-2 -1 1 2 3 4 6 6 7 6 8 10Project year i 5 s 4 5 1 7 8 8 10 n JJ

Operating Rale 80% 80% 100% 100% 100% 100% 100% 100% 100% 100%

Equity Injection 1,664,634,744 1,146,307,480Loan Disbursement 4,066,464,187 3,462,642,108

Operation Ineeaie 0 0 2.323,800.618 2.852.082.008 2.880.223.484 2.887.003.887 2.883.783.801 3.000,964.104 3.007.344.308 3.014.124,512 3.020.804.716 A.027,884.818

Depreciation 442,241,000 442,241,000 442.241,000 442,241.000 442,241,000 442,241,000 442,241,000 442,241,000 442.241.000 442,241,000Amortization 147,341,022 147,341,822 147,341,822 147,341,822 147,341,822 147,341,822 147,341,822 147.341,822 147,341,822 147,341,822

Net Income battue Tax 1,734,317,986 2,062,478,084 2,380,840,871 2,387,420,776 2,404,200,878 2,410,881,182 2,417,781,383 2 424 641 688 2,431,321,783 2,433.101,888Corporation Tax 683,727,038 824,881,633 866,296,228 856,868,310 861,880.381 864,382,473 887,104,994 888,816,836 872,528,717 876.240,788Net Income attar Tax 1,040,680,558 1,237,487,450 1,434,384,343 1,438,462,466 1,442,620,617 1,446,568,708 1,450,696,631 1,454,724,853 1,458,783,076 1,462,861,188

Loan Outatandlng balance 7,918,087,006 6,788,287,306 8,014,477,606 6282887806 4.810.868.204 3,798,048,503 3,007,238,803 2,266.428.102 1,603,618,401 761.808.701Intereet 676,628,731 608,866,898 541,302,884 473,840.111 408,877,238 336,314,365 270,631,482 202,888,818 136,326.746 87 662873

Car Mow tor Project IRR baton Tax ■6,720,218,841 -4,687.848,680 1,734,317,608 2,062,478,084 2,380,840,671 2,387,420,778 2,404,200,878 2,410,881,182 2,417,761,386 2 424541 688 2,431,321,783 2,436,101,886Cash low lor Equity IRR baton Tax ■1,664,134,744 -1,146,307,410 306,878,168 701,703,928 1.087.927.888 1,171,870,063 1,246,414,038 1,320,867,118 1,386,300,183 1,480,743,288 1,944,186,346 1,618,628,423Cash low lor Project IRR alter Tax ■6,720,288,641 ■4,587,848.980 1,040,680,668 1,237,467,460 1,434,384,343 1,438,452.485 1,442,520,587 1,446.888,706 1,450,896.831 1.484.724,833 1,458,783,076 1,462,861,188Ceshlow tor Equity IRR after Tax •1,634,134,744 -1,146,307,480 •387,847,873 -123,288,108 141,271,668 213,002,853 284733 848 366 484 843 428,186,638 488826834 671,667,828 643,388,624

Debt Covering Redo 1.14 1.34 1.67 1.65 1.78 1.87 2.00 2.14 2.31 2.50Average Debt Covering Ratio 1.14 1.24 1.34 1.41 1.48 1.93 1.58 1.64 1.70 1.76

Y»«r a ter operation<20yeata>IProlact IRR baton Tax I wnsiif™ -3,084,336 481

lEaultv IRR betbm Tex r wJrnpNPV -147,081,232

IPralect IRR alter Tax 1NPV *4,638,362446lEoulty IRR alter Tax 1w----------- •1,681,844,S01

Discount Rata 16.00%

Table 4.1.3.4 Profitability Statement (2/2)

Calender yearYear alter operation

2014 2016 2016 2017 2018 2010 2020 2021 2022 2023 Total11 12 13 14 16 16 17 18 1» 20

Project year ----------------------------rr 14 16 16 W 16 19 20 21 22

Operating Rate 100% 100% 100% 100% 1100% 00% 00% 00% 00% 00%

Equfty InjectionLoan Dfabuiaement

2,800,142,2237,618,007,006

Operation Income 1.014.465.122 3.038.550.684 3.044.638,685 3.048.722.437 3.054.808.208 2,738,512.806 2 743500488 2 748684230 2.763.770,011 2,758,866,702 67,074.200,807

DepreciationAmortization

442.241.000 442,241,000 442,241,000 442,241.000 442,241,000 442,241,000 442,241,000 442,241,000 442.241,000 442,241,000 0,844.020,0001,473,410,226

Net Income bolbra TaxCorporation TaxNat Income alter Tax

2.612.224.1221,036,660,6461,656.334.473

2.687,308,1041 038 823 8501 558 385 836

2,602,306.8661.040.058,2801,561,437,388

2,607,481.4371,042,082,6761,664,488.662

2.812.587.2081,048,026,8831.667,640,326

2,206,271,606018,808,678

1,377,763,016

2,301,367,408020,542,067

1,380,814,481

2 300 443 230 822,877,206

1 383 865 043

2,311,520,011824,611,604

1.306,017,408

2,310,614,782 026,646,013

1 380 968 860

47,699.001,472 10002 384 688 28,683,676,013

Loan Outotondlng babnca inbred

0 0 0 0 0 0 0 0 0 03,721,458,010

Caahlow tor Project IRR before TaxCaahlow for Equity IRR before TaxCaahlow tor Project IRR alter TaxCaahlow tor Equity IRR after Tax

2.862.224.1222.682.224.122 1,666,334.471 1,666.334.473

2.687.308.8842.687.308.8841 558 385 0381 658 385 035

2,602,388,6662.602.186,8661.661.437.3881.661.437.388

2.607.461.4372.607.481.4371 564 438 882 1,664,418,862

2,612,667,2082,812,667,2011,887,640,3281,667,640,326

2.296.271.6062.206.271.606 1,377,763,018 1,377,763.010

2,301.307,4082.301.367,4681.360.814.4811.300.014.481

2.308.443.2302.306.443.230 1,363,666,0431 383 066 043

2.311.520.0112.311.620.0111.386.017.4061.366.017.406

2.316.614.7822.310.014.782 1 389 068 660 1 380 068 060

17,337,722,24133.816,264,22310,276,337,86214,663,670,634

Debt Cowing RatioAverage Debt Covering Ratio

(2) Project Internal Rate of Return

1) Return on Investment

— Before Tax : 19.24%

— After Tax : 11.17%

2) Return on Equity

— Before Tax : 30.63%

— After Tax 13.64%

(3) Sensitivity analysis on ROI and ROE before Tax

To analyze the profitability of the Project, sensibility analysis for Return on

Investment (before Tax) is made in the views of the Plant cost, the Product

prices, raw material prices (NGL, fuel gas), the interest rate and O&M Costs

in the range of ±10% respectively.

According to the result of the analysis, raw material prices (NGL, fuel gas),

and selling price of MS impact on the profitability a lot and the interest rate

and the O&M costs do not impact so much compared to other factors.

1) The Plant cost

Sensitivity analysis for the Plant cost is shown in the Table 4.1.3.5.

