Mba Sadiqul

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PROJECT PAPER ON

FORECASTING OF GAS DEMAND AND SYSTEM LOSS IN TITAS GATRANSMISSION AND DISTRIBUTION COMPANY LTD.

Prepared for

Dr. M. Sadiqul Islam

Professor,

Department of Finance

University of Dhaka

Prepared by

Md. Anisur Rahman

ID-20508010

8TH Batch


University of Dhaka

Evening MBA ProgramDepartment of Finance

University of Dhaka

June 5, 2007


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Table of ContentPage

AcknowledgementExecutive Summary

Chapter 1: Introduction

6-91.1 Background and present status of gas sector

61.2 Objectives of the study

91.3 Rationale of the study

91.4 Limitations of the study

9

Chapter 2: Gas sector of Bangladesh10-20

2.1.History of Petrobangla 102.2. Petrobangla and the govt

10

2..3. Short history of gas oil and mineral industry in Bangladesh 10- 11

2.4. Activities of Petrobangla 12-13

2.5Petrobangla companies 14-20

Chapter 3:A brief about Titas Gas Transmission and Distribution Company Limited 21-25

3.1. Marketing and operational performance 21-23

3.2. Development activities24-263.3. Types of gas connection in Titas Gas Transmission and Gistribution Company Limited 27

Chapter 4: Regression and Time Series analysis 30-354.1. Regression analysis 30-31

4.2. Time Series analysis and forecasting 32-35

Chapter 5:Methodology36


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Chapter 6: Findings and analysis of the study.37

Chapter 7: CONCLUSION AND POLICY IMPLICATION

Appendix38-

05 June,2007 Letter of Transmittal

Dr. M. Sadiqul Islam

Professor,


Faculty of Business Studies

University of Dhaka

Dhaka

Subject: Submission of Project Paper on FORECASTING OF GAS DEMAND ANDSYSTEM LOSS IN TITAS GAS TRANSMISSION AND DISTRIBUTION COMPANY LTD AND THE EVENTUAL IMPACT OF

GROWING GAS DEMAND ON RECOVERABLE GAS RESERVE AND CURRENT PRODUCTION LEVEL

Dear Sir,

I am pleased to submit this project paper on the topic FORECASTING OF GAS DEMAND AND SYSTEMLOSS IN TITAS GAS TRANSMISSION AND DISTRIBUTION COMPANY LTD AND THE EVENTUAL IMPACT OF GROWING

GAS DEMAND ON RECOVERABLE GAS RESERVE AND CURRENT PRODUCTION LEVEL. which was assigned for

the complete fulfillment of my EMBAprogram.

Writing this project paper plan has been an extremely challenging and interesting experience.

It helped me to learn more about the real scenario of pharmaceutical business and its

challenges and opportunities.

Ive tried my label best to prepare this report and I do hope that I will be successful in

meeting your expectation. I shall be very glad to furnish with any explanation on this report if

necessary.

Thanking You.


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Sincerely yours,

(Md. Anisur Rahman)Evening MBA ProgramDepartment of Finance ,Unive ID # 20508010

ACKNOWLEDGEMENT

I express my heartiest regards, profound gratitude, deepest sense of appreciation &

indebtedness to my respected project coordinator Dr. M. Sadiqul Islam, Professor,

Department of Finance Faculty of Business Studies, University of Dhaka,for his constant

guidance, active encouragement, keen interest, valuable criticism & inspiration to develop

this report.

I would also like to thank him for providing me sufficient time and scope from his

valuable time by initially providing with an outline and then through-out the making of

this report. He has also encouraged me all the time and guided me continuously up to the

final stage of this report.

I would also like to thank all those people who have taken time off from their valuable

days and spent minutes to help me for preparing this pragmatic report.


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EXECUTIVE SUMMARY

Titas Gas Transmission and Distribution Company Ltd(TGTDCL),a subsidiary company of

Bangladesh Oil, Gas and Mineral corporation(Petrobangla),is a pioneering organization in

natural gas sector. B.Baria, greater Dhaka and Mymensingh districts comprises its franchise

area. Titas gas provides about 72% of the total gas consumed in the country. Titas Gas

supplies gas to a variety of customers such as industry, commercial etc. Natural Gas being

non-renewable energy is limited but valuable resource of Bangladesh. Bangladesh economy

especially the industrialization process largely depends on the smooth supply or natural gas.

Noteworthy that the demand of gas for various categories of customers is on the increase. So

it is important to forecast the demand of gas in the coming years. Not only that it is also

important to analysis the gas reserve scenario, system loss, and production perspective of

natural gas to cater to the requirement of natural gas in the coming years. Thus the objectives

of the study have been set so. It is worth mentioning that system loss is the difference

between the volume of natural gas purchased from producers and the volume of natural gas

supplied to the customers.

Time series analysis, which is based on regression analysis, is an important tool for

forecasting any variable /economic data. Hence to meet the objectives of the study this toolhas been employed to develop a suitable regression model with which to forecast the gas

demand and system loss within Titas Gas T & D Co. Ltd, using relevant secondary data

collected from this company and Petrobangla. Using this model forecasting of gas demand

and system loss for next 15(fifteen) years is made. It is found that forecasted totas gas

demand for the next 15(fifteen) years would be 4730490.243 million cubic feet which is

33.905% of the remaining gas reserve. This suggests that the remaining reserve will cater to

the growing gas demand within Titas franchise area for more than 15(fifteen) years. It may

be up to approximately 45 (forty five) years. And to face this need production of gas is to be

enhanced 29.2265% per year. As to system loss analysis it is found that system loss of the

company is on the decline. It is also found that system loss is not well explained by time

alone. There might be other factor/factors to describe this.


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It is imperative that the policy makers of the gas sector would think well ahead of time to

explore and research for more natural gas resources and to increase the present production

level to conform to the forecasted gas demand with a view to avoiding uncertainties in gas

sector.


