A Study on “Accounting Systems of Petrobangla”

1. Introduction

BBA program of Dhaka University, department of accounting and information system is Organized and tailored to provide the students with the conceptual, theoretical and practical tools of analysis. Special stresses are given on theory and practice them under an organization.

Therefore as an internee I have completed my practice session and prepared this required report Based on investigations carried out by me in PETROBANGLA. The main vision of PETROBANGLA is to provide Energy for the sustainable development growth and maintain Energy security of the country. Bangladesh oil, gas and mineral corporation (PETROBANGLA) was created through PO# 27 on March 26, 1972.Since 1972, this corporation is performing its Activities with credit.

2. OBJECTIVES OF THE REPORT

The basic focus of the report is to explain the accounting system of PETROBANGLA and the different problem of this system and some recommendation for those problems

GENERAL OBJECTIVES

• To gain practical job experiences and view the application of theoretical knowledge in the real life.

• To further expand my knowledge, improve my skills and build on my work experiences.

• To ultimately develop and advance my career.

REPORT TOPICS OBJECTIVES

• To know the accounting system of PETROBANGLA.

• To know all the sub-division of accounting division of PETROBANGLA.

• To identify the problems of its accounting system.

• To suggest ways of improving the present procedures of accounting systems.

3. SCOPE OF THE STUDY

This report will cover all the accounting systems of only PETROBANGLA but not its subordinates companies. Over the years, the activities of PETROBANGLA has expanded and diversified to a great extent. To manage these activities, PETROBANGLA has created specialized companies to perform specific operations. Currently, there are eleven companies operating under PETROBANGLA, dealing in oil and gas exploration, transmission, distribution, Conversion as well as development and marketing of coal and hard rock. Accounting section of PETROBANGLA is divided into 8 sub-sections. They are 1. Management accounting section 2. Fund accounts section

3. Provident fund section 4. Pension Section 5. Payroll section 6. Bill Section 7. Insurance section 8. General section. This study will explain how those sub-sections are Maintaining their accounts and how general section accounts is merging all the activities of others sub-sections. This report is written from practical work experiences and consulting with the related division officers.

4. METHODOLOGY

The internship report generally starts with visits and observation. However, in respective areas of the study different methods can be used where necessary. No single method is method is appropriate for the report. This is a cost study both primary & secondary sources of data are used to complete study. These two sources are explained below_____________

1.4.1 PRIMARY SOURCES

Among the primary sources the main sources are-

• Interview and conversation with respected personnel of PETROBANGLA. • Officials records & documents of PETROBANGLA • Practical work experiences with different section of PETROBANGLA especially accounts section.

1.4.2 SECONDARY SOURCES

Among the secondary sources the main sources are-

• Annual report-2007 of PETROBANGLA.

• Journals & relevant books. 1.5 LIMITATIONS OF THE STUDY

• Lack of comprehension of the respondents was the major problem that created much confusion regarding verification of conceptual question.

• Sufficient books and publication & journals were not available.

• Insufficiency of necessary information & data.

• Huge mismanagement in this corporation that’s why collecting information is very tough.

• Most of the employees are not much cooperative as expected.

• Rush hours and business was another reason that acts as an obstacle while gathering data.

• Confidentiality of data was another important barrier that was faced during the conduct of this study. Every organization has their own secrecy that is not revealed to others. While collecting data on income statement, balance sheet, cash flow statement of PETROBANGLA for the year 2008, the personnel did not disclose enough information for the sake of confidentiality of the organization.

1.6 ORIGIN OF THE REPORT

The BBA internship program is required course for the students who are graduating from the Dhaka University, Department of Accounting & information systems. It is a practical course with duration of 12 weeks. Students who have completed all the required courses are eligible for this course.

In the internship program, the author was attached to a host organization Bangladesh oil, gas and mineral corporation (PETROBANGLA) for 12 weeks. During this period author learned how the corporation works with the help of the external supervisor. The internal supervisor assigned the project to the author. The report on “the accounting systems of PETROBANGLA” is prepared by the author and finally, submitted to the internal supervisor on March 14, 2009. The author not only depicts the factors but also recommend for solving the problems to make the project work more viable and worthy.

CHAPTER-TWO

PETROBANGLA AND ITS HISTORY

2.1 THE ORDINANCE

Bangladesh Mineral Oil & Gas Corporation (BMOGC) was created through the Presidential order #27 on March 26, 1972. The minerals operation of the corporation was segregated and vested with a new organization, Bangladesh Mineral Development Corporation (BMEDC), on 27 September 1972, through the PO # 120. The reconstituted Bangladesh Oil & Gas Corporation (BOGC) was short named PETROBANGLA through the ordinance # 15 of 22 August, 1974. On 13 November 1976, through the ordinance #88, the importation, refining and marketing of crude and petroleum products and vested with newly formed Bangladesh Petroleum Corporation (BPC).

BOGC and BMEDC were merged into a single entity, Bangladesh Oil, Gas & Minerals Corporation (BOGMC), by the Ordinance # 21 of 11 April 1985. In a partial modification of the Ordinance by the Law 11 of February 1989, the corporation was short named Petrobangla and given the authority to hold the shares of the companies dealing in oil, gas & minerals exploration and development.

2. A SHORT HISTORY OF PETROBANGLA

Initial scattered exploration effort for oil and gas was undertaken by private ventures. The search of oil and gas in the area constituting Bangladesh began in the later part of the 19th century through some isolated geological mapping. The first serious attempt to find oil and gas was undertaken in Sitakund in 1908 by the Indian Petroleum Prospecting Company, 18 years after the first oil discovery in Digboi, Assam. During 1923-31 Burmah Oil Company (BOC) drilled two shallow wells in Patharia. The wells were abandoned though there was a reported occurrence of oil. A total of 6 exploratory wells were drilled, there was however no discovery and the Second World War disrupted further activity.

The promulgation of Pakistan Petroleum Act in 1948 introduced formal activity and infused interest of international oil companies in oil and gas exploration. The Standard Vacuum Oil Company (STANVAC) of USA, Pakistan Petroleum Ltd. (PPL) - a Burmah Oil Company affiliate and Pakistan Shell Oil Company (PSOC) took up concessions during early fifties and carried out exploration till the end of sixties. These operations saw the drilling of 16 exploration wells including the first offshore well and resulted in the discovery of 7 gas fields.

During this time Oil and Gas Development Corporation (OGDC) was established as the first public sector national organization in 1961 and the root of exploration for oil and gas were firmly set in the country. OGDC started to carriy out geological and geophysical survey including gravity, magnetic and seismic, and drilled wells which soon saw success.