Table 4.1.3.5 Sensitivity analysis for the Plant cost

No. Case Amount (Million Yen) ROI before Tax

1. The Plant cost +10% 9,729.5 17.06%

2. Base case 8,845.0 19.24%

3. The Plant cost —10% 7,960.5 21.78%

2) Raw Materials costs (NGL and Fuel Gas)

Sensitivity analysis for Raw Materials costs (NGL and Fuel Gas) are

shown in the Table 4.I.3.6.

- 4 - 20 -

Table 4.1.3.6 Sensitivity analysis for the raw materials costs

(NGL and Fuel Gas)

No. Case Price (Yen) ROI before Tax

1. Raw materials costs +10%

NGL 33,019 yen/ton15.52%Fuel Gas

277,220 yen/MMSCF

2. Base caseNGL 30,017yen/ton

19.24%Fuel Gas252,018 yen/MMSCF

3. Raw materials costs —10%

NGL 27,015 yen/ton22.72%Fuel Gas

226,816yen/MMSCF

3) Products Prices (LPG, MS and HSD)

Sensitivity analysis for Product costs (LPG, MS and HSD) are shown in

the Table 4.1.3.7.

Table 4.1.3.7 Sensitivity analysis for Products prices

(LPG, MS and HSD)

No. Case Price(Yen/ton) ROI before Tax

1. LPG price + 10% 31,415 20.11%

2. Base case 28,559 19.24%

3. LPG price -10% 25,703 18.34%

4. MS price + 10% 72,205 23.42%

5. Base case 65,641 19.24%

6. MS price -10% 59,077 14.70%

7. HSD price + 10% 43,563 20.05%

8. Base case 39,603 19.24%

9. HSD price -10% 35,642 18.41%

- 4 - 21 -

4) Interest rate

Sensitivity analysis for interest rate is shown in the Table 4.I.3.8.

Table 4.1.3.8 Sensitivity analysis for Interest rate

No. Case Interest rate ROI before Tax

1. Interest rate +10% 9.9% p.a. 18.87%

2. Base case 9.0% p.a. 19.24%

3. Interest rate —10% 8.1% p.a. 19.61%

5) O & M cost

Sensitivity analysis for O & M cost is shown in the Table 4.I.3.9.

Table 4.1.3.9 Sensitivity analysis for O & M cost

No. Case Amount (Million yen) ROI before Tax

1. 0 & M cost +10% 141.3 19.13%

2. Base case 128.5 19.24%

3. 0 & M cost —10% 115.6 19.34%

The results of above sensitivity analysis are shown in the Figure 4.1.3.1

through 4.I.3.4.

- 4 - 22 -

(4) Conclusion

The ROI (Before Tax) of the Project is calculated at 19.24% for 20 years, it is

possible to expect a sufficient profitability in economic point of view.

It is expected that the realization of the Project will cause various effects,

namely, valuable utilization of Cs and C4+ currently injected to sales gas

and/or flared out wastefully and condensate, reduction of GHGs by

alternative energy, decrease of the energy supply gap areawise, sustainable

energy supply and promotion of development of the western region, etc. To

realize such effects in the Bangladesh, the earlier implementation of the

Project is eagerly desired.

As like other issues, the fungibility and transferability of the credit was not

concluded at COPS, namely the issue whether such credit (Certified Emission

Reductions: CER) to be made from CDM can be sold to other concluding

countries and companies. In COPS, the umbrella group lead by Japan and

USA (the negotiating group consisting of USA, Japan, Canada, Australia,

Norway, New Zealand, Iceland, Russia, Ukraine, Korea and Mexico) insists

the application of the fungibility and transferability of the credit. If it is

adopted and applied to the Project, the profitability of the Project can mark

much higher result of the evaluation.

-4-25-

4.2 Cost versus Effects

4.2.1 Cost versus Alternative Energy Effects

The Project is expected to produce valuable products, LPG, MS and HSD from

Cs and C4, which are currently injected to the sales gas or flared out, and

from C5+, which is treated with an imported crude oil.

By the realization of the Project, LPG can be available from NGL currently

not being used efficiently. Effect on alternative energy is estimated in section

3.1. The cost versus alternative energy is calculated as follows:

(1) The cost versus alternative energy effects

As shown in the paragraph 3.1.3.(1), the alternative energy effects of LPG is

estimated at 44,690 toe/y. Accordingly the cost versus alternative energy is

calculated as 4.33 toe-y/million yen:

Annual alternative energy effects (44,690 toe/y) / Investment amount

(Yen 10,320 million)

= 4.33 toe-y/million yen

(2) Cumulative effect of alternative energy

As shown in the paragraph 3.1.3.(2), the cumulative effect of alternative

energy of LPG over the project life of 20 years is estimated at 858,048 toe.

Accordingly the cost versus accumulated alternative energy effects is

calculated as 83.14 toe/million yen:

Cumulative effect of alternative energy 858,048 toe) / Investment amount

(Yen 10,320 million)

= 83.14 toe/million yen

- 4 - 26 -

4.2.2 Cost versus Greenhouse Gases Emission Reduction

The LPG produced by the Project will be sold in the western region for the

residential use. In Bangladesh, most part of the energy for the residential use

depends on biomass energy. By conversion to LPG, the effects of GHGs

reduction could be expected as shown in section 3.2. The cost versus GHGs

reduction is calculated as follows:

(1) The cost versus effects of GHGs reduction

As shown in the paragraph 3.2.3.(1), the effects of GHGs reduction is

estimated at 861,424 t-COz/y. Accordingly the cost versus effects of GHGs

reduction is calculated as 83.47 t-COz-y/million yen:

Annual GHGs reduction (861,424 t-COz/y) / Investment amount (Yen

10,320 million)

= 83.47 t-COz-y /million yen

(2) Cumulative effect of GHGs reduction

As shown in the paragraph 3.2.3.(2), the cumulative GHGs reduction over the

project life of 20 years is estimated at 16,539,341 t-COz. Accordingly the cost

versus effects of GHGs reduction is calculated as 1,602.65 t-COz/million yen:

Cumulative Effect of GHGs reduction (16,539,341 t-COz) / Investment

amount (Yen 10,320 million)

= 1,602.65 t-COz /million yen

- 4 - 27 -

Chapter 5

Technology Spread and Its Effects

In this chapter, the possibility of the dissemination to other

regions and its effect in Bangladesh when this project is executed

are described. Furthermore the effect of alternative energy and

reduction effect of GHGs in case of dissemination are considered.

Chapter 5 Technology Spread and Its Effects

5.1 Possibility in Spread of the Proposed Technology

In Bangladesh, the natural gas resource is a valuable and only domestically self-supported energy resource. Dissemination of this natural gas to the whole country is indispensable from the viewpoint of the energy policy and the impartial distribution to the people as a domestic resource. However it is

said that only 8% of the people have access to the natural gas at present, because the infrastructure such as pipeline network etc. to disseminate the natural gas has not been completed or is limited only to certain areas. Because the discovered natural gas fields are unevenly distributed in this country, the construction of pipeline network especially in the west region divided from the northeast by the Jamuna River requires a large sum of capital and enormous time for completion and the financing from a public

organization such as Asian Development Bank is examined. Moreover, making good use of the natural gas, which is a valuable resource, is considered as an important subject. At present, the condensate produced

along with the natural gas production is mixed with the imported crude oil and is refined, but a part of the condensate is used as inferior gasoline too,

which causes air pollution. Moreover, a part of Cs and Ci fractions are mixed with the sales gas and the other part are incinerated by flaring out. High

utilization of NGL, which are not effectively used now, by collecting and manufacturing LPG, MS, and HSD is a big factor in raising the additional

value of the natural gas.