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CHAPTER 01

INTRODUCTION

1.1. Background and present status of gas sector:

Bangladesh is a land of some natural resources such as oil, gas, coal, hard rock, white clay,

boulder etc. Bangladesh being the biggest delta in the world, serves as a good reservoir of

Natural Gas. Exploration and production of Natural Gas is undertaken by Bangladesh Gas

Fields Company Limited (BGFCL), Sylhet Gas Fields Limited (SGFL), Bangladesh

Petroleum Exploration and Production Company Limited (BAPEX), Some International Oil

Companies (IOC). They are producing natural gas from 12 fields. The average daily

production of these gas fields in fiscal year 2005-2006 is 1500 MMSCF and yearly

production is 540 BCF (Annual Report of Petrobangla 2005-2006). Gas Transmission Lines

are handled by Gas Transmission Company Limited (GTCL). There are four separate

distribution companies that are engaged in supplying Natural Gas to different types of

customers in different regions. They construct and handle distribution lines and conduct

marketing activities. A company named Rupantarita Prakritik Gas Company Limited

(RPGCL) was organized to convert vehicles to Compressed Natural Gas (CNG) and to

popularize the use of CNG. Barapukuria Coal Mine Company (BCMC) and Madhyapara

Granite Mining Company Limited (MGMCL) are two companies that serve the purpose of

mining of coal and hard rock respectively. A corporate body under the ministry of petroleum

and mineral resources Petrobangla supervises all of the above companies in the country.

Gas consumption arenas are Power plants, Fertilizer factories, Process plants, different types

of Industries, Commercial and Domestic customers etc.

The discovery of large reserve of natural gas has stimulated demand for this clean, cost-

effective energy source, resulting in rising investment and rapid expansion of transmission

and distribution networks. Because of versatile use of natural gas in the industrialization

process ( Natural gas is used as raw materials and environment friendly fuel of high calorific

value) , its demand is increasing day by day. Thus it is necessary to forecast the demand of

natural gas .


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1.2 . Objective of the study:

a.To forecast the demand of gas in various category of gas connection within the Titas

franchise area.

b.To analyze and forecast the system loss that incurs within Titas franchise area in

transmission and distribution of gas.

c.To forecast the relationship between the remaining reserve of gas and the cumulative

forecasted demand of gas after 15(fifteen) years from now.

d.To forecast the growth in production scenario of gas.

1.3. Rationale of the study:

This study may provide the decision makers of the NATURAL GAS sector with the

basis of decision. This may give us an insight into the relationship amongst demand,

supply/production and reserve scenario of natural gas. Natural gas being crucial sector

of Bangladesh, knowledge surrounding this sector may enable us to avoid

uncertainties.

1.4. Limitation of the study: In this study, forecasting of gas demand and system loss is

carried out for Titas Gas T & D Co. Ltd only, which captures 72.52% of the total market

share of Natural Gas. But total forecasted gas demand is compared with total remaining gas

reserve. Analysis has been done based on secondary data.


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CHAPTER 02GAS SECTOR OF BANGLADESH

2.1.History of Petrobangla:Bangladesh Mineral, Oil & Gas Corporation (BMOGC) was created through the Presidential

Order # 27 on 26 March 1972. The Minerals operation of the corporation was segregated and

vested with a new organization, Bangladesh Mineral Exploration and Development

Corporation (BMEDC) though the Presidential Order #120 of 27 September 1972. The

reconstituted Bangladesh Oil & Gas Corporation (BOGC) was short-named Petrobangla

through the Ordinance # 15 of 22 August 1974. Through the repeal Ordinance # LXX of

1974, Oil and Gas Development Corporation was abolished and all its asset and liabilities

was vested to Petrobangla. On 13 November I976, through the Ordinance # 88, the

importation, refining and marketing of crude and petroleum products was vested with the

newly formed Bangladesh Petroleum Corporation (BPC). BOCC and BMEDC were merged

into a single entity, Bangladesh Oil, Gas & Mineral Corporation (BOGMC) by the Ordinance

# 21 of 11 April 1985. In a partial modification of the Ordinance by the Act # 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.

Mandate of Petrobangla:

Bangladesh oil, Gas & Mineral Corporation ( Petrobangla), is empowered and entrusted of

perform:

Exploration and development of the Oil, Gas and Mineral Resources as per the

policies of the Government of the Peoples Republic of Bangladesh.

Coordinate, plan and supervise the activities of the subordinate companies.

Overall control and coordination of the production, transmission and marketing ofgas, condensate, oil and mineral resources produced in the country

Conduct necessary research required in Oil, Gas and Mineral Exploration.

Enter into Production Sharing Contracts (PSC) with International Oil 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 assistances provided by the friendly countries and

international organizations.

Any other functions and responsibilities as directed by the government from time

to time.

2.2.OPETROBANGLA AND THE GOVERNMENT

Petrobangla operates as public sector statutory body under the ordinance of 1985. The Board

of Directors is the policy making and managing body of the Corporation, with members

from various Ministries The Corporation is under the administrative control of the Energy

and Mineral Resources Division the Ministry of Power, Energy and Mineral Resources, The

Corporation have also relationship, through the Ministry of Power, Energy and Mineral

Resources, with Ministry of Finance and Ministry of Planning for its development

programmes. There is also active relationship with numerous functional bodies such as,

National Board of Revenue, Department of Explosives, and Department of Environment for

specific work functions. The activities of the Corporation is reviewed and examined by the

Public Accounts Committee and the Parliamentary Standing Committee on Power, and


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Mineral Resources.

2.3. SHORT HISTORY OF OIL, GAS & MINERAL INDUSTRY IN BANGLADESH

The beginning: up to 1947

The search of oil and gas in the area constituting Bangladesh began in the later part of the19th century through some isolated geological mapping. The first serious attempt to find oil

and gas was undertaken in Staked in 1908 by the Indian Petroleum Prospecting Company, 18

years after the first oil discovery in Digboi, Assam. During 1923-31 Burma Oil Company

(BOC) drilled two shallow wells in Path aria. The wells were abandoned though there was a

reported show 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

activities.

