Myanmar-Bangladesh Energy Crisis

[News Source: AFP,6Nov, 2008]

Dhaka, (AFP)-A simmering dispute between Bangladesh and neighbouring Myanmar in a hydrocarbon-rich stretch of the Bay of Bengal has highlighted Dhaka's desperate plight over dwindling gas supplies, say analysts.

Bangladesh this week took the unusual step of deploying four naval ships to the disputed waters -- claimed by each nation as their own -- after its southeastern neighbour began gas exploration activities there.

Dhaka says it will take "all possible measures" to protect the zone, about 50 kilometres (30 miles) south of Bangladesh's Saint Martin Island.

The military-backed interim government has meanwhile sought to resolve the dispute diplomatically, dispatching its foreign secretary to Myanmar to hold crisis talks.

A senior official from Myanmar's military government said they were open to discussions, but insisted that oil and gas companies were operating inside their territory and far away from the disputed sea boundary.

Myanmar also insisted that the United States was involved and stirring up trouble -- an accusation denied by Washington.

Regardless of what sparked the face-off, experts say Bangladesh has taken an unusually strong stance, especially towards a country it has generally enjoyed friendly relations with.

"There's a chance we might find gas in the Bay of Bengal. India and Myanmar have already discovered gas there so it's crucial for Bangladesh to assert its territory. A lot is at stake," said energy expert Nurul Islam, from the Bangladesh University of Engineering and Technology.

Bangladesh has been facing an acute shortage of gas in recent months with demand outstripping supply by 15 percent thanks to its booming manufacturing sector.

The government has told hundreds of factories they will have to wait until 2011 for new supplies, as years of neglect over exploration have fast depleted gas reserves.

To overcome the crunch, the emergency government earlier this year divided its sea territory into 28 blocks and invited bids from international oil companies for exploration contracts.

Myanmar protested the move, although Bangladeshi officials have said they refrained from awarding contracts for blocks lying in disputed waters.

Security expert Imtiaz Ahmed of Dhaka University said Bangladesh's actions this week were aimed at deterring foreign companies who had been awarded contracts by Myanmar to search for gas in the region.

"The government is trying to send a signal to foreign oil companies and the international community that it would take any drillings in the disputed blocks very seriously," Ahmed said.

"Under international laws, Myanmar cannot drill in disputed waters, which have not been demarcated yet."

Ahmed said all seismic surveys showed huge gas reserves in the Bay of Bengal, which would ensure Bangladesh's energy security for decades.

"It's a matter of our future. We may not be rich now but our economy is growing fast. Soon enough we'll have the capacity to drill in deep sea waters," he said.