If this technology (technology to refine the NGL collected from the natural

gas and produce LPG, MS, and HSD) is applied to other natural gas production areas in Bangladesh based on the study result of this project, a

stable supply of energy to the region where the energy source cannot be easily

secured becomes possible. Though BPC estimates a domestic latent demand of LPG at 200,000 - 250,000 tons/year, the present domestic production

capacity is estimated only at 20,000 ton/year even in the maximum case, and the amount of the supply including the 45,000 tons imported by private organizations that begun in 2000 has greatly fallen below the demand. Moreover, this technology is a universal technology that is widely adopted in

- 5 - 3 -

a lot of oil and gas fields worldwide; as such there are no technical problems on design, construction and operation is expected. Therefore, it can be said

that this technology possesses a high possibility to be disseminated to another gas field and the surrounding area, though it’s application is highly

dependent on the natural gas composition in the gas fields in Bangladesh.

This project intends to utilize the NGL produced from only three gas fields (Kailastila, Beanibazar and Jalalabad) located in east area, amounting to

245 MMSCFD. The total production rate of natural gas in Bangladesh at present is approximately 1,000 MMSCFD and is expected to be over 1,500 MMSCFD in 2005.

The compositions of the natural gas are different from each of the gas fields; the gas fields in the east north area produce wet gases, while that in the east

south area produce dry gas in general. Though it is impossible to assess the spread effect quantitatively without knowing the gas compositions of each field, the potential production of the petroleum products of LPG, MS and HSD is to be evaluated as shown in Table 5.1.1.1 based on the predicted amount of the total supply in Table 1.1.2.4, assuming the same yields of the

products as this project could be applied to the other fields:

Table 5.1.1.1 Potential Production of Petroleum Products

Supply/Production

Unit Fiscal Year2000/01 2001/02 2002/03 2003/04 2004/05

NaturalGas

MMSCFD 1,200 1,340 1,340 1,500 1,500

LPG TPD 602 673 673 753 753MS TPD 1,283 1,542 1,542 1,727 1,727

HSD TPD 402 448 448 502 502

From above Table 5.1.1.1, more than 200,000 tons/year of LPG could be

obtained, which is sufficient to supply the potential demand for LPG mainly in west region, provided that the LPG is produced from the NGL recovered from all the gas fields. As for the MS, which is currently imported (2,430 BPD as of 1998 statistics), the domestic production of 1,542 TPD in 2001/02

(equivalent to 11,410 BPD) could well exceed the imported amount.Further analysis and evaluation of the gas composition in each gas fields is required, however, needs for the technology to recover NGL from the natural

- 5 - 4 -

gas and refine and produce the LPG, MS and HSD is high in order to promote the economical and social development.

In order to disseminate this technology, following items are to be considered:

• Promotion of development of new gas fields and introduction of NGL recovery facilities.

• Introduction of the NGL recovery facilities in the existing gas fields.• Funding and securing of the NGL fractionation plant construction

capital.

• Establishment of the LPG delivery system to remote area.

- 5 - 5 -

5.2 Effects under Possible Spread

5.2.1 Effects on Alternative Energy

The NGL fractionation technology introduced by this project is to refines and produces LPG, MS, and HSD from NGL, recovered from the natural gas that is not effectively used now. These products serve as replacement of biomass fuels such as agricultural residue, forest products (firewood) and dung of livestock or the imported petroleum products. In this project, only three gas fields (Kailastila, Beanibazar, and Jalalabad) are targeted as supply sources of the raw material, but if the NGL recovery plants are introduced into the other existing gas fields in the future, the spread of further alternative energy effect is expected.As shown in Table 1.1.2.1, net recoverable reserves of the three gas fields

targeted by this project are roughly 3,240 BCF, and net recoverable reserves of the other gas fields are roughly 8,370 BCF, which are about 2 to 2.5 times as large as that of the three fields.Since the gas compositions are different from each of the gas field, the ratio of

Cs+ fraction or the yield of LPG product differs in some extent. Assuming the same yields of the products as this project could be applied to the other fields,

about 2 to 2.5 times alternative energy effect of this project (about 90,000 to 112,500 toe/year) could be potentially obtained when the technology similar to this project are applied to all other existing gas fields.

Exploration and development of new gas fields by the PSC contracts are currently being advanced in Bangladesh and further alternative energy effect would be expected if the NGL recovery system will be promoted to introduce

to the new developed gas fields in the future.

5.2.2 Effects on Greenhouse Gases emission Reduction

The effect on GHGs reduction is presumed to be 1,720,000 - 2,150,000

t-COg/year, which is about 2 to 2.5 times of this projects each year, if the similar technology will be applied to other gas fields, as same as the effects on alternative energy as described in section 5.2.1.

-5-6-

Chapter 6

Effects on Other Areas

In this chapter, effects on other areas such as environment,

economy and society than on alternative energy and GHGs

emission reduction are described.

Chapter 6 Effects on Other Areas

6.1 Effects on Environment

The condensate produced in Beanibazar, Jalalabad and Kailastila is

currently gathered to Ashuganj through the pipeline and then transported to the Eastern Refinery Limited (ERL) in Chittagong by barge over the

Meghna River. There, the condensate is mixed with imported crude oil and

refined at the refinery.However, a part of the condensate is sold directly as inferior gasoline in the gas field. The inferior gasoline is said to cause air pollution, which is the

biggest environmental issue in the city part of Bangladesh.Constructing the NGL fractionation plant at Ashuganj and producing the fuel products, which will meet the standard specification of Bangladesh,

could prevent the sales of the inferior gasoline and mitigate the air

pollutions.

The LPG produced by this project will be mainly supplied to the west region of the Jamuna River and used as residential energy for cooking

stoves, serving as replacement of the biomass fuels such as agricultural residues, forest products (firewood) or dung from livestock currently used.In addition to the effect on GHGs emission reduction, the following effects

on the environmental improvement are expected by using these biomass

resources instead of burning:• Prevention of soil erosion and accompanying soil deterioration by

deforestation;• Recovery of forest and accompanied function to prevent natural disaster

such as floods, cyclone, etc; and• Improvement of yield of agricultural products by using cow dung as

fertilizer not as fuel.