After the liberation of Bangladesh, exploration activities gathered pace both by the national and international companies. The part of OGDC that was in operation in Bangladesh was reorganized as Bangladesh Mineral Oil and Gas Corporation (Petrobangla) continued its exploration efforts while the Bangladesh Petroleum Act was enacted in 1974 to facilitate international participation under PSC.

The offshore area of Bangladesh was divided in to 6 blocks, which were taken up by Ashland, ARCO, BODC (Japex), Union Oil, Canadian Superior Oil and Ina Naftaplin under production sharing contract. This phase of PSC ended with relinquishments by 1978. Since 1972 the operational mandate of Petrobangla have undergone modification several times. In 1974 oil import, refining and marketing was segregated under Bangladesh Petroleum Corporation, while the mineral operation, which was separate since 1972, was merged with oil and gas operation in 1985.

Presently Bangladesh Oil Gas and Minerals Corporation short named Petrobangla operates oil and gas exploration, development, transmission, distribution and conversion together with development and marketing of minerals.

The logo of Petrobangla signifies its primary business of oil and gas related operations. The blue and the red segments signifies the energy emanation from gas and oil, while the overall circle signifies the integration of the whole business. The stylized letters P and B signifies Petrobangla.

3. PETROBANGLA & ITS CONSTITUENT COMPANIES

Over the years, the activities of PETROBANGLA has expanded and diversified to a great extent. To manage these activities, PETROBANGLA has created specialized companies to perform specific operations. Currently, there are eleven companies operating under PETROBANGLA, dealing in oil and gas exploration, production , transmission, distribution, conversion as well as development and marketing of coal and hard rock.

1. EXPLORATION AND PRODUCTION COMPANIES

BANGLADESH PETROLEUM EXPLORATION & PRODUCTION COMPANY LIMITED (BAPEX)

Shah Jalal Tower 80/ A-B, Shiddheshwari Circular Road, DHAKA 1217, BANGLADESH

MUHAMMAD IMADUDDIN MANAGING DIRECTOR

Phone:880 2 9345255 Fax:880 2 9355704 E-mail : [email protected] Website : www.bapex.com.bd

BAPEX was formed as a company to conduct exploration for oil and gas in the country, by separating the former exploration directorate of Petrobangla. The company has the capability of conducting seismic survey and drilling using its own manpower and equipment. The company has also its laboratory and seismic data processing facilities.

So far BAPEX has discovered eight gas fields. Since 29th November, 2000 BAPEX is operating as an Exploration & Production Company and owns the Shahbazpur, Saldanadi, Fenchuganj, Kamta, Srikail, Semutang, Begumganj and Feni gas fields.

Currently BAPEX is going ahead with the drilling at Habiganj gas field of Habiganj#11 under the contract with BGFCL. It also has completed significant seismic operations for Tullow, the operator of Block 9. BAPEX also provides seismic survey support to sister companies and recently performed 2D high resolution seismic survey at Srikail and Mobarakpur. During the fiscal year 2007-08 BAPEX has produced a total of 307.853 mmcm of gas.

SYLHET GAS FIELDS LIMITED (SGFL)

Panichora Sylhet, BANGLADESH

MD YOUSUF ALI TALUKDER MANAGING DIRECTOR

Phone: 88 - 00821 - 761735 Fax : 88 - 00821 – 761739 88 - 02 – 8152577 (Dhaka) E-mail:[email protected] Website:www.sgfl.org.bd

SGFL was originally owned by Burmah Oil Company. The company was abandoned by BOC after liberation of Bangladesh and was taken over by the government. At present the company has under his umbrella 5 gas fields namely Haripur, Kailashtila, Rashidpur, Beanibazar and Chatak with 15 producing wells. It is the second largest gas producer in the country. During the fiscal year 2007-08, SGFL produced 61.49 bcf of gas from its 15 producing wells the average daily gas production was 170.82 mmcfd.

SGFL also processes its own gas before supplying it to Transmission companies. The SGFL operated gas fields contain gas that varies from moderately wet to very wet category, so that the SGFL process system includes a number of different types of process plants. SGFL currently operates the only Mole Sieve Turbo Expander in the country to recover NGL from its Kailashtila field.

SGFL also have a small scate refining units to process the gas derived condensate to produce value added gasoline and diesel. BANGLADESH GAS FIELDS COMPANY LIMITED (BGFCL)

Court Road, Brahmanbaria BANGLADESH

MD. NURUL ISLAM MANAGING DIRECTOR (Current Charge)

Phone: 88 - 00851 - 53856 Fax : 88 - 00851 - 53856(H.O.) 88 - 028753243(Dhaka) E-mail :[email protected] Website :www.bgfcl.org.bd

BGFCL started originally as a Pakistan Shell Company in the early sixties operating 6 wells in Titas and Habiganj gas fields. After the liberation of Bangladesh, the government bought out the Shell stake and BGFCL became a fully national company. Today BGFCL is the largest gas production company of the country and operates Titas, Bakhrabad, Habiganj, Meghna and Narshingdi gas fields. Saldanadi field was previously operated by BGFCL but now is under BAPEX, while production from Kamta field has been suspended.

During the fiscal year 2007-08, BGFCL has produced a total of 255.42 bcf of gas from its 31 flowing wells. The average daily gas production was 709.51 mmcfd.

BGFCL processes its own gas before supplying it to Transmission companies. Most of the BGFCL operated gas fields contain basically dry to moderately wet gas so that the BGFCL process system are mostly Silica Gel or Glycol type plants. BGFCL also have small scale refining units to process the gas derived liquids to produce value added gasoline and diesel.

2. TRANSMISSION COMPANIES

GAS TRANSMISSION COMPANY LIMITED (GTCL)

Red Crescent Borak Tower, (Level 4, 5, &6) 71-72 Old Elephant Road, Eskaton, Ramna, Dhaka-1000 BANGLADESH

MD. AMINUR RAHMAN MANAGING DIRECTOR

Phone : 880 2 9362800 Fax : 880 2 9358100 E-mail : [email protected] Website : www.gtcl.org.bd

GTCL was formed as a high-pressure gas transmission company to eventually take over all high-pressure transmission pipelines of the country for a centralized operation. The company started with the operation of the Petrobangla implemented North South pipeline (24 inch, 175 km) stretching from Kailashtila gas field to Ashuganj. Later the company implemented the Ashuganj- Bakhrabad pipeline (30inch, 58.5 km), which completed the interconnection of the national gas grid. GTCL since then have completed the pipeline to western region over the Jamuna Bridge, carrying natural gas to the western parts of the country for the first time.

This pipeline was later extended to Baghabari to feed gas to the power plants of PDB and Westmont. A more recent pipeline of GTCL is the first stage of the Ashuganj –Kailashtila loop, which extends from Ashuganj to Habiganj (30 inch, 54 km).