The interim: 1947 to 1971

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) ofUSA, Pakistan Petroleum Ltd. (PPL)-a Burma Oil Company affiliate, and Pakistan Shell Oil

Company (PSOC) took up concessions during early fifties and carried out exploration till the

end of the sixties. STANVAC drilled 3 wells at Hazipur, Bogra and Kuchma in the

northwestern part of the country without success. PPL drilled wells in Haripur; Patharia,

Chhattak, Fenchuganj, Patiya and Lalmai and made the first gas discovery in Haripur in

1955, followed by Chhattak in 1959. PSOC was the most successful company and discovered

the 5 gas fields of Titas, Habiganj, Rashidpur; Kailashtila and Bakhrabad. They also drilled

the first offshore well Coxs bazar-1, which was dry.

During this time Oil and Gas Development Corporation (OGDC) was established as the

national organization in 1961 and the root of exploration for oil and gas were set up in the

country. OGDC carried out geological and geophysical survey including gravity, magnetic

and seismic and drilled wells in Jaldi and Semutang, discovering gas in Semutang in 1970.

The way forward : 1971 onwards

After the independence of Bangladesh, exploration activities by both national and

international companies gathered pace. Bangladesh Oil, Gas and Mineral 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 into 6 blocks, which were taken up by Ashland, ARCO, BODC

(Japex), Union Oil, Canadian Superior Oil and Ina Naftaplin under production sharingcontracts. These companies carried out gravity, magnetic and seismic surveys (about 32000

km) and drilled 7 wells. Of them, only Union Oil Company discovered an offshore gas field

Kutubdia in 1977. This phase of PSC ended with relinquishment of the blocks by the PSC

operators in 1978.

The 1980s saw accelerated exploration activities by Petrobangla, which drilled 12 exploration

wells in Muladi, Begumganj, Singra, Beanibazar; Atgram, Feni, Fenchuganj, Sitakund,

Bogra, Kamta, Marichakandi (Meghna) and Belabo (Narshindi) and discovered 7 gas fields in

Begumganj, Beanibazar, Feni, Fenchuganj, Kamta, Marichakandi (Meghna), and Belabor

(Nearside). Among these, Fenchuganj-2 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. Since 1989, after the formation ofBAPEX as the national exploration company, BAPEX has continued exploration for


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Petrobangla, and drilled 3 exploratory wells discovering gas in Shahbazpur and Saldanadi.

In 1981 Shei1 Oil Company was awarded the Chittagong Hill Tracts for petroleum

exploration under PSC. Shell conducted geological and seismic survey and drilled the

Sitapahar well which was dry, subsequently Shell undertook exploration in the extreme northwest of the country and drilled the first well in the area - the Salbanhat well which was also

dry. In 1988 Schimitar Exploration was awarded another PSC what is now block 13 in Surma

basin. They failed to prove the extent of the oil discovery at Sylhet structure but discovered

the Jalalabad gas field.

Enactment National Energy Policy 1993 and adoption of a model production sharing contract

document together with redefining the whole of Bangladesh territory into 23 exploration

blocks ushered in a new phase of exploration and development of oil and gas in the country.

In the first stage under the new arrangement, 8 blocks were awarded to 4 companies under

PSC. Exploration and development activities in these blocks were rather limited; most of the

blocks were moderately covered by seismic. So far in total 11 exploration wells were drilledand 3 gas fields were discovered in these blocks. These fields are Maulavibazar; Sangu and

Babiyana. Three gas fields: previously discovered Jalalabad, newly discovered offshore

Sangu and Maulavibazar were developed under PSC and are in production. The first 3D

seismic survey of the country took place in Bibiyana during its appraisal. Bibiyana is

expected to come under production by the end of 2006. Another PSC bidding round during

the late nineties culminated in award of 4 more blocks. These were Shell/Cairn/Bapex in

blocks-5 & 10, Unocal/Bapex in block-7and Tullow / Chevron / Bapex in block-9.

Exploration activity in these blocks have only recently commenced. There have been

substantial activity in block 9 only, where apart from seismic survey including 3D seismic, 3

exploration wells have been drilled.

Even though exploration history of oil and gas in Bangladesh goes back almost a century,

exploration density has remained very low. So far only about 69 exploration wells have been

drilled, which resulted in discovery of 25 gas fields of sizes ranging from than 4 tcf to 25 bcf

GIIP. This indicates the extremely low exploration density but high success rate of 1 in 3

exploration wells. Of the exploration wells, 13 are in the offshore with 2 discoveries and the

rests 56 are on shore with 23 discoveries.

Minerals: Petrobangla is also entrusted with mineral development in the country. While the

exploration part of minerals activity falls under the charter of Geological Survey of

Bangladesh (GSB), subsequent development of economic deposits are undertaken byPetrobangla. Mineral activities were part of the erstwhile Bangladesh Mineral Exploration &

Development Corporation (BMEDC) till its merger. Petrobangla is developing two

underground mines, one for coal at Barapukuria and the other for hard rock at Madhya Para,

which are expected to be on full production by January 2007 and December 2006

respectively. Certain other extraction operation, like limestone, white clay and boulder, are

controlled by the govt through the Bureau of Mineral Development (BMD).

2.4.ACTIVITIES OF PETROBANGLA

The activities of the Petrobangla group encompasses the whole spectrum of the gas sector.

The Companies under Peftobangla 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 byhired contractors, processes the raw gas to pipe line specification, transport the processed gas


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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

also conducted by Petrobangla.

Exploration and Production

Exploration and Production Exploration in the public sector is the responsibility of

Petrobangla company, Bangladesh Petroleum Exploration and Production Company Ltd

(BAPEX). BAPEX also undertakes production activities. The major public sector gas produc-

tion companies, however, are Bangladesh Gas Fields Company Ltd. and Syihet Gas Fields

Limited, which together account for about 70% of gas production during FY 2004-05.