■ 6 ■ 3 "

6.2 Effects on National Economy

By the execution of the Project, it will be possible to supply LPG, MS, and HSD to the western part of Bangladesh thereby reducing the supply energy gap from that of the eastern region. The economic effects are considered as

follows:

(1) Decrease of price-gap of the imported LPG

In Bangladesh, the wholesaling and retailing price of oil and gas products are regulated by the Government. To the range of up to 40km radius area from the LPG distribution terminals (deposits) operated by BPC in Dhaka, Dhaulatpur, Barisal, Jhalakathi, Barab, Sylhet, Shrimagal and Chandpur located in eastern area from Dhaka and Barisal Division, the retail price of a 12.5kg LPG Cylinder is Tk 250 (as of November 2000). And to the range up to 40km radius area from the LPG distribution terminals operated by BPC in Baghabari, Rangpur, Chilmari, Parbatipur, Natore, Harian and Balashi located in western area from Jamuna river, the retail price of a

12.5kg LPG Cylinder is Tk 255.40 (as of November 2000).In the area out of the 40km radius range from the LPG distribution terminals, a Tk 0.8/km is added to the retail price as transportation cost.

The price composition of LPG is shown in the Table 6.2.1.1. Also location map of LPG depots in Bangladesh is shown in the Figure 6.2.1.1.

BPC is currently producing and supplying about 20,000 ton/year of LPG nationwide. And BPC estimates the domestic latent demand of LPG at

200,000 - 250,000 ton/year mainly in western area of Bangladesh, but the current LPG supplied by BPC does not meet the demand. To make up for this deficiency of LPG, the GOB admitted the import and distribution of

LPG to private companies. According to Summit United Petroleum Co. Ltd., an LPG importer/distributor, at present there are 24 private companies who have acquired the permission for import and sales, and 40,000 ton of LPG has been imported and distributed by a private company since 2000 and sold at Tk500-600 / 12.5kg cylinder to the consumer.

-6-4-

Table 6.2.1.1 The price composition of LPG (12.5kg)

No. Description (Delivery Point) Composition

Price(Tk)

Price(Yen)

1 Ex-production point 173.60 3572 Commission to bottling company 30.00 623 Ex-bottling company (before tax) 1+2 203.60 4194 Ex-bottling company (after tax) 208.10 4285 Commission to marketing

companies12.00 25

6 Transportation cost to each depotdescribed in Item 7.

15.50 32

7 Ex-depots price in Dhaka, Dhaulatpur, Barisal, Jhalakathi, Barab, Sylhet, Shrimagal, Chandpur: Eastern area fromDhaka and Barisal Division

4+5+6 235.60 485

8 Transportation cost upto 40km range from the depots

6.40 13

9 Commission to retailers 8.00 1610 Retail price in upto 40km area

from the depots described in Item7.

7+8+9 250.00 514

11 Transportation cost to depots in Baghabari, Rangpur, Chilmari, Parbatipur, Natore, Harian,Balashi: Western area of Jamunariver

5.40 11

12 Ex-depots price, described in Item11.

7+11 241.00 496

13 Retail price in upto 40km range from depots described in Item 11.

8+9+12 255.40 525

In the area out of 40km radius area from the LPG depots, Tk 0.8/km as transportation fee is added to the retail price by the distance.

Applicable Exchange Rate : Tk54.10 = US$1= ¥111.25 (Nov.30, 2000)

(Source: National Gazette, August 14, 2000)

-6-5-

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(Source: Jamuna Oil Co. Ltd. Annual Report 1998-99)

- 6 - 6 -

When the Project is realized, 40,590 ton/year of LPG is produced. Assuming that the LPG produced by the project replaces the imported LPG and retails at the governmentally controlled price, the price gap will be decreased as follows:

1) LPG production amount by the Project: 40,590 ton/year

2) The number of the 12.5kg Cylinder production:40,590 ton/year x (1,000kg) / 12.5kg Cylinder =3,247,200 cylinder/year

3) Sales amount at the governmentally controlled price:Assuming a consumption place at 140km far from a major depot located at western side of Jamuna River (the additional transportation cost at 100km is considered: refer to Table 6.2.1.1):

(Tk255.40 + (TkO.8 x 100km)) x 3,247,200 cylinder = Tkl,089,110,880.-

4) Sales amount of the imported LPG:

TkSOO.-x 3,247,200 cylinders = Tkl,623,600,000.-

5) Annual balance (The above 4)—3)) = Tk534.489.120.-

As a result of the above, Tk534,489,120.- is saved and is turned to the consumption except LPG purchase expenses. However, the latent demand

will not be fully satisfied even if the Project is realized, and the imported LPG will be continuously required in the future too. But, the price balance

will be foreseen to decrease by the increase of domestic produced LPG.

(2) Decrease of Imported LPG — Improvement of trade balance

It is said that the price of imported LPG by private company at Mongla port is Tk340/12.5kg and about 45,000 ton of LPG was imported in 2000. By the realization of the Project, an LPG amounting to 40,590 ton/year

would be produced. When this locally produced LPG replaces the imported LPG, this will cause a foreign currency saving amounting to

US$20,407,541.59 for LPG 40,590 ton and in return would result to the

improvement of the trade balance.

(40,590,000 kg/12.5kg) x Tk340 @Tk54.10/US$ = US$20,407,541.59/year

- 6 - 7 -

(3) Effect of Alternative Energy of the imported petrochemical product (Kerosene) — Improvement of trade balance

It is considered that LPG produced by the Project replaced not only the biomass energy but imported oil and kerosene which is used as residential energy at this moment. Though, by the replacement of biomass energy with LPG, high effect on reduction of GHG could be obtained, the replacement of kerosene with LPG does not provide so much effect on the reduction. Since the carbon emission coefficients in kerosene and LPG are 0.6896kg-C/liter

and 0.8200-C/kg respectively, and carbon-dioxide emissions of kerosene and LPG are 0.284kg-C02/1000kcal and 0.250kg-C02/1000kcal respectively, it can be said there is little numerical effect.

However, the calorie obtained from LPG of 123TPD to be produced by the

Project is equivalent to kerosene of 1,000BPD. The kerosene imported in Bangladesh at present is about 4,000BPD. In economic point of view, it is expected that the newly produced LPG will be equivalent to about 1/4 of

the imported kerosene.

At present, the price of the kerosene at Chittagong is calculated at 10.81/liter (US$31.77/bbl) according to the data of BPC in 1999 showing

import kerosene of 269,282ton/the year, import sum of US$63.3 million. On the other hand, the price of kerosene at ERL is Tk. 14.86/liter (US$43.67/bbl) as shown in the Table 6.2.1.2 below. In case the LPG

produced by the Project wholly replaced the imported kerosene, the improvement of the trade balance by saving of the foreign currency is calculated as below:

l,000bblx US$31.77/bbl x 365days/year = US$11.6 million

- 6 - 8 -

Table 6.2.1.2 The price composition of kerosene

The item Tk/LiterEx Chittagong refinery 14.86Commission to BPC’s subsidiary marketing companies 0.14The transportation cost to distribution terminals 0.17The cartage to each filling station(In the 40-km region from the distribution terminals)

0.12

Commission to retailers 0.21The retail price 15.50

(Source : National Gazette, August 14, 2000)

(4) Improvement of RPGCL’s profitability — Increase of contribution to

national budget

In accordance with the estimation of the Cashflow of the Project, by the realization of the Project, it is calculated that the net profit (after tax) to

the RPGCL is assumed about Yen 1,040-1,567 million (about US$9,353-14,090 thousand) in each year. It is considered that this will support improvement of the RPGCL’s financial constitution, which is suffering from deficit at this moment and cause the reduction of financial

burden of the country. Moreover, it will be able to make the expansion of RPGCUs other business, such as retail and dissemination of CNG, etc.