The second stage of the loop, extending from Habiganj to Rashidpur (30 inch, 28 km) has been completed. The extension of the western region network of a 60 km transmission line from Nalka to Bogra (20 inch, 54km plus 30 inch 6 km) is now operational.

A number of new pipeline and compressor & stations will be build between 2006-2010. These includes compressor stations in Ashuganj, Muchai & Elenga, and Bheramara - Khulna, Bonpara - Rajshahi, Westbank to Nalka, Hatikumrul - Bheramara, Monohordi to East bank of Jamuna Bridge, Ashuganj– Monohardi and Monohardi – Jamuna East Bank pipeline. 3. MARKETING COMPANIES

TITAS.GAS.TRANSMISSION AND.DISTRIBUTION COMPANY.IMITED (TGTDCL)

105 Kazi Nazrul Islam Avenue, Kawran Bazar, Dhaka 1215 BANGLADESH

MD. ABDUL AZIZ KHAN MANAGING DIRECTOR

Phone : 880 2 8111718 Fax : 880 2 8113031 E-mail : [email protected] Website : www.titasgas.org.bd

This is the oldest gas marketing company of the country, with a franchise area extending over the area east of the Jamuna - Padma river system, excluding the Sylhet and Chittagong divisions, but including Brahmanbaria. The company currently operates a network of 11087.54 km pipeline, which includes 613.11 km transmission, 582.76 km distribution and rest feeder mains and service lines and the pipelines made by the customers at their own cost.

At the end of the fiscal year 2007-08, TGTDCL had a customer base of 1359641 among the bulk customers of TGTDCL are 28 power and 4 fertilizer plants. During 2007-08 fiscal years TGTDCL sold 432.39 BCF gas to its customers, of which power and fertilizer plants consumed about 234.28BCF and 78.66 BCF respectively.

JALALABAD GAS TRANSMISSION & DISTRIBUTION SYSTEM LTD. (JGTDSL)

Gas Bhaban, Mendibagh, Sylhet BANGLADESH

MOLLA MD.MOBIRUL HOSSAIN. MANAGING DIRECTOR

Phone:880 0821 712194 Fax:880 0821 716964 E-mail:[email protected] Website :www.jalalbadgas.org.bd

Jalalabad Gas System supplies gas to the customers in its franchise area consisting of the greater Sylhet district. The company currently has a network of 2875.10 km pipeline, including 413.44 km transmission and 1211.78 km distribution lines. At the end of the year 2007-08, JGTDSL had a customer base of 118047 including 4 power and 1 fertilizer plant. Gas sales by JGTDSL during the 2007-08 fiscal year is about 31.14 BCF, the major consumer being power plants, accounting for about 14.53 BCF

BAKHRABAD GAS SYSTEMS LIMITED (BGSL)

Chapapur Comilla BANGLADESH

ENGR. SAIFUL ALAM CHOWDHURY MANAGING DIRECTOR

Phone: 880-081-77411 Fax: 880-081-77199 E-mail : [email protected] Website : www.bgcl.org.bd

The company was originally established as a production and marketing company, with the Bakhrabad gas field as its source. Later, it was transformed in to an exclusive marketing company with the transfer of the Bakhrabad gas field to BGFCL. The company operates in the Chittagong Division area excluding Brahmanbaria. The major trunk line of the company is the 24", 110 km Bakhrabad-Chittagong pipeline.

The network has about 6134.00 km pipelines which includes 67.46 km transmission, 263.74 km distribution and rest feeder mains and service lines. At the end of the fiscal year 2007-08, BGSL had a customer base of 436834. Among the bulk customers of BGSL are 5 power and 3 fertilizer plants. During this 2007-08 fiscal year BGSL sold 99.28BCF gas to its customers, of which power and fertilizer plants consumed about 20.56BCF and 34.11BCF respectively. The non bulk and domestic customer base of BGSL accounted for the rest. PASHCHIMANCHAL GAS COMPANY LTD. (PGCL)

Nalka, Sirajganj BANGLADESH

MD. ALI HOSSAIN MANAGING DIRECTOR (Current Charge)

Phone:880 0751 63820 Fax:880 0751 63820 E-mail:[email protected] Website:www.pgcl.org.bd

This is the newest gas marketing company under Petrobangla, set up with the objective to market gas in the areas west of the Jamuna River. The Company currently has a network of 908.96 km pipeline, including 84.75 km distribution and rest feeder mains and service lines. At the end of the fiscal year 2007-08 PGCL had a customer base of 38607PGCL sold about 21.67BCF gas that year.

4. CNG / LPG COMPANIES

RUPANTARITA PAKRITIK GAS COMPANY LIMITED (R P G C L)

RPGCL BHABAN, Plot 27, Nikunja 2, Joar Sahara, Dhaka 1229

ENGR. SHAFIUL AZAMMANAGING DIRECTOR

Phone:88 - 02 - 8919353 Fax:88 - 02 - 8923948 E-mail:[email protected] Website:www.rpgcl.org.bd

RPGCL was organized as a company to convert vehicles to Compressed Natural Gas (CNG) and to popularize the use of CNG. Later, the company was also given the responsibility of extracting LPG from the wet gas stream, and refines it for bottling and marketing. RPGCL was the pioneer in CNG conversion and recently CNG conversion and retailing business have been opened to private sector and RPGCL is providing more supervisory and advisory roles to the private operators. The company also operates the 5000 tons per year Kailashtila LPG plant and is planning to implement another 110 tons per day NGL fractionation plant at Kailashtila after changing the location from Ashuganj.

5. MINING COMPANIES

BARAPUKURIA COAL MINING COMPANY LIMITED (BCMC)

Chouhati, Parbatipur, Dinajpur, BANGLADESH

KHURSHEDUL HASAN MANAGING DIRECTOR

Phone : 880 05327-299 (SITE), 880 2 8110190(DHK) Fax : 880 2 8118136 E-mail : [email protected] Website : www.bcmcl.org.bd

This is a new company formed to operate the coal mine constructed at Barapukuria in Dinajpur district. This mine has a capacity to produce about 1 million tons of coal per year.

The mine started partial production from 14th April 2002.Commercial production under a Management, Production and Maintenances Services (M&P) Contract commenced on 10th September 2005.Under the M&P Contract, coal extraction from two Long wall Faces 1101 and 1106 have successfully been completed. it produced 87142.840 metric ton coal during 2004-2005 and 77520.820 metric ton during July to December 2005.The produced coal is being delivered to the Barapukuria Coal based Thermal Power Station of PDB. Development works of the next Long wall Coal Face 1109 is underway. After completion of the development works, production from the next Long wall is expected to commence in January 2007.