Transmission

High pressure bulk transport of gas is carried out by the specialized Petrobangla company,

Gas Transmission Company Limited (GTCL). It is the state monopoly for gas transportcatering to both public sector and private sector gas producers. Transmission system built by

other companies before GTCL was formed is being rationalised by integrating them with the

GTCL system. A modern SCADA system, fully commissioned recently, provides integrated

supervision and monitoring.

Distribution

Marketing gas to the customers ranging from large power and fertilizer plants to small

households and business is the responsibility of four marketing companies under Petrobangla.

These companies, namely Titas Gas T&D Co., Bakhrahad Gas Systems Ltd., Jalalabad Gas

T&D System Ltd. and Pashimanchal Gas Co. Ltd., each have their own marketing franchise

covered by a fairly extensive distribution system Expansion of gas marketing to the western

part of the county is now a major priority.

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 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 participation in LPG and CNG is actively

encouraged by Petrobangla.

Mining

Petrobangla has also a mining interest in the country.As the pioneer in subsurface mining inthe country, Petrobangia has developed the mines at Barapukuria for coal extraction and at

Madhyapara for granite mining.

Production Sharing Contracta (PSC)

A major activity of Petrobangla is administering the PSCs. Under the Patrobangla Ordinance,

Petrobangla administers and supervises the PSCs signed with IOCs. Currently, blocks

awarded under two rounds of PSC are operational. Under the 1993/94 awards blocks 12,13

and 14 were awarded to Occidental, blocks 15 and 16 to Cairn Energy, blocks 17 and 18 to

Redwood/ Okland and block 22 to UMC. The share holding operator of these blocks have

since undergone several changes.

Under these PSCs the respective operators have conducted varying amount of exploration and


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development works. In the blocks 12,13 & 14 a total of 5 exploratory wells were drilled and 2

discoveries were made. There was however a massive blowout in one well resulting in loss of

hydrocarbon and other surface assets. The previously discovered Jalalabad field was

developed and is in production since 1998. In blocks 15 & 16 the operator drilled 6

exploratory wells including 4 offshore wells, resulting in discovery of offshore Sangu field.This field is in production since 1997. In blocks 17 & 18 a single offshore well drilled was

found dry. There was practically no exploration work in block 22. Significant parts or whole

of these blocks are now relinquished as per contract.

Under the second bidding rounds, four blocks have been awarded. Unocal Bangladesh was

awarded block 7, Shell/ Cairn JV was awarded blocks 5 and 10 with a 10% carried stake for

BAPEX, and Tullow,/ Chevron/ Texaco JV was awarded block 9 with a 10% carried stake

for BAPEX. Among these blocks, some seismic survey have been carried out in block 10,

while in block 9 major seismic survey including a 3D survey have been completed followed

by 3 exp1oration wells. An appraisal program is currently underway in block 9 after

encountering significant gas in Bangora-Lalmai.

There has been some restructuring of the holdings in the PSC during the last year. Shell

Bangladesh has handed over their major stake to Cairn Energy, while Chevron Texaco has

transferred their stake in block 9 to Niko Resources. Cairn produced about 47.36 bcf gas and

19,900 bbls condensate from the Sangu field during 2004-05, while Unocal produced 68.88

bcf gas & 663,133 bbls condensate from Jalalabad field and 7.32 bcf gas & 5,511 bbls

condensate from Maulavi Bazar field. Subsequently, all block holdings & operation of

Unocal has been taken over by Chevron as part of their global acquisition of Unocal. Niko is

operating the Feni field in a JV with Bapex produced 6.98 bcf gas during this period.

Production for July to December 2005 were Cairn 29.33 bcf, Unocal 49.21 bcf and Niko 5.10

bcf.

2.5.PETROBANGLA 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.


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2.5.1.Bangladesh Petroleum Exploration and Production Company Limited

(BAPEX)

BAPEX is the lone public sector company conducting exploration for oil and gas in thecountry. It was formed by separating the erstwhile exploration directorate of Petrobangla.

The company has the capability of conducting seismic survey and drilling by using its

own manpower and equipment. The company also has laboratory and computerprocessing facilities. So far BAPEX has discovered-two gas fields, Shahbazpur (1996)

and Saldanadi (1997). Since 1998, BAPEX has been converted to an Exploration and

Production Company and owns Saldanadi, Shahbazpur and Fenchuganj gas fields.BAPEX started drilling the exploration well in Srikail in 2004 and completed drilling in

2005 where gas was encountered. It is now under evaluation. As part of developing the

Shahbazpur and Fenchuganj gas fields, BAPEX has undertake the work over of well no.1

and drilling of well no. 2 of the Shahbazpur gas field under Shahbazpur gas fielddevelopment project. The well no. 3 in Fenchuganj was completed and put on production.

BAPEX had also undertaken the drilling of 2 development wells in Titas gas field on

behalf of BGFCL and completed the drilling of well no 15. It has completed an appraisal

2D survey over Narshingdi field for BGFCL. Under the second bidding rounds BAPEXholds 10% shares in the blocks 5,7,9 and 10. BAPEX also has a joint venture with NIKO

to develop two marginal gas fields. In a major breakthrough for the company, it wasawarded the Block 8 and 11 for exploration and development; as part of the programmed

BAPEX has conducted 252 km geological survey in the block 11 during this year. The

two producing gas fields under BAPEX, Saldanadi and Fenchuganj Gas Field, producedabout 17.47 bcf gas and 8,206 bbls of condensate during 2004-05 (up to end June 2005)

The production of gas and condensate for the period from July to December 2005 were

11.00 bcf and 5,079) bbls respectively.

2.5.2.Bangladesh Gas Fields Company Limited (BGFCL)

BGFCL originated as a Shell subsidiary in early sixties operating on a small scale in Titas

and Habiganj gas fields. After the independence of Bangladesh, the Government bought

out the stake and BGFCL became a national company. Today, BGFCL is the largest gasproduction company of the country and operates Titas, Habiganj, Bakhrabad, Meghna

and Narshingdi gas fields. It also operated Feni and Kamta gas fields prior to suspension

of production from these gas fields.