Furthermore, by the Project, corporate income tax amounting to Yen

693-1,045 million (about US$6,235-9,393 thousand) and VAT to the products will newly contribute to the national budget for 20 years after

commercial operation.

(5) Others

• Stable energy supply would promote independent development and industrialization in the west region, contributing to prepare economic conditions for investment from abroad.

• Improvement of existing refinery’s productivity by not mixing the condensate into the crude oil:The condensate recovered from the natural gas is currently transported to the Eastern Refinery Limited (ERL) in Chittagong and refined and

treated together with the imported crude. According to the hearing at

- 6 - 9 -

the site survey, since the distiller in ERL is designed to treat the crude

oil as a raw material, condensate mixing with high volume might result in lowering its productivity. It is preferable to treat the condensate in the gas treatment site, not at the distiller in ERL.

- 6 ■ 10 ■

6.3 Effects on Society

In addition to the influence on the effect on the environmental improvement and the economy, the following effects on the society is expected by executing this project:

(1) Technology Transfer

The natural gas is a valuable domestic resource for Bangladesh and the NGL fractionation technology is important for its effective use.On the other hand, the number of petroleum and plant engineers in the energy sectors including Petrobangla are insufficient, whose technology level, experience or training opportunities are very limited. Improvement of

their technical skills and spread of the technology to the whole country is expected by technology transfers in plant design and engineering, project management, plant construction, operation and maintenance, etc through

this project implementation.

(2) Social Effect of LPG Dissemination

The firewood stove generates heavy soot, which is bad for health, and workloads for firewood collection are becoming heavier due to the forest

regression. Conversion to LPG stoves from biomass stoves will contribute

to the improvement of health conditions and reduction of workloads, resulting in the possibility of spending more time for education and/or higher profitable work. Since these loads are mainly borne by women and

children, the project might promote the WID, Women in Development.In addition, LPG dissemination will promote industrialization by supplying

stable energy, resulting in independent social development.

(3) Environmental Education concerning Energy Saving

Generally speaking energy saving consciousness is very scarce in

Bangladesh: it is said that cooking stoves are kept on burning all day long in most houses where natural gases are available. Improvement of

environmental consciousness would be expected through educational support programs on safety use of LPG, energy saving, etc., which will be incorporated into the project as a part of dissemination activities for LPG

- 6 ■ 11 -

utilization.

(4) Increase in Employment

About 100 operators are planned for the operation of NGL fractionation plant in Ashuganj in this project, which will contribute to increase in

employment.Plant operation would bring additional employment chances for not only

the project but also the related services, activating the local society.

(5) Infrastructure Reinforcement

Products of the project will be distributed by surface transportation using tank lorries. In accordance with the increase of transportation demand, local public transportation system such as roads and bridges would be

expected to reinforce.Petrobangla has started a study on LPG pipeline construction plan from Ashuganj to Elenga, on the assumption of the operation of Ashuganj NGL

fractionation plant through this project. The pipeline project plans to transport the LPG produced in Ashuganj via 4”-pipeline of 124 km directly to Elenga, which is located in the entrance point to the west region, and

distribute to the west region after bottling in Elenga.

- 6 ■ 12 -

CONCLUSION

- Conclusion -1 -

Conclusion

This investigation verified the feasibility to construct the NGL fractionation plant by

which a raw material NGL collected from the natural gas not being effectively used in

Bangladesh at present is refined to produce LPG, MS, and HSD thereby contributing

a big effect to the reduction of Greenhouse Gases (GHGs) generated from the

combustion of the present biomass fuel through the dissemination of stable supply of

clean energy to the energy shortage region in this country.

The attenuation of the subtropics forest which is the vegetation of Bangladesh is

increasing rapidly in South Asia, and the deforestation for the firewood fuel is one

cause of the forest attenuation which leads not only to emission of GHGs by the

combustion of the firewood but also to the loss of the ability of the forest to absorb and

accumulate carbon dioxide.

The raw material of this plant is NGL which is collected from natural gases produced

in the gas fields of Kailastila, Beanibazar and Jalalabad in the Sylhet region and sent

to Ashuganj. The plant has the capacity to treat 467 ton/day of NGL transported from

the three gas fields as a raw material and produce LPG of 123 ton/day, MS of 262

ton/day and HSD of 82 ton/day.

Cs and C4 fractions not being used now are utilized as energy without new crude oil

consumption, and the effect of alternative energy is about 45,000toe/y of the crude oil

conversion of LPG, MS and HSD produced. This cost-effectiveness is about 4

toe-y/million yen, and about 83 toe-y/million yen in 20 years operation.

The emission of carbon dioxide can be reduced by replacing the present biomass fuel

as a residential use fuel with the manufactured LPG of 123 tons/day. The reduced

amount is about 115,000t-CG2/y by even simply converting the equivalent calorie,

and if the thermal efficiency of the firewood stove being used now is considered, the

reduced amount increases further to about 861,000t-CC>2/y.

The cost vs. effect of the greenhouse effect reduction reaches about 84 t-COz/y/million

yen against the amount of an initial investment. Moreover, the accumulation of GHGs

reduction effect for the project period of 20 years reaches about 16.5million t-COz.

On the other hand, the execution of this plant construction secondarily brings the

following effects besides the effect of GHGs reduction and the effect of alternative

energy.

- Conclusion - 3 -

♦ Contribution to the improvement of the foreign currency revenue and expenditure

balance because of consumption of the produced LPG in the country as

substitution of the imported LPG.

♦ Contribution to the social development through the promotion of new industry in

the energy source shortage region by securing the stably supplied energy source.

♦ Contribution to life level improvement through reduction of work load of home

women and children by introduction of the convenient and stability fuel which

replaces biomass fuel

If the construction of NGL fractionation plant in Ashuganj proposed as the

countermeasure against GHGs which is the global wide environmental problem put

into practice, solution of a part of the social and economical problems of the country

which is under the situation called as LLDC is supported beside the reduction effect of

GHGs, and the contribution of Japan by this project must be highly evaluated.

It is desired that this investigation contributes to the execution of this project which

should give a hope for GHGs reduction by the energy conversion in this country and

the social development promotion which is the pending problem, in addition to the

promotion of the clean development mechanism (CDM) leading to the global warming

control by the reduction of GHGs.

Japan Oil Engineering Co., Ltd. which executed this investigation will keep

cooperating with the local execution organization for promotion of this proposed

project and will exert its best effort to request the support of the related organizations

in Japan.

Finally, Japan Oil Engineering Co., Ltd. sincerely express gratitude for the related

various organizations including New Energy and Industrial Technology Development

Organization which gave us valuable advice and cooperation and also for the related

various Bangladesh organizations including Petrobangla and everybody who/which

cooperated for collecting information and material during the local survey.

- Conclusion - 4 -

ATTACHMENT

References

The following list is supported with an extensive literature bibliography of this study.