MADDHAPARA GRANITE MINING COMPANY LIMITED (MGMCL)

Maddhapara, Fulbari, Dinajput, BANGLADESH

MD. FARRUK MANAGING DIRECTOR (Current Charge)

Phone : 880 0521 64974 (SITE) Fax :880 0521 64974 E-mail :[email protected] Website :www.mgmcl.org.bd

This is a new company formed to operate the hard rock mine at Madhapara in Dinajpur district. The mine has the capacity to produce about 1.65 million tons of hard rock per year.

Its trial production started in 1998 and finally commercial production started on 25th May, 2007. Granite mine during development phase are finding good market. During the mine development period, 4, 59,506 metric ton granite was produced from which 3, 93,050 metric ton have been sold. The granite produced is expected to be used mostly as construction material and will substitute import. As a diversification, MGMCL is also studying the market potential and techno-economical feasibility of producing tiles from the colorful granite blocks, as a replacement of equivalent imported tiles.

4. MISSION OF PETROBANGLA

• To enhance exploration and exploitation of natural gas. • To develop coal resource as supplement to natural gas. • To expand the gas network to reach all corners of the country. • To promote CNG and LPG to improve environment.

5. VISION OF PETROBANGLA

• To provide energy for the sustainable growth and maintain energy security of the country. • To provide energy to all areas and all socio economic groups of the country. • To diversify indigenous energy resources.

• To contribute towards environmental conservation of the country.

6. FUNCTIONS OF PETROBANGLA

Bangladesh oil, Gas and mineral corporation (PETROBANGLA), is empowered and entruested to perform:

• Exploration and development of the oil, gas, mineral resouces as per the policies of the government of the people’s republic of bangladesh. •Coordination , plan and supervise the activities of the susbordinate companies. • Overall control and coordination of the production, transmission, and marketing of gas, condensate, oil and mineral resouces produced in the country. • Conduct necessary research required in oil, gas and mineral exploration. • Enter into Production Sharing Contracts(PSC) with international ouil companies for exploration and development of oil and gas and to supervise, monitor and coordinate the activities under the signed PSCs.

• To implement important projects to develop the gas and mineral sector with the annual government fund and assistance’s provided by the friendly countries and international organizations. • Any other functions and responsibilities as directed by the government from time to time. 7. PROJECTS OF PETROBANGLA

There are two kinds of projects in PETROBANGLA, they are as follows________

2.7.1 INVESTM ENT PROJECTS OF PETROBANGLA

• Shabajpure gas field valuation and development project (approved). • Dhaka clean fuel projects (approved). • Operation capability strengthening projects (approved). • Mobarokpure oil/gas well excavation projects (approved). • Muchai and Ashugonj compressor station establishment projects (approved). • Monohardi-dhonua and allenga-east side of JOMUNA BRIDGE -----gas pipe line establishment and compressor establishment projects (approved). • Appraisal of gas field(3-D shyshomik) (titas, bakhrabad, sylhet, koilashtila and roshidpur)

• West of JOMUNA BRIDGE---Nalka, Ishhorde, Varamara etc. gas pipe-line establishment projects (approved). • Bonpara, Rajshahi, gas pipe-line establishment projects (approved). • Gas pipe-line establishment projects of Rajshahi city and its attached purview (approved). • Projects of Abatement of system loss of Titas gas transmission and distribution limited (approved). • Upgradation of data centre of BAPEX projects.

• Chandpur heat-electricity center. • Varamara-Khulna gas pipe-line establishment projects. • Khapashia oil/gas searching projects.

• Bakhrabad-Shindhirgonj gas pipe-line establishment projects. • Shamutang gas field development projects. • Shundolpur oil/gas seeking well excavation projects. • Exploration and production capacity building of BAPEX.

2.7.2 TECHNICAL ASSISTANCE PROJECTS OF PETROBANGLA

• Technical assistance for capacity building of energy and mineral resources division of ministry of power, energy and mineral resources PETROBANGLA and its companies.

• New project-----Technical assistance for preparing the gas sector development projects.

• TA for strengthening planning and management capacity of EMRD and PETROBANGLA group projects. 2.8 ACTIVITIES OF PETROBANGLA

The activities of the PETROBANGLA group encompass the whole spectrum of the gas sector. The companies under PETROBANGLA are involved in each of the stages from the drill bit to burner tips. PETROBANGLA, through its companies, conducts geological and geophysical exploration by its own crew, drills exploration and development wells by its own rig or by hired contractors, processes the raw to gas pipe line specification, transport the processed gas through an increasing network of high-pressure transmission lines and distributes gas to the customers, be it a large power plant or fertilizer factory or a single household. Value added LPG and liquid fuel is extracted from the gas derived NGL and promoting the growing CNG network for vehicle fuel are also its function. Furthermore, extraction of coal and granite are conducted by PETROBANGLA.

2.8.1 EXPLORATION AND PRODUCTION

The search of oil and gas in the area constituting Bangladesh began in the later part of the 19th century through some sporadic geological mapping. The first serious attempt to find oil and gas was undertaken in Sitakund in 1908 by the Indian Petroleum Prospecting Company. During 1923-31 Burmah Oil Company (BOC) drilled two shallow wells in Patharia. The wells were abandoned though there was a reported occurrence of oil. A total of 6 exploratory wells were drilled, the deepest being 1047 meters. There was however no discovery and the Second World War disrupted further activity.

The promulgation of Pakistan Petroleum Act in 1948 infused interest of international oil companies in oil and gas exploration. The Standard Vacuum Oil Company (STANVAC) of USA, Pakistan Petroleum Ltd. (PPL) - a Burmah Oil Company affiliate and Pakistan Shell Oil Company (PSOC) took up concessions during early fifties. STANVAC drilled 3 wells without success. PPL drilled several wells and made the first gas discovery in Haripur in 1955 followed by Chhattak in 1959. PSOC was the most successful company and discovered 5 gas fields. During this time Oil and Gas Development Corporation (OGDC) was established in the national sector in 1961.They drilled wells in Jaldi and Semutang, discovering gas in Semutang in 1970.

After the liberation of Bangladesh, Petrobangla was formed and in 1974 the Bangladesh Petroleum Act was enacted. The offshore area of Bangladesh was divided in to 6 blocks, which were taken up by Ashland, ARCO, BODC (Japex), Union Oil, Canadian Superior Oil and Ina Naftaplin under Production Sharing Contract (PSC). These companies drilled 7 offshore wells resulting in discovery of Kutubdia offshore gas field.

The 1980s saw accelerated exploration activities by Petrobangla, which drilled 12 exploration wells and discovered 7 gas fields. Among these Fenchuganj well remains the deepest drilled well in Bangladesh (4977m). Meanwhile a new milestone was achieved when Petrobangla discovered the first commercial oil pool in Sylhet-7 on December 23, 1986. After formation in 1989, BAPEX has continued exploration for Petrobangla, and drilled 3 exploratory wells discovering gas in Shahbazpur and Saldanadi.