With the rapid growth of gas consumption in the country, BGFCL has kept up its

relentless effort to ensure uninterrupted gas supply and implements major projects. As

part of the development activities, BGFCL is drilling two development wells in Titas gasfield with its own resources, one of which (Titas 15) was completed during the financial

year. An appraisal seismic programme has been completed by BAPEX on its behalf and

based on the results, a new well be drilled in Narshingdi gas field. Another new well inHabiganj gas field and several walkovers will also be undertaken finaced by the company

itself. A major 3D appraisal seismic programme over Titas and Bakhrabad gas field is

also being processed with ADB assistance.

During the financial year 2004-2005, BGFCL produced 276.32 bcf gas and 453,097 bbls

of gas derived liquids from its 30 flowing wells; this averages about 757.04 million cubic

feet gas per day. This was an improvement on the 265.14 bcf gas produced during the

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previous year when the daily average was about 726 million cubic feet gas per day.

Production for the period from July to December 2005 is 136.38 bcf gas, which indicates

the continuous growth in gas production.

2.5.3.Sylhet Gas Fields Limited (SGFL)

SGFL was originally owned by Burmah Oil Company. The company was abandoned byBOC and after the independence of Bangladesh, taken over by the Government. The

company currently operates Sylhet, Kailashtila, Rashidpur and Beanibazar gas fields, and

is the second largest gas producer in the country. The company is implementing a twowell programme for the Kailashtila field to augment and sustain production level. In

addition new projects have been taken up to install 2nd MSTE plant, a condensate

fractionation plant and a 3D seismic survey.

During the financial year 2004-2005, SGFL produced 62.31 bcf gas and 531,997 bbls of

gas derived liquids from its 14 flowing wells; this averages about 170.7 million cubic feet

gas per day. The previous years production was 71.45 bcf gas and 532,795 bbls of gas

derived liquids when the daily average was about 196 million cubic feel gas per day.Production for the period from July to December 2005 is 31.95 bcf. The decline in

production is attributed to problems in some wells and depletion of pressure.

2.5.4. Gas Transmission Company Limited (GTCL)

Gas Transmission Company Limited (GTCL) was incorporated on 14th December 1993

under the Companys Act with the aim to separate the high-pressure gas transmissionoperation and management from that of gas marketing companies in the country and

eventually form the national gas grid for centralized control.

The company commenced its business with the operation of 175 kilometer 24 inches

diameter North-South gas transmission pipe line and the 6 inches parallel pipe line inorder to mitigate the gas demand /supply to the central and south-eastern region of the

country and to carry condensate to Ashuganj.

Later the company implemented the Ashuganj-Bakhrabad pipeline (30 inches 59 km)which connected the national gas grid. The company has implemented a national gas grid

SCADA for effective and central control. The company also completed construction of a

gas pipe line to the western zone over the Jamuna Bridge, carrying natural gas to thewestern part of the country for the first-time. This pipe line was extended to Baghabari

where gas is supplied to Baghabari power station of PDB and IPP power station of

Westmont. GTCL has taken over physical possession of several transmission pipelines

from marketing companies.The Company has since implemented the Ashuganj-Habiganjstage (30 inches 54 km) of the Ashuganj-Kailashtila loop. The second stage extending

from Habiganj to Rashidpur (30 inches 28 km) has been successfully completed. It has

also completed the 30 inches/20 inches 60 km Nalka-Bogra pipeline during 2004-05.Two other projects : 20 inches 60 km Gazipur-Savar pipeline under Dhaka-Clean Fuel

and 30 inches 37 km Ashuganj-Manohardi pipeline are fast nearing completion. The

Company had under its operation a network of 833.87 km. high pressure pipe lines up toDecember 2005. The Company has transported 7722.32 million meter gas during the FY

2004-05 which is 16.96% higher than the previous year. During this period the Company

has transported 123.239 million liters condensate, which is 9.5% more than the previous

year.

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2.5.5. Titas Gas Transmission and Distribution Company Limited (TGTDCL)

This is the premier gas marketing company of the country,with a franchise area extendingover the east of the Jamuna-Padma river system, excluding the Sylhet and Chittagong

divisions but including Brahmanbaria. By the end of December 2005 the company had

under its operation a network of 9352.81 km pipeline, which included about 612.74 kmtransmission, 509.33 km distribution, 7563.69 feeder mains and service lines and

under customer financing 667.05km. At the end of the fiscal year 2004 - 2005, TGTDCL

had customer base of about 1041,732 ; this has further increased to about 1081,091 byDecember 2005. Among the bulk customers of TGTDCL are 21 power and 4 fertilizer

plants. During 2004-2005 financial year TGTDCL sold 322.0 bcf gas to its customers, of

which power and fertilizer plants consumed about 152.13 bcf and 51.26 bcf respectively.

The domestic consumer base of TGTDCL accounted for about 36.81 bcf gas. During thefinancial year 2005-2006, the average system loss of the company was 6.47% and at the

end of December 2005 it was 7.18%.

Bakrabad Gas Systems Limited (BGSL ) :The Company was originally established with

the three-fold responsibilities of production, transmission and distribution, with theBakhrabad gas field as its source. Later, it was transformed into a transmission anddistribution company with the transfer of the Bakhrabad and Feni field to BGFCL. The

Company is responsible for gas supply in the Chittagong Division area excluding

Brahmanbaria district. Recently gas supply however been extended to Kasha and

Bancharampur Upazillas of Brahmanbaria district which are outside its franchise area,asdecision of the Government. The two main transmission pipe lines of the

company, the 24 inches 110 km Bakhrabad-Chittagong and the 20 inches 69 km

Bakhrabad-Derma gas transmission pipe lines have been handed over to GTCL as a partof the plan of the Government to bring in all transmission lines under GTCL. As a result,

BGSL is now engaged with gas marketing activities only.