1. Annexure-2 Rashidpur-Ashuganj Transmission Loopline Project, Soil Survey

Report, May 1999, Gas Transmission Company Limited

2. Annual Report 1996, Bangladesh Gas System Limited

3. Annual Report 1998-99, Jamuna Oil Co., Ltd.

4. Annual Report 1999, Bangladesh Petroleum Corp.

5. Bangladesh Compendium of Environment Statistics 1997, Bangladesh Bureau of

Statistics

6. Bangladesh Gazette, August 14, 2000, Ministry of Energy and Mineral Resources,

GOB

7. Environmental Conservation Act, 1995, Ministry of Environment and Forest,

GOB

8. Environment Conservation Rules, 1997, Ministry of Environment and Forest,

GOB

9. Environment and Safety Management System, Petrobangla

10. Graphosman World Atlas, Jan. 1996, Graphosman Publishing Co.

11. ICEP International Seminar 2000, Petrobangla

12. National Environmental Policy, 1992, Government of Bangladesh (GOB)

13. National Environmental Management Action Plan, 1995, Ministry of

Environment and Forest, GOB

14. National Report on Asian Least-cost Greenhouse Gas Abatement Strategy

(ALGAS): Bangladesh, 1998, Asian Development Bank

15. Petroleum Exploration Opportunities in Bangladesh, March 1997, Petrobangla

16. Power Development Program for the Next 7 Years, Bangladesh Power

Development Board

17. Project Profile, Department of Environment, GOB

18. NEDO-IC-99R44 Repowering Project of Ashuganj Thermal Power Station, NEDO

19. World Development Indicators 2000, World Bank

20. International Financial Operations, JBIG

21. Annual Report (Extra Volume) 2000, JBIG

22. Bangladesh Investment Guide, March 2000, Bangladesh Prime Minister’s Office,

Board of Investment

Field Survey Report

First Field Survey Report

Second Field Survey Report

Third Field Survey Report

First Field Survey ReportFeasibility Study on Ashuganj NGL Fractionation Plant JOE Project No.324-30-001-01

lBt Field Survey

December 4,2000

Project Engineering Dept., JOE

By: Takada, Okubo, Ikuta, Kinoshita

Survey Place: People’s Republic of Bangladesh

(Dhakax Sylhet> Ashuganj ^ Chittagong)

Survey Period: November 17,2000 to December 2,2000

Survey Member: JOE - Hiroshi Takada, Shigenari Okubo, Ryoji Ikuta, Atsuko Kinoshita

TOMEN - Yoshihiro Inoue, Hirotaka Itoh

1. Summary of field survey

The purpose of this study is to explore potential projects that are expected to lead to

a future Clean Development Mechanism (CDM) for Green House Gas (GHG)

emission reduction as part of NEDO’s year 2000 program of Basic Survey Project for

Joint Implementation, etc. This project is to construct in Ashuganj a facility by

which NGL as the raw material will be refined/separated to LPG, MS and HSD. The

LPG produced from Ashuganj NGL Fractionation Plant can be supplied as a

valuable energy to the remote areas where commercial energy is unavailable or only

biomass energy is available, such as the Western Region of the country. This study

also includes the possibility to operate a joint venture (JV) business in collaboration

with the local counter part.

The necessary information and data were obtained through interview of counter

part personnel and by planned plant site visits.

As continuously the 2nd field survey, JOE plans to put a conclusion of study by

the workshop method in the forum with the counter part about 1 week around

last January.

JOE received a letter of intent from NEDO on November 10th and is engaged by

NEDO to carry out the study as a main Contractor. Tbmen on behalf of JOE,

carried out the profitability analysis and CSL was adopted as the local agent via

Tbmen during the field survey.

- 1st Field Survey -1 -

1st Field Survey

2. Companion of major interview and data collection

(1) Petrobangla: Chairman, Planning Div., Marketing Div.

(2) Rupantarita Prakritik Gas Company Limited (RPGCL: means Natural Gas

Conversion Co. Ltd. in Bengalee.)

(3) Sylhet Gas Fields Limited (SGFL): Dhaka, Kailashtilla, Beanibazar

(4) Gas Transmission Company (GTCL): Dhaka, Ashuganj

(5) Bangladesh Petroleum Corporation (BPC)

(6) LP Gas Limited: Dhaka, Kailashtilla

(7) Unocal: Jalalabad

(8) Eastern Refinery Limited (ERL)

(9) Ministry of Environment and Forest

(10) Prime Minister’s Office Board of Investment

(11) World Bank (WB)

(12) Asian Development Bank (ADB)

(13) JBIG


lBt Field Survey

3. Schedule of field survey

Month Day Week Activity Stay at Remarks*11 17 Fri. Narita/Bangkok Bangkok HT, SO,

RI, AK, YI,HI

11 18 Sat. Bangkok/Dhaka Dhaka HT, SO,RI, AK, YI,HI

11 19 Sun. Meeting with Petrobangla Dhaka11 20 Mon. Meeting with Petrobangla,

RPGCL and JBIGDhaka

11 21 Tue. Meeting with LP-Gas and GTCL DhakaMeeting with MOEF AK, HI

11 22 Wed. Meeting with Petrobangla and RPGCL

Dhaka HT, SO, RI

Meeting with WB-, UNDP and MOEF

AK, YI, HI

11 23 Thu. Meeting with Petrobangla and WB Dhaka11 24 Fri. Site survey of Ashuganj NGL

Plant siteDhaka

11 25 Sat. Off duty DhakaDhaka/Bangkok In flight YIDhaka/Chittagong Chittagong AK, HI

11 26 Sun. Meeting with Petrobangla, GTCL and SGFL

Dhaka

Meeting with BPC, ERL andLP-GasChittagong/Dhaka

AK, HI

B angkok/N arita - YI11 27 Mon. Meeting with Petrobangla, and

RPGCLDhaka

Dhaka/Sylhet Sylhet HT, SO, RI11 28 Tue. Meeting with ADB and IUCN Dhaka AK

Meeting with BI and ERD HI

Site survey of Kailastila -I & II gas production station (SGFL & RPGCL) and Jalalabad gas production station (UNOCAL)

Sylhet HT, SO, RI

- l8t Field Survey -3 -

lBt Field Survey

Month Day Week Activity Stay at Remarks*11 29 Wed. Meeting with Petrobangla, United

Enterprises, Summit and RPGCLDhaka HI

Site survey of Beanibazar gas production station (SGFL) Sylhet/Dhaka

HT, SO, RI

Dhaka/Bangkok In flight AK11 30 Thu. Meeting with Petrobangla and

RPGCLDhaka HT, SO,

RI, HIBangkok/Narita - AK

12 1 Fri. Dhaka/Bangkok In flight HT, SO,RI, HI

12 2 Sat. Bangkok/ Narita - HT, SO,RI, HI

*: All mission members visited together unless otherwise noted.