In 1981 Shell Oil Company was awarded a PSC. Shell drilled the Sitapahar and Salbanhat wells which were dry. In 1988 Scimitar Exploration was awarded another PSC. They discovered Jalalabad gas field. IDuring 1994-1997, eight blocks were awarded to six companies under PSC. Again during 2000-2001 four blocks were awarded to four companies. So far 13264 km 2D seismic, 1301 sq.km 3D seismic and 14 exploratory wells have been drilled in those twelve blocks. All these exploratory activities led to discovery of four gas fields namely Moulavibazar, Sangu, Bibiyana and Bangura-Lalmai. Currently all these four fields along with the previously discovered Jalalabad gas fields are in production.

Even though exploration history for oil and gas goes back almost a century, exploration density has remained very low. So far only about 75 exploration wells have been drilled, which resulted in discovery of 25 gas fields of sizes ranging from more than 4 tcf to 25 bcf GIIP. This indicates the extremely low exploration density but high success rate of 1 in three exploration wells.

Of the exploration wells, 17 are in the offshore with two discoveries and the rest 58 are on shore with 23 discoveries. It is of great significance that out of the 58 onshore wells 47exploratory wells were drilled in the eastern margin of the country with the discovery of 22 gas fields.

[pic] 2.8.2 TRANSMISSION

The first gas transmission line of the country was constructed in 1960 to supply gas to a fertilizer plant from the first gas field discovered in 1955. Over the last 40 years this single pipeline has grown in to a major network comprising of about 1832 high pressure transmission line of 8 inch to 30 inch diameter operating at 960 psig, supported by about 1966 km of intermediate pressure pipeline and about 13310 km of service pipelines. Till the year 2000, gas network was limited to the eastern half of the country.

This was due to The massive Jamuna River, which separates the eastern and western part of the country. Since the completion of the almost 9 km long Jamuna Multipurpose bridge, a 30 inch gas pipeline has rode the bridge and reached the western part. A network of pipelines in the western part in now starting to take shape. Some of the major milestones in gas transmission are as follows:

|Commissioning Year |Network Description |Description of Pipelines |Nominal Diameter |Length (Km) | | | | |(inch) | | | 1960 |First Pipeline of the |Haripur To NGFF |8 |43 | | |Country | | | | |1968 |First Pipeline to Dhaka |Titas to Siddhirganj |14 |82 | | | |Power Plant | | | |1982 |First Pipeline to |Bakhrabad to Chittagomg |Bakhrabad to Chittagomg |175 | | |Chittagong | | | | |1992 |Pipeline from Surma Basin|Kailashtila to Ashuganj |24 |188 | |1994 |Pipeline to Jamuna River |Ashuganj to Elenga |24 |124 | |1997 |Integration of Network |Ashuganj - Bakhrabad |30 |59 | | | |Pipeline | | | |2000 |Pipeline Across the |Elenga to Nalka across |24/30 |37 | | |Jamuna |Jamuna | | | |2001 |Pipeline in the West |Nalka to Baghabari Power |20 |36 | | | |Plant | | | |2002/2004 |Integration of Network |Rashidpur to Ashuganj |30 |82 | |2005 |Integration of Network |Nalka to Bogra |30,20 |60 | |2006 | - |Ashuganj to Monohordi |30 |37 | |2006/2007 |Pipeline to Dhaka |Dhanua to Aminbazar |20 |60 |

2.8.3 DISTRIBUTION

PETROBANGLA markets gas to various customers through its marketing companies. There are now four marketing companies operating in their respective franchise areas. The companies are Titas Gas T&D Company Ltd., Bakhrabad Gas System Ltd., and Jalalabad Gas T&D System Ltd. And Pashchimanchal Gas Co. Ltd. The individual details of each company are to be found in the company pages.

The consolidated customer base of Petrobangla companies on November, 2008 were:

| |Power |Fert. |Indus. |Com. |Other |Domestic |Total | |TGTDCL |28 |4 |4291 |10074 |1073 |1374700 |1390170 | |BGSL |5 |3 |1009 |4399 |240 |441098 |446744 | |JGTDSL |5 |1 |47 |1013 |161 |119276 |120503 | |PGCL |4 |- |56 |226 |35 |41295 |41616 | | |42 |8 |5403 |15712 |1509 |1976369 |1999033 |

Source: PB MIS Report November 2008

There are individual tariff for each of the customer type (visit the data base/ marketing).

Source: January, 2009 based on PB MIS Report, November 2008

4. MINING

Mining became part of PETROBANGLA operation in 1985, when the erstwhile Bangladesh Mineral Exploration & Development Corporation was merged with Petrobangla. Till date, major mine able deposits of coal, limestone and granite has been discovered in Bangladesh. These are often at a deeper depth than conventionally exploited elsewhere. However, lack of surface or shallower deposits and overall competitiveness against import has encouraged development of underground mines to exploit such resources.

At present two major mines are operated to extract about 1 million tons of coal and 1.65 million tons of granite respectively from the Barapukuria Coal Mining Company Limited and Maddhapara Granite Mining Company Ltd.

A) THE SALIENT FEATURES OF BARAPUKURIA COAL MINE :

|Location |Village_Chowhati, Police Station Parbatipur, | | |District-Dinajpur. | |Extent of Coal Deposit |6.68 Square kilometres. | |Depth Of Coal Deposit |118 m-509m. | |Estimated Deposit(Coal) |390 Million Metric Tonne. | |Number of Coal Seams |7. | |Production Seam |6th Seam. | |Thickness of 6th Seam |36 Metre. | |Estimated Deposit in 6th Seam |285 Million Metric Tonne. | |Composition of coal |Moisture-10%, Ash-12.4%, Volatile Matter-29.2%, Fixed | | |Carbon-48.4% and Sulphur-0.53%. | |Calorific value |25.68 MJ/kg or 11040 Btu/lb. | |Rank of coal |High volatile bituminous. | |Uses of coal |100% of the production will be used in a 375 MW coal fired power | | |station. | |Coal extraction method |Multi-slice Longwall. | |Present Selling Price of Coal per Tone |US$ 60.00 to BPDB |

B) THE SALIENT FEATURES OF MADDHAPARA GRANITE MINE:

|Location |Village_Chowhati, Police Station Parbatipur, | | |District-Dinajpur. | |Discovery |1974 | |Mode of Mine entry |By Two vertical shafts(dia-5m) | |Mining Method |Room and Piller Sub-level stoping method | |Total Reserve of Mine |174 million metric tons in the mine area of 1.20 km | |Type of Deposit |Granite,Granodiorite,Gniess,Pegmatite etc. | |Total Extractable Hard Rock |More than 100 million metric tons. | |Life of the Mine |70 Years.