By December 2005, the network of BGSL totaled about 5338.62 km pipe lines which

includes 67.46 km transmission pipe lines, 266.64 km lateral pipe lines and 5004.52 km

distribution network pipe lines. By the end of the fiscal year 2004-2005 BGSL had acustomer base of about 325,089 which increased to 340,925 by the end of December

2005. Among the bulk customer of BGSL are five power and three fertilizer plants.

During this year BGSL sold about 89.44 bcf gas to its customers, of which power and

fertilizer plants consumed about 26.08 bcf and 36.74 bcf respectively. The domesticcustomer base of BGSL accounted for about 12.37 bcf gas. During the financial year

2004-2005 the average system loss of the company was 2.33% and at the end of

December 2005 it was 1.64%.

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DRS/CGS OF TITAS GAS TRANSMISSION AND DISTRIBUTION COMPANY LTD.

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2.5.6. Jalalabad Gas Transmission & Distribution System Limited (JGTDSL)Jalalabad Gas System supplies gas to the customers in its franchise area consisting of the

customers Syihet division. By the end of December 2005 the company had a network of

2508.95 km pipelines including 383.52 km transmission lines, 1112.02 km distribution,696.56 km feeder main & service lines and 316.85 km others (customer financing). At

the end of the financial year 2004-2005, JGTDSL had a customer base of 90,501

including three power and a fertilizer plant, which expanded to 94,329 by December2005. Gas sales by JGTDSL during the year 2004-05 totalled about 24.43 bcf, the major

consumer being power plants, accounting for 11 .59 bcf. The sales performance of the

company was static. The Company incurred no system loss during this year, rather it

attained 0.60% system gain though at the end of December 2005 the Company incurred0.51% system loss .

2.5.7.Pashchimanchal Gas Company Limited (PGCL)

This is the fourth and newest gas marketing company under Petrobangla, set-up with theobjective to market gas in the areas west of the Jamuna River covering the North

Westregion. This new company is now in its 6th year of operation. By the end ofDecember 2005 the Company had constructed a network of 795.20 km pipelines which

included 84.75 km distribution and 710.45 km feeder main & service lines. At the end of

the fiscal year 2004-05 the Company had a customer base of 7,684 which increasedto13,757 by the end of December, 2005. Gas marketed by PGCL amounted to about

21.80 bcf in 2004-2005. Most of the gas marketed by PGCL is consumed by three power

plants in its franchise area. Among 21.80 bcf of total sales, 21.22 bcf consumed by the

power plants. PGCL incurred no system loss from the very beginning and was able tomaintain the trend during 2004-05. The Company attained 0.40% system gain during this

period.

As part of expansion of company activity as well as expanding gas network in north west

region, PGCL has established distribution networks in Sirajganj, Pabna and Ishwardi

towns. A new project undertaken for gas supply to the Bogra town was completed within2005. To further expand its operation, PGCL is now initiating a programme to set-up a

distribution network in Rajshahi town.

2.5.8.Rupantarita Prakritik Gas Company Limited (RPGCL)

Repatriate Prakritik Gas Company Limited (RPGCL) started its activity as a company ofPetrobangla from 1st January 1987. 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 production of LPG, Petrol and Diesel fromNGL produced in the gas field. With gradual shift of CNG conversion and CNG retailing

activity to private sector, RPGCL is now concentrating more on evolving necessary code

and standards, providing advisory services and act as a supervisory entity in the CNGsector. Over the last year vehicle, especially petrol driven vehicle conversion has seen

tremendous response.

During the financial year 2004-2005, RPGCL through its own CNG workshop

converted 657 petrol and diesel driven vehicle into CNGV. The Company has converted

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a total of 3732 petrol and diesel driven vehicle into CNGV up to December 2005. Due to

encouragement and assistance provided through RPGCL to private investors, CNG

related industry has seen tremendous growth. At present there are 106 CNG refuelingstations and 67 conversion workshops in the country. Out of 106 stations, 77 in Dhaka, 9

in Chittagong, 4 in Sylhet, 6 at Gazipur and 9 at different areas. Currently, the number of

CNG converted vehicles are 33,028 and CNG driven vehicles are 44,534. The NGLfractionation plant of RPGCL at Kailashtila produced and supplied 7857 metric ton of

LPG and 121.59 million liters of motor spirit during 2004-2005. The Company is now

installing another NGL fractionation plant at Kailashtila and is entrusted withimplementing a part of Dhaka Clean Fuel project under which it will expand its

conversion activity and facilitate import of CNG dedicated buses for the private sector.

2.5.8.Barapukuria Coal Mining Company Limited (BCMCL)

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 and Maintenance Services (M&P) Contract Commercialproduction under a Management, commenced on 10th September 2005. Under the

M&Pcontract, coal extraction from two Long wall Faces 1101 and 1106 havesuccessfully been completed. It produced 87142.840 metric tons coal during 2004-2005

and 77520.820 metric tons during July to December 2005. The produced coal is being

delivered to the Barapukuria Coal based Thermal Power Station of PDB. Developmentworks of the next Long wall Coal Face 1109 is underway. After completion of the

development works, production from the next Long well is expected to commence in

January 2007.

.

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CHAPTER 03

A BRIEF ABOUT TITAS GAS TRANSMISSION AND DISTRIBUTION

COMPANY LIMITED

3.1.MARKETING AND OPERATIONAL PERFORMANCE:

Gas Purchases-Sales:Based on gas demand and according to allocation of Petrobangla the target for purchaseand sale of gas was set at 10649.02 MMCM and 10181.98 MMCM respectively for the

financial year 2005-2006. The actual figures of gas purchases and sales during the yearwere 10,875.80 MMCM & 10,164.52 MMCM respectively. It is mentionable that the

growth rate of gas purchase and sales was 10.77% and 11.47% respectively.

