India offers more diesel to Bangladesh

NEW DELHI, JUNE 1 . India has offered to double the sale of diesel to Bangladesh even as Dhaka refrained from making any commitment on selling gas to New Delhi. India has offered 60,000 tonnes of diesel a month from next year to meet Bangladesh's 2.3 million tonnes of petroleum product shortfall.

The offer was made at a meeting here today between the Petroleum Minister, Mani Shankar Aiyar, and the visiting Bangladesh Foreign Minister, Morshed Khan. "We are looking at the potential for larger cooperation [with India] as our requirement [of diesel] is going up. I will leave it to the officials to discuss import contract," Mr. Khan told presspersons after the meeting.

The Indian Oil Corporation is supplying 2,30,000 tonnes of diesel to Bangladesh Petroleum Corporation during April-December this year. New Delhi has offered to supply 0.7 million tonnes diesel a year on a 5-year contract beginning 2005.

Mr. Khan, however, made no commitment on exporting its vast natural gas reserves to India. "If we have exportable surplus, if Bangladesh [ever] exports natural gas, India is the natural choice because of the proximity," he said.

Unocal, the U.S. energy firm which had proposed exporting gas to India from its Bibiyana field in north Bangladesh through a pipeline, was forced to redraw its plans as Dhaka refused to allow exports though such a scheme would provide hard cash up to $ 70 millions for development plus an estimated $ 3.5 billions over 20 years. The company now plans to supply 200 million cubic feet a day to the Bangladesh domestic market by 2006. Bibiyana, with its estimated 5.5 trillion cubic feet of gas reserves, does not produce any gas at present.

Mr. Aiyar said: "they [Bangladesh] have to decide if they have exportable surplus. Whenever they reach such a decision, they will have no objection in exporting gas to India. So far, Bangladesh is not convinced."

Estimates suggest that Bangladesh would need around 1,400 million cubic feet a day to 1,500 million cubic feet a day of gas by 2006, compared to its current consumption of 1,269 million cubic feet a day. Mr. Aiyar also raised the issue of using Bangladesh territory as the transit route for transporting India's share of gas in the gigantic A-1 field in offshore Myanmar. To this, Mr. Khan said Dhaka had no objections if the pipeline was constructed on mutual beneficiary terms. Oil industry sources interpret this to mean that Bangladesh was keen on levying a transit fee which would make the Myanmar gas very expensive for the Indian markets.