| |Annual Production |1.65Million Metric Tons (5500 metric tons daily). | |Production cost per ton |Tk.666.00(US$11.479) | |Proposed sale price per ton |Tk.986.00(US$17.00) (For Boulder) | | |Tk.1160.0000(US$20.00) (For Crushed Stone) | |Project cost |Tk.102498.31 Lakh(US$ 197.889 million) | | |L.C Tk.33110.06(US$57.086 million) | |Employment opportunity |Directly 766 persons, Indirectly 10,000 persons | |Implementing Contractor |M/S.Korea South-South Co-operation Corporation (NAMNAM), DPR of | | |Korea | |Contract Price |Total US$ 158.48 m. F.C US$134.004 million | | |L.C US$24.844 million | |Type of the Contract |Turn-Key, Fixed price basis | |Supervisory Consultant |M/S. Kopex S.A .Poland | |Start of the Partial Production |October 1998 | |Start of the Commercial Production |May 2007 | |Point Load Strength |24,000.00PSI |

2.8.5 CNG AND LPG

As some of the gas fields of Bangladesh contain high percentage of liquid, optimized extraction of this liquid, especially value added LPG is becoming a growing activity. Popularization of the use of CNG as vehicle fuel is carried out under PETROBANGLA, and over the last few years this has accelerated considerably. Use of CNGV has resulted in significant improvement of the urban air quality. Private sector participates in LPG and CNG is actively encouraged by PETROBANGLA.

2.8.6 PRODUCTION SHARING CONTRACTS

Petrobangla went in for Production Sharing Contracts back in 1974, immediately after its incorporation as the national oil and gas organization. This initial PSC round was limited to the Bangladesh offshore. There were seven blocks of which six were taken by Atlantic Richfield (ARCO), Ashland Oil, Union Oil, Canadian Superior (CSO), BODC – a JNOC/JAPEX venture and INA NAPTHAPALIN of the then Yugoslavia. These companies together conducted more then 31,000 lkm of marine seismic and drilled 7 wells. Union Oil discovered gas in Kutubdia.

The next major round occurred in 1993, after the promulgation of the National Energy Policy. This time the whole territory of the country was divided into 23 blocks and both Offshore and on shore blocks were offered. This round is popularly known as First Bidding round. This time 8 blocks were awarded to Occidental (Blocks 12, 13, 14), Cairn Energy (Blocks 15, 16), Okland/Rexwood (Blocks 17, 18) and United Meridien (Block 22).

A Second Round of PSC award was held in 1997, under which a number of contracts were signed by the year 2001. The major blocks awarded this time were: block 9 to TULLOW/CHEVRON/TEXACO/BAPEX; blocks 5 and 10 to SHELL/CAIRN/BAPEX, and block 7 to UNOCAL/BAPEX, The operators under these PSCs conducted exploration of varying level with major activity concentrated in some blocks. Occidental, Cairn, Okland and Tullow drilled 5, 6, 1 and 3 exploration wells respectively.

The major events under PSC so far was discovery and subsequent development of the offshore SANGU gas field, development of previously discovered JALALABAD gas field, newly discovered Maulavibazar gas field, BIBIYANA gas field and Bangura-Lalmai gas field. In the mean while, some changes in operator’s hip occurred. Blocks 12,13 and 14 were taken over by UNOCAL, major share and operators hip of blocks 15, 16 was taken over by SHELL and again by CAIRN ENERGY and Blocks 17, 18 was taken over by TULLOW which was subsequently taken by Total E.P.

Block 22 saw a number of change in operators hip but hardly any activity. Currently, on completion of the initial exploration period, major relinquishments have been made under the PSCs of Blocks 12, 13, 14, 16 & 18. PSCs for Block 15 & 22 have expired resulting 100% relinquishment of these blocks.

After completion of the development progress, Moulabibazar field is producing 100 mmscf gases per day since March 2005. Production from Sangu and Jalalabad is being maintained at about 60 mmcf and 160 mmscf per day. Recently the development plan of the Bibiyana gas field has been completed and this filed is producing @492 mmscf per day. Gas production from Bangura-Lalmai gas field has also started since May 2006 through long-term testing under on appraisal program. Upon declaring the Bangura-Lalmai as a commercial discovery on December 3, 2006, TULLOW submitted a development plan which is now under implementation.

Meanwhile a Temporary Gas purchase and Sale Agreement (TGPSA) between TULLOW and Petrobangla has been signed to utilize the gas produced from the Bangura-Lalmai field. A commercial GPSA are expected to be singed shortly. Presently Bangora is producing 70 mmcf per day. After completion of process plant up gradation and tie-in of Bangora-3 well, the production level will increase up to 100mmcf per day. TOTAL E & P Bangladesh has been granted a conditional extension up to March 2010 in order to conduct further exploration in Block 17 & 18.

Recently TOTAL has conducted 283 sq.km 3D seismic surveys over Teknaf structure. Based on the result of the data, well location will be proposed. In Blocks-5 & 10 Cairn has conducted 68.7 km and 13000 km seismic survey without drilling any well yet. Recently CAIRN has completed drilling at Magnama and Hatia prospects situated in Block 16. Considering the gas show in both the wells, CAIRN has proposed to come up with appraisal program of the said prospects in near future. In Block-7, Chevron has a plan to drill a well in 2008 after completion of the interpretation of data collected from seismic survey.

2.9 ORGAN GRAM OF THE CORPORATION (ADMIN.)

Planning directorate

Strategic Plan and Resource Mobilization Project Planning Investigation and study project division Planning and monitoring division

Administration directorate

Administration Service Establishment

Finance directorate

Finance division Accounts division Audit division Financial Management Division (FMD)

Operations and Mines directorate Mine Operation Division Engineering Division Implementation Environment & Safety Division (ESD) Production & Marketing Reservoir and Data Management Division

PSC (Production Sharing Contract) directorate

Contract Data Processing Department (DPD) Exploration Division (ED) IOC Procurement and Monitoring

2.9.1 PERSONNEL OF PETROBANGLA

2.10 ACCOUNTABILITY CHAIN OF PETROBANGLA

ACCOUNTABILITY CHAIN

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2.11 OFFICE OF PETROBANGLA (AT A GLANCE)

|Floor |Working Division/Department/Unit | |14th Floor |Vacant | |13th Floor |Western Area Gas | |12th Floor |Vacant | |11th Floor |Vacant | |10th Floor |Vacant | |9th Floor |MIS Dept, Library | |8th Floor |Dev. & Production Division, Contract Division, Exploration Div. | |7th Floor |Information Technology Dept. (IT), Training Dept, Public Relation, Board dept. | |6th Floor |Finance, Accounts, Audit, FMD division | |5th Floor |Operations Div. | |4th Floor |Planning Div.

| |3rd Floor |Chairman, Director (Planning), Director (PSC), Director (Mines & Mineral), Director (Operation) | |2nd Floor |Admin Div, Law Dept, Purchase dept | |1st Floor |Mosque, Seminar Hall | |Ground Floor |Transportation dept, Safety dept, Union Office, Rent dept, IFIC Bank. |

12. OVERALL PERFORMANCE OF THE CORPORATION

2.12.1 EXPLORATION

Exploration for oil and gas remained practically static during the year with nominal exploration conducted by Petrobangla Company BAPEX. "BAPEX was given block 11 for exploration and development and after a preliminary seismic survey has been completed, BAPEX has taken up a major seismic campaign during the dry season of 2005 for evaluating the block. There was no new exploration drilling apart from completion of Srikail well, which is undergoing evaluation.