Measures taken for improving gas supply:

With the gradual expansion of Dhaka City, the number of customers have also

increased. As a result, some times, gas could not be supplied in some areas as per

demand with the existing pipeline network. In some areas, low pressure problems

have been solved by constructing link lines such as Tejgaon, Palton,

Segunbagicha, Fakirerpul, Santinagar, Postagola, Hazaribagh, Mirpur etc. UnderDhaka clean fuel project 92 KM x16" pipeline has been constructed till

November 2006 in and around Dhaka City to solve the low pressure problems indistribution system & to supply gas to CNG filling stations. Besides a total of 4

DRS/TBS have already been constructed and modification work of 5 DRS/TBS

has been completed.

Construction of 16"x140 PSIGx12.O km Rajendrapur-Jaydebpur main

pipeline from existing offtake valve in Rajendrapur area to supply moregas distribution area in Jaydebpur, area.

Construction of 4"-12"diax2700 meter distribution line and connection withexisting network in different places to solve low pressure problems inPager Bscic area and industrial area of Satas,Tongi.

Safety Position of High Pressure Praline: Regular patrolling system is essential for

maintaining safety of transmission pipeline. But the number of Companys Patrolmen isinadequate.Therefore, private security service has been engaged for safety of high

pressure pipeline and regular supervision to prevent accident. The task of replacing the

old pipeline by phases has also been taken up to improve safety measures and avoidoperational hazards. Program for environmental safety improvement have also been taken

up.

System Loss:Effective efforts have been undertaken to reduce system loss. The premisesof the Industrial & disconnected customers have been inspected by thespecial teams. In the financial year under review due to sincere efforts put inby Titas Management under the direction of Titas Board, Petrobangla andMinistry, positive result could be achieved from February-06 and system losscould be brought down to 6.47% during the year. System loss has come downto 6.47% compared to 7.06% in the previous year. Necessary steps have

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been taken to bring down system loss to 5%.System loss Reduction Programme:

The Company has been implementing different action plans to reduce overall

system loss/unaccounted for gas by maintaining areawise input-output & fixing

responsibilies, RMS sealing, calibration and replacement of old meters, intensive

vigilance, disconnection of unauthoried gas connection by task force, speedydisposal of court cases, electronic volume corrector(EVC), flow/pressure logging

device etc. Necessary steps are being taken to prepare proper gas bill of all

industrial customers through collection of meter reading by computerisedremote-metering system for reduction of system loss. Necessary measures have

been taken to reduce the present system loss at Narayanganj, Sonargaon Tongi,

Narsingdi, Ashuganj and Brahmanbaria and metro sales zone (Ind. & Com. 1,4.).

A target oriented programme is being implemented by assigning officers tocollect meter reading through frequent visit of the customer premises. Meter

Sealing and testing Programme is being completed Properly and timely.

Despite the best efforts made by the Company and better congenial workingatmosphere, reduction of system loss at a desired level could not be achieved due

to shortage of efficient manpower, construction of unauthorised by-pass line by

the dishonest customers, injunction order of the Honorable Court in favour ofdefaulter customers,

Illegal re-connection from disconnected risers, unauthorised use of

additional appliances/gas load, excess gas consumption by the un-metered domestic customers, interference on RMS and meter tamperingetc. During the year 2005-2006 the figures for net gas purchases andsales stood at I 0,875.80 MMCM and10164.52 MMCM respectively. The

sales figures for Bulk and Non Bulk customers stood at 6133.88 MMCMand 4030.64 MMCM respectively. If system loss is not counted in the Bulksector, then the total system loss will be 14.87%. On the other handrevenue loss of all kinds of customers including Bulk customers stood atTk 23611 crore and system loss is 6.47%.

To reduce system loss and to collect arrear gas bills as per direction often

higher authority, the ompanyformed 19 teams to inspect all the industrialcustomers premises to find out the illegal use of gas by dishonestcustomers. The special teams have inspected 3349 industrial customersfrom 11 December 2005 to 29 January 2006 . Among those customers

249 have been disconnected for illegal use of gas. As per application, thedisconnected customers have been reconnected according to gasmarketing policy 2004 and TK 10 corers have been realised as additionalbill and penalty. The company has given a special opportunity fordomestic Customers to regularizes their illegal connections withoutpenalty from 11-2-2006 to 15-5-2006. A total of 51200 unauthorisedconnections were regularized. It has contributed additional TK. 1.88 croremonthly and 22.50 crore yearly to the companys sales revenue.

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Emergency Service:

The Company has emergency Control Rooms at Dhaka Cantonment, Postogola, Mirpurand the 24 hours central emergency control room at Motijheel. In FY 2005-2006 a total

number of 3121 emergency calls were attended including fire 146 ,80 fault of

regulator407,water logging due to rain water 174, stoppage of gas supply 460,fault of lock wing cock 543, fault of meter 119, house line repair 272 and others220 calls. All the calls. were promptly attended to ensure safe and smooth supplyof gas to the customers and to avoid possible accident and loss.FINANCIAL ACTIVITIES:

A brief account of the financial activities during the financial year is as follows.

Sales Revenue:During FY 2005-2006 a total of 10164.52 MMCM (MillionCubic Meter) of gas was sold to various customers add a sales revenue of

Tk.3408.00 crore was earned compared to previous years revenue ofTk.2991.36 crore. the growth rate in sales revenue for the year underreview 13 93%.

Arrear Revenue: lnspite of the Company`s increased efforts to collect arreargas bills during the year, due to unsatisfactory realizations of arrears from the

disconnected, litigant and Govt/ Semi-Govt customers arrear revenue stood at

Tk. 1328.78 crore which is equivalent to 4.42 months gas bills (Gove 5.36 monets and private 3.99 months ) excluding bad debt. During 2004-2005 it was

1344.14 crore which was equivalent to 4.99 months gas bills (Govt 5.69 months

and private 4.60 months) .Steps have been taken to reduce arrear revenue of the

Govt Customers and to bring down the arrear.revenue of theprivate customers to 3(three) months average gas bill ;

Pre-Profit:

Pre-Tax Profit of the year 2005-2006 was Tk. 304.21 crore as against Tk.239.25crore for the year 2004-2005.