- lBt Field Survey -4 -

1st Field Survey

4 . Interview person list

No. Date Company Name/Address N ame/Position

1. 2000/11/18 Consolidated Services Limited35/1,Parana Pal tan Line, Inner CircularRoad, Dhaka-1000 G.P.O.Box 2705,Bangladesh

Mr. Fateh Ali Chowdhury

2. Tbmen CorporationLiaison OfficeSena Kalyan Bhaban, 9th Floor195, Motijheel Commercial AreaG.P.O.Box 244, Dhaka-1000 Bangladesh

Mr. Abdul Baten,Manager

3. Sylhet Gas Fields LimitedHead OfficeP.O. Chiknagool, SylhetDhaka Liaison OfficeHouse No. 85, Road No. 11/ADhanmondi R/A, Dhaka-1209 Bangladesh

Mr. Khurshid Alam,General Manager (NGL/LPG)

4. Rupantaria Prakritik Gas Company Limited 102, Kazi Nazrul Islam AvenueKawran bazar C/A, Dhaka-1215 Bangladesh

Mr. M.A. Mannan,Managing Director

5. 2000/11/19 PetrobanglaPetrocenter3, Kawran Bazar C/A, Dhaka-1215Bangladesh

Mr. Imaduddin,General Manager, TAPP (Planning)

6. Petrobangla Mr. A.S.M. Waliullah,Director, Planning

7. Petrobangla Mr. Manjur Morshed Talukder, General Manager, Strategic Planning)

8. Petrobangla Mr. Talukder G. Mustafa,General Manager & Project Manager,GIDP Training Project

9. Petrobangla Mr. A.K.M. Shafiqur Rahuwan Deputy eneral Manager Environment and SafetyDivision

10. 2000/11/20 Consolidated Services Limited35/1,Parana Pal tan Line, Inner CircularRoad, Dhaka-1000 G.P.O.Box 2705,Bangladesh

Mr. Salahddin Ahmed

11. Japan Bank for International Cooperation The Pan Pacific Sonargaon HotelExtension Building, RM #351-355107,Kazi Nazrul Islam Avenue Dhaka-1215

Mr. Yasunori Onishi

- lBt Field Survey -5 -

1st Field Survey

No. Date Company Name/Address N ame/Position

12. 2000/11/21 LP-Gas LimitedHouse #386 Road #28, New D.O.H.S. MohakhaliDhaka-1206

Mr. Md. Mustaqun Khan,General ManagerMr. A.K.M. Zahirul Kabir, ManagerMr. Md.Mosharraf Hossain, Project EngineerMr. KaziSuzanur Rahman, Engineer

13. Gas Transmission Company Ltd.House #23, Road #3, Sector #3, UttaraDhaka-1230

Mr. Kh. A.Saleque, General ManagerMr. Sanowar HossainChowdhury

14. Ministry of Environment and Forest Programme Management Unit, STEPDept, of Environmentl"t floor, New Bldg.)E/16 Agargaon, Sher-e-Bangla NagarDhaka-1207, Bangladesh

Ph D Mahfuzul Haque Programme Coordinator

Ph.D Mizan R. KhanPolicy Specialist

15. 2000/11/22 RP Gas Company Limited102 Kazi Nazrul Islam AvenueBSEC Bhaban (8th & 9th Floor)Karwan Bazar C/A, Dhaka-1215 Bangladesh

Mr. Abdul Khaleque Khan, Deputy General ManagerMr. Md. Nowshad azam,ManagerMr. Md. Zahidul Islam,Chemical Engineer (KTL LPG Plant)

16. Petrobanngla Mr. Md. Monwar Hossain, General Manager, Production & Marketing DivisionMr. Md. Abdus Sultan, Asst. Manager

17. Petrobanngla Mr. Quazi S. Rahman, General Manager, Reservoir Study Cell

18. The World Bank3A, ParibaghG.P.O. Box 97, Dhaka-1000

Mr. A.S.M. Bashirul HuqSenior Energy SpecialistEnergy & Infrastructure Team

19. United Nations Development Programme (UNDP)UN Office, IDB BhabanE/8-A, Begum Rokeya SharaniSher-e-Bangla Nagar, Dhaka-1207Bangladesh

Ms. Farhana SultanaProgramme Officer

20. Ministry of Environment and Forest, Department of EnvironmentE-16, Agargaon, Dhaka-1217 Bangladesh

M. Abdus SobhanDeputy Director (Technical)

21. 2000/11/23 Bangladesh Petroleum CorporationHBFC Buileing,1/D Agrabad C/A, Chittagong-4100,Bangradesh

Mr. Mizanur RahmanGeneral ManagerMarketing & Distribution Division


1st Field Survey

No. Date Company Name/Address N ame / Position

22. 2000/11/24 Gas Transmission Company Ltd.House #23, Road #3, Sector #3, Uttara,Dhaka-1230

Mr. Kh. A.Saleque, General Manager

23. 2000/11/25 (Origin) Eastern Refinery Limited, GM Mr. Kamaluddin Ahmea

24. 2000/11/26 Eastern Refinery LimitedP/O/Box No.35, Chittagong, Bangladesh

Mr. D A. Raquib Choudhury General Manager

25. Eastern Refinery LimitedP/O/Box No.35, Chittagong, Bangladesh

Mr. A. Wadud Khan

26. LP Gas LimitedNorth Patenga, Chittagong-4204 Bangladesh

Mr. MD. Fazlur Rahman Khan Senior Engineer (O&M)

27. Bangladesh Petroleum CorporationHBFC Buileing,1/D Agrabad C/A, Chittagong-4100,Bangradesh

Mr. Mizanur RahmanGeneral ManagerMarketing & Distribution Division

28. Bangladesh Petroleum Corporation Mr. Md. Jamal UddinManager (Commercial & Operations)

29. Bangladesh Petroleum Corporation Mr. A.K.M. Shahjahan Moll ah General Manager (Accounts)

30. Sylhet Gas Fields LimitedDhaka Liaison Office

Mr. Raihanul AbedinManaging Director

31. 2000/11/27 RPGCL Mr. Abdul Khaleque Khan, General Manager (NGL)Mr. Md. Nowshad Azam,Manager (CNG)

32. Petrobangla Mr. Emdadul HaqueSr. General Manager/Secretary

33. Petrobangla Mr. MD. Mosharraf Hossain Chairman

34. 2000/11/28 Asian Development BankBangladesh Resident MissionBSL Office Complex, 2nd Floor (Sheraton Annex)1 Minto Rd., Dhaka Bangladesh

Mr. Shamsuddin AhmedHead, Energy

35. IUCN, The World Conservation Union House-3A, Road-15 (New)Dhanmondi, Dhaka-1209 Bangladesh

Ph D Ainun NishatCountry Representative

36. IUCN, The World Conservation Union Mr. Mostak AhmadAssistant Programme Officer

37. Board of Investment Mr. M. Jalalil HaiDeputy Director (Investment Promotion)

38. Board of Investment Mr. Mitsuo Otsuki (JICA) Investment Advisor


1st Field Survey

No. Date Company Name/Address N ame/'Position

39. ERD Mr. Shinichiro OmoteEconomic Cooperation Advisor (from JICA)

40. ERD Mr. Yoshikatsu Nakamura (from JICA)Economic DevelopmentPlanning Advisor

41. Unocal Bangladesh, Ltd.House #1, Upokhanto Abashik El aka, Off Shahjalal Uposhahar, Sylhet, Bangladesh

Mr. Shabbir Hossain, Senior Project Engineer

42. Sylhet Gas Fields Limited Mr. Abm Nazmul Hasan,Deputy General Manager, Kailashtilla Gas Field

43. 2000/11/29 Sylhet Gas Fields Limited Mr. Liaquat Ali Khan, Deputy General Manager, Beanibazar Gas Filed

44. United Enterprises & Co., Ltd. Mr. K.M.A. ShaminDerector

45. Summit United Petroleum Co., Ltd Mr. M. Hafizur RahmanProject Director

46. 2000/11/30 Petrobangla Mr. Ahmed Manirul Islam ManagerInvestigation & Study ProjectDiv.