Exploration activity under the PSCs also remained low key. The initial exploration programme of the on going PSCs was completed before the period under review. Among the new PSCs, block-9 was the most active. After drilling of new wells encountering gas a major appraisal programme including 3D seismic and drilling is currently underway. In block-10, further seismic appraisal is going on.

2.12.2 DEVELOPMENT AND PRODUCTION

To keep pace with continually increasing gas demand, gas production by the three national and three international companies (Cairn, Chevron, Tullow & Niko) maintained the increasing trend of the past years. Total production recorded till 30 June 2006 was 526.86 billion cubic feet (bcf), averaging about 1489.55 mmcfd. Out of this, BGFCL produced 275.04 bcf, SGFL 60.64 bcf, BAPEX 21.58 bcf, Cairn Energy 55.55 bcf, Unocal / Chevron 103.47 bcf, Niko 7.94 bcf and Tullow 2.67 bcf. During the year, Titas gas field retained its customary position as the prime source of gas in the country supplying about 29.38% of the total; gas produced from other major sources were Habiganj 18.86%, Sangu 10.54%,

Rashidpur 5.45%, and Jalalabad 12.34% and Maulavibazar 7.29%. This year's production level was an improvement on last year's level of 486.48 bcf averaging 1395.54 mmcfd. At the end of FY 2005-06, 16 gas fields were in production with 66 flowing wells. These fields are operated by BGFCL (5), SGFL (4), BAPEX (2), Cairn Energy (I), Unocal/ Chevron (2), Niko (1) and Tullow (1). SGFL and BGFCL have taken up new drilling programmes in the Titas, Kailashtila and Habiganj gas fields. BAPEX has initiated development of the Shahbazpur field and drilling of a new development well in Fenchuganj gas field. Unocal/Chevron has developed the Maulavibazar gas field and this field is producing at about 100 mmcf gas per day since March 2005. Cairn has undertaken new drilling at Sangu to sustain production.

Gas production from Bangura- Lalmai gas field has started since May 2006. Bibiyana gas field development has already been completed and this field is producing now 450 mmcf per day. Cairn produced about 55.55 bcf gas and 15,590 bbls condensate from the Sangu field during 2005-06, while Unocal produced 65.05 bcf gas & 609,441 bbls condensate from Jalalabad field and 38.42 bcf gas & 30,898 bbls condensate from Maulavi Bazar field. Niko operating the Feni field in a JV with Bapex produced 7.94 bcf gases during this period. Whereas Tallow produced 2.67 bcf gas during the period 20052006. Production for July - December 2006 were Cairn 22.43 bcf, Unoca158.26 bcf and Niko 2.91 bcf.

2.12.3 PIPELINES

Gas pipeline network continued to expand both in transmission and distribution. In total about 1011.37 km pipe lines including 85.37 km transmission lines, 134.16 km distribution pipelines, 722.27 km feeder main and service lines and 69.57 km others (customer financing) pipe lines of various sizes and grades were completed during the year 2005-2006.

As on June 2006 the gas pipeline network encompassed about 19642.478 km comprising of about 1982.96 km transmission lines, 2078.71 km distribution lines and rest feeder mains and service lines. As on December 2006 the pipe line network increased to about 20031.48 km, which included about 1982.96 km transmission lines, 2078.712 km distribution lines, 14644.65 km feeder mains and service lines and the rest 1325.16 km pipe lines constructed under customer financing.

Among the major transmission lines under progressive construction during this period were the 30-inches diameter 28 kIn Rashidpur to Habiganj pipeline, 20 & 30- inches diameter 60 kIn Nalka to Bogra pipeline, 30- inches 37 kIn Ashuganj to Monohardi pipeline and 20- inches diameter 60 kIn Dhanua (Gazipur) to Aminbazar (Savar) pipeline. Rashidpur - Habiganj and Nalka - Bogra pipeline projects have since been successfully completed by December 2005; and Ashuganj - Monohardi by June 2006.

2.12.4 MARKETING

In keeping with the increased production, gas sales also showed increasing trend. By end of 2005-06 financial years, total sales were 495.55 bcf, of which power sector again consumed the lion's share of 272.15 bcf followed by fertilizer sector 89.08 bcf, domestic sector 57.10 bcf and non-bulk 77.22 bcf. Fertilizer sector consumption regained its normal level with all the plants in operation during the year. Gas sector catered to more than a 1.6 million customers of various categories at the end of December 2006. Most of these customers fall under domestic users; however, power sector remained the largest consumer.

5. FINANCIAL

For the year 2005-06, consolidated provisional operating profit of Petrobangla group companies stood at Taka 4558.59 million. The gross provisional income from sales of gas, gas derived liquids, coal and hard rock stood at Taka 35787.02 million, while gross provisional expense, including SD /VAT, interest, depreciation, overhead, margins etc., and was Taka 31228.43 million. Provisional pre-tax profit which included miscellaneous income totaled Taka 8751.07 million.

After providing for workers participation fund, income tax and dividend paid to the government, the provisional net profit stood at Taka 3619.28 million. During the financial year 2005-06, the Petrobangla group in total provisionally paid to the national exchequer to the tune of Taka 28115.0 million. This amount was made up of Taka 18526.7 million as Supplementary Duty and VAT, Taka 3597.8 million as income tax, Taka 2154.8 million as dividend payment, Taka 383.2 million as customs duty, Taka 3440.0 million as DSL and Taka 12.5 as royalty. In comparison, payment to the national exchequer for the same heads during 2004-05 totaled Taka 27288.8 million.

During 2005-06 fiscal years TGTDCL incurred 6.50% system loss on total sales. Based on the non bulk sales, the main source of unaccounted for gas, this percentage was a staggering 14.91%. In comparison, system loss and unaccounted for gas on total sales was 7.57% and 18.31% on non bulk sales in the previous year. On the other hand, BGSL incurred 2.25% system loss on global basis and 6.53% on non-bulk basis during this year, while the same figures for the previous year were 2.15% and 6.85% respectively. JGTDSL incurred 1.14% system loss on total sales and 3.77% on non-bulk sales during the financial year 2005-2006.