47. RPGCL Mr. Maqbul MurshedDeputy General Manager (Accounting)


Second Field Survey ReportFeasibility Study on Ashuganj NGL Fractionation Plant JOE Project No.324-30-001-01

2nd Field Survey

January 15, 2001


By: Takada


(Dhaka)

Survey Period: January 6, 2001 to January 13, 2001

Survey Member: JOE - Hiroshi Takada


The first field survey was carried out during the period from November 17th to

December 2nd 2000, to collect the necessary information, data and advices required

in carrying out the study. The study was commenced based on these collected

information, data and advices in Japan. However, it was recognized during the

study process that additional information and confirmation of design condition,

etc. was required by counter part that a follow-up field investigation was

necessary. Thus a second field investigation was carried out from January 6,

2001 to January 13, 2001 to collect additional information necessary for the

execution of the study. Subsequently, CSL was engaged as the local agent via

Tbmen to support the field survey.

The third field survey (presentation and forum) was held middle of March

2000.

Petrobangla was responsible for coordination work of the Bangladesh side

attendee in joint forum.


(1) Petrobangla: Investigation & Study Project Div.

(2) Sylhet Gas Fields Limited (SGFL): Dhaka

(3) Gas Transmission Company (GTCL): Dhaka

(4) World Bank (WB)

- 2nd Field Survey -1 -

2nd Field Survey


Month Day Week Activity Stay at Remarks

1 6 Sat. Narita/Bangkok Bangkok

1 7 Sun.Bangkok /Dhaka

Meeting with WB and received dataDhaka

1 8 Mon. Meeting with Petrobangla Dhaka

1 9 Tue. Meeting with SGFL Dhaka

1 10 Wed. Meting with SGFL and received data Dhaka

1 11 Thu. Meeting with Petrobangla and GTCL Dhaka

1 12 Fri. Dhaka/Bangkok In flight

1 13 Sat. B angkok/N arita

- 2nd Field Survey -2 -

Third Field Survey ReportFeasibility Study on Ashuganj NGL Fractionation Plant JOE Project No. 324-30-001-01

3rd Field Survey

March 26, 2001


By: Takada, Ikuta


(Dhaka)

Survey Period: March 17, 2001 to March 23, 2001

Survey Member: JOE - Hiroshi Takada, Ryoji Ikuta

TOMEN - Hirotaka Itoh


Both the process engineer in charge and the environment engineer in charge,

who originally form the business trip delegation, were cancelled due to the

cold. Therefore, a reorganization was necessary to take charge of the task at

field suddenly voided by the above business trip member. It was not possible

to fix a schedule immediately in front of the above reason and the usual

shortest route (via Bangkok) didn't come off because the general passenger at

the concerned airway was crowded that the trip taken was via Singapore

route.

The main purpose of the 3rd field survey is to present the study result and

discuss the project promotion to RPGCL which is the main constituent of the

implementation body of the Bangladesh side and Petrobangla which is the

mother public corporation. A presentation and a forum were held for about 2.5

hours on March 19, 2001 at Petrobangla conference room with 30 attendee,

exceeding the 21 formal invitations from the Petrobangla side.

JOE explained the background, methodology, the contents of analysis and

evaluation and conclusion, etc. of the study. An intensive discussion was held

between JOE and Bangladesh side related to the above subjects. After the

presentation and forum, JOE carried out information collection to define the

future scope of work for the project implementation and promotion.

- 3rd Field Survey -1 -

3rd Field Survey

2. Presentation and forum attendance

Refer to attendance list as attached


(1) Petrobangla: Investigation & Study Project div. x Reservoir Study Cell

(2) Rupantarita Prakritik Gas Company Limited (RPGCL): Dhaka

(3) Gas Transmission Company (GTCL): Dhaka

(4) Bangladesh Petroleum Institute (BPI): Dhaka


Month Day Week Activity Stay at Remarks

3 17 Sat. Narita/Singapore/Dhaka Dhaka

3 18 Sun. Meeting with Petrobangla Dhaka

3 19 Mon.Presentation and forum

(At: Petrobangla)Dhaka

3 20 Tue.Meeting with Petrobangla, RPGCL

and JBIGDhaka

3 21 Wed. Meeting with BPI and GTCL Dhaka

3 22 Thu.Meeting with Petrobangla

Dhaka/SingaporeIn flight

3 23 Fri. Singapore/Narita

- 3rd Field Survey - 2 -

3rd Field Survey

List of Attendees


Date: March 19, 2001 10:30 - 12:30

Place: Petrobangla conference room

No. Name Company Name /Position

1. A.S.M. Waliulah Director (Planning) Petrobangla

2. S.R. Osman Director (Finance), Petrobangla

3. Mohammad Ehsanullah Director (Operation), Petrobangla

4. Eng. Raihanul Abedin Sr. General Manager, Petrobangla, Planning

5. Muhammad ImaduddinGeneral Manager (Investigation Studies),

Petrobangla

6. Abdul Khaleque KhanProject Manager, Ashuganj NGL-Project,

RPGL

7. Engr. M. A. Based General Manager (Operations), BGFCL

8. Engr. Q. S. RahmanGeneral Manager (Reservoir Studies Cell),

Petrobangla

9. Engr. Khurshid Alam General Manager (NGL/LPG), SGFL

10. Syed Haider Ah General Manager (P.C), Petrobangla

11. Md. Mahbubur Rahman General Manager (PND), GTCL

12. Md. Shafiqur Rahman Deputy General Manager (PI.), Petrobangla

13. M.A. Aziz Khan General Manager, Production & Marketing

14. M.A. Mann an Managing Director, Incharge, RPGCL

15. A.KM. Shafiqur Rahman DGM (ESD), Petrobangla


3rd Field Survey

No. Name Company Name /Position

16. Aziz Ahmed RPGCL Petrobangla

17. Mostafa Kamal DGM, BGFCL

18. Mahbub Sarwar Manager (Plan), Petrobangla

19. Golam Mustafa Talukdar General Manager, Petrobangla

20. Pravanjan Biswas Deputy Manager, Petrobangla

21. Ahmed Mauinul Islam Manager, I & S, Petrobangla


Any part or a whole of the report shall not be disclosed without

prior consent of Internal Cooperation Center, NEDO

Phone 0 3 (3987) 9466

Fax 03 (3987 ) 5 103

Feasibility study on Ashuganj NGL Fractionation Plant

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