The Company attained 0.60% and 2.15% system gain respectively on total sales and non-bulk sales in the previous year. 2.12.6 HUMAN RESOUCES DEVELOPMENT

As part of the continuing efforts to upgrade its manpower resources to meet the changing need of the industry, Petrobangla and its companies pursue a regular skill development and diversification programme. Apart from conventional training opportunities for job specific subjects, new areas of specialization are being inducted to cater to a new milieu of activity.

In view of a gradual deregulation of certain aspects of gas industry, introduction of private venture as sole or joint collaboration, taxation regime, and tariff mechanism and over all reinvigoration of the sector, regular and frequent participations are ensured by the widest possible selection of personnel in various training, workshops and seminars.

During the fiscal year 2005-06, Petrobangla arranged external training of different duration and for different disciplines for 39 personnel, while 70 participants were sent for attending seminars, workshops and conferences. During the same period, local training was imparted to 70 personnel while 27 participated in seminars, workshops and conferences hosted in the country.

Petrobangla has also undertaken a plan to automatist the management. The Petrobangla website was launched last year, while the head office complex has been brought under LAN with almost all major personnel and sections connected within the network.

2.13 DEVELOPMENT PROGRAMMES FOR THE FISCAL YEAR 2006-2007

The Annual Development Programme (Revised) of Petrobangla for the fiscal year 2006-2007 has an allocation of Taka 1321.6 million, consisting of Taka 879.3 million in local currency and Taka 442.3 million in project aid. The programme includes 18 investment projects and 2 technical assistance projects. In addition, there are 14 more projects financed by the companies involving a total investment of Taka 1397.4 million. A short description of some of the major projects is given below:

Kailashtila NGL Fractionation plant: The project cost involves about Taka 929.0 million and it is expected to be commissioned by the end of June 2007.

Shahbazpur Gas Field Development: Costing about Taka 1628.8 million, the project will bring the well # 1 in production, drill a second well and set-up process plant. This project is expected to be implemented by June 2008. Dhaka Clean Fuel Projects: Three companies, GTCL, TGTDCL and RPGCL are implementing three components of this project. Total financial involvement is about Taka 4993.0 million, supported by an ADB loan. The project includes construction of transmission pipeline, CNG dedicated distribution line, CNG conversion kits and CNG bus. This project is expected to be completed by December 2008

Operation capability Strengthening: Procurement of a deep drilling rig with GOB financing. The projects cost involves Taka 1420.4 million and expected to be completed by February 2008.

Muchai & Ashuganj Compressor Station: Construction of compressor stations to augment transmission capability under ADB loan. This project costs Taka 3040.9 million and it will be implemented by June 2008.

Monohardi to Jamuna east bank pipeline: Construction of 51 km 30 inches transmission line segment under ADB loan. This project Taka 834.62 million and expected to implemented by June 2009.

Jamuna west bank Nalka, Hatikumrul-lshawardi-Veramara pipe line: Costing about Taka 628.7 million this project is expected to be completed by June 2009.

Appraisal of Gas Fields: Conducting 3D seismic survey on 5 gas fields-Titas, Bakhrabad, Sylhet, Kailashtila and Rahsidpur to define gas reserve and field development under ADB loan. This project involves Taka 1457.5 million and to be implemented by June 2010.

Mobarakpur Exploration Well: Conducting seismic and subsequent drilling of an exploration well at Mobarakpur in Pabna under GOB financing. The project cost involves Taka 560.4 million and expected to be completed by June 2009.

Installation of 2nd MSTE plant at Kailashtila Gas Field: Costing of about Taka 1404.4 under self- financing' this project will be implemented by SGFL within June 2008.

Fractionation Plant at Rashidpur : Construction of a 3x1250 bbl/ daily capacity condensate fractionation plant at Rashidpur gas field under SGFL own finance at the cost of Taka1585.6 Million and expected to be completed by June 2009.

2.14 FUTURE PROGRAMMES AND STRATEGIES

The mid-term activity programme of Petrobangla group follows the five year plans drawn by the Government. The action plan takes into account the complementary programmes to be taken up by the private sector, where present. The current five-year plan is the Sixth Five Year Plan covering the period 2002-2007 (SFYP 02-07). PETROBANGLA's programme under the SFYP is primarily driven by the midterm gas demand projection. Gas demand projected for the next few years to 2012 are given in the table below in millions of cubic feet per day.

|FY |Power |Fertilizer |Others |Total | |2007-08 |810 |289 |821 |1900 | |2008-09 |888 |289 |843 |2018 | |2009-10 |1191 |289 |890 |2370 | |2010-11 |1284 |325 |1011 |2620 | |2011-12 |1434 |325 |1088 |2847 |

Production plan has been drawn up to meet this demand by augmenting supply from national gas companies and increasing purchase from the IOCs, supported by increasing stress on exploration. The programme to 2007/08 is expected to include conducting exploration survey of at least 2500 krn and drilling of 6 exploration wells by the public sector and 3700 krn seismic and 19 exploration wells by the private sector under PSc. There would be about 10 new production drilling and 10 works over together with necessary process capacity in the public sector together will 8 productions and 1 work over drilling supported by necessary process plants by PSC contractors.

Transmission pipelines and distribution system will require and expected to achieve major expansion. In addition to the projects already underway, important transmission projects envisaged during this period are Monohardi - Elenga - East Bank of Jamuna Bridge 30"x103 krn; Ashuganj -

Narshingdi-Haripur-Meghnaghat 30" x105 km; Jamuna Bridge West Bank-NalkaBonpara-Ishwardi-Bheramara 30"x140 krn; Bibiyana-Rashidpur 30" /25 krn; and KailashtillaRashidpur 30"x95 krn. Similarly, the distribution network under each of the four franchise areas will be expanded to supply natural gas to new consumers ranging from domestic to industrial and commercial users. As part of the Government's commitment to environment, use of CNG in vehicle will continue to be accelerated.

This business has already been opened to private sector and Petrobangla will provide all out assistance. CNGV operation will focus on converting diesel vehicles and other users. NGL fractionation to recover LPG from gas as an environmental friendly fuel will also be promoted especially new plants to fractionate NGL to value added products by the private sector will be encouraged. .

2.15 PRODUCTION TREND OF PETROBANGLA

Year Production 1990-91172.84 1991-92188.48 1992-93210.98 1993-94223.76 1994-95247.34 1995-96265.51 1996-97260.99 1997-98282.02 1998-99307.48 1999-00332.35 2000-01372.16 2001-02391.53 2005-06526.86

2.16 GROWTH OF CUSTOMER BASE

|YE