Net Profit:

The Companys net profit for FY 2005-2006 was Tk. 206.40 crore. In the year 2004-2005the net profit of the Company was Tk.149.53 crore.

Rate Return:The annual rate of return of the year under review was 25.40% as against19.81% in the year 2004-2005.

Payment to Government Exchequer:

2005-2006

Corporate Tax 96.68 CroreCD/VAT 12.45 Crore

Ad-Interim Dividend 75.04 Crore

DSL 66.42 Crore

Total 250.59 Crore

During the year2005-2006 the Board of Directors has recommended a dividendof 1k 75.04 crore which was paid in advance as ad-interim dividend. During the

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year 2004-2005 the amount of declared dividend was Tk. 68.19 crore.

3.2.DEVELOPMENT ACTIVITIES

An al Development Programme:The Company has expanded its network implementation of new pipeline projects under

the Annual Development Programme. During FY 2005-2006 an amount of Taka 77.48crore has been spent of which Tk. 2.38 crore for the Greater Titas Franchise Area

Pipeline project (phase-4) was financed from own sources and Tk. 19.54 crore for Dhaka

Clean Fue Project (Titas part) was with the financing of GOB and ADB. At present, pipe

line network of the company extends over greater Dhaka, greater Mymensingh andBrahmanbaria District. During the FY 2005-2006 620.86 kilometer pipeline has been

laid. As on June 30, 2006 the length of pipeline under TGTDCL stood at 9816.29

kilometer which include 61 3.11 kilometer transmission pipe line and 9061.18 kilometerdistribution line.

Dhaka clean Fuel Project (Titas Part):With a view to saving valuable foreign currency on import of energy and to prevent

environmental pollution as per Government policy the Company has undertaken aproductive & pragmatic programme to convert all the motor vehicles into CNG fuelled.

This project has been taken in order to extend the use of natural gas by conversion of

petrol driven motor vehicles into environment friendly CNG fuelled ones specially tomake the capital Dhaka a pollution free city. PP of the project was approved on

10.06.2003 by ECNEC. Construction cost of the project as per approved PP is

Taka 10 313.55 lac of which Tk 5762 .25 lack is from project aided fund and Tk.4551.30 lac is from local currency. It may be mentioned that the revised PP of the

project after approval by Titas Board has been sent to Ministry through Petrobangla for

further necessary action. The proposed cost of the project in the revised PP is Tk.10894.00 lac of which Tk. 4996.00 Lac is in local currency and Tk. 5898.00 Lac is in

foreign Currency. The proposed time limit of the completion of the project is December2006.

The following works are being carried out under this project :-a. Construction of 16" x 99 KM Pipeline;b. 16 dia x 0.50 KM x 2 nos River Crossing.c. Construction of 5 new TBS/DRS and modification of 5 TBS/DRS.

On completion of the project it would be possible to supply gas to 500 new CNGstations of greater Dhaka area within 10 years. Rest of the gas will be used tomeet the increased demand of gas in Dhaka city. It is expected that the lowpressure situation of the Dhaka city would be mitigated to a great extent with theimplementation of the project. of 92 km pipeline has been installed under Dhaka

Clean Fuel Project. Out of 5 DRS/TBS, 4 DRS/TBS have already been installedand modification work of 5 TBS/DRS has been completed. The rest one DRS

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Non Commercial Energy

Commercial Energy

TOTAL ENERGY USAGE SCENRIO OF BANGLADESH

would be constructed after allotment of land from the ministry of works. TheNational Board of Revenue has given approval of duty/tax to be paid by thecontractor for the import of RIG. Steps have been taken by the contractor to bringthe RIG to the site.

Greater Franchise Area Pipe Line Project (Phase-4):A project was taken up to construct in total 610 km distribution line at a cost of Tk47.73 crore (Tk. 33.37 crore in local currency and Tk. 14.36 crore in foreigncurrency) during the period from July 2001 to June 2006 in Dhaka, Narsingdi,

Brahmanbaria, Narayanganj, Munshiganj, Managing, and Tangail, Gasport andgreater Mymensingh area. The PCP of the project was approved on 03.07.2001by the ECNEC and PP by the Energy & Mineral Resources Division on29.12.2001. Revised project has been sent to the Ministry after approval by theTitas Board & Petrobangla Board due to increase of the price of steel products inthe international market & the price of NTL pipes. DPP of the project has beenapproved by the Ministry on 29-9-05. Revised cost of the project as per approvedDPP is Tk 55.95 crore of which 50.48 crore as local currency & 5.57 crore asforeign currency.

A total of 405.00 KM pipeline has been constructed of which 1" - X"113.41 KM at

Saver, Narayanganj and Murapara area in the FY2001-2002 and 1- 8X 183.95KM in Dhaka Metro area, Kernigan, Zinnia, Shubuta, Mymensingh sadar,Tangail, Mirzapur and Karatia in the FY2002-2003 and 1-8X108.2OKMdistribution pipeline has been completed as extension work at Narsingdi sadar,Shipper, Mashed, Ghorashal,Palash and its surrounding area in FY 2003-2004 . A total of 540.82 KM pipeline hasbeen completed in the FY 2004-2005 including 135.26 KM in Gazipur district, different

district and up zeal under greater Mymensingh district . It is expected that 1 - 6 X 69.18

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km pipeline would be completed at Brahmanbaria & Managing district in 2005-2006 of

which is at final stage.

Gas Supply to Power Plants Project:During the year,2005-2006 the Company started to supplying gas to 10 MW Unique

Power Plant (unit-2), 10 MW Partex Power Ltd & 25 MW REB Madhabdi Power Plant(unit-2)

Participation in the field of CNG:To reduce the dependence on import of energy and to prevent environmental pollution as

per Government policy the Company has been supplying gas to 95 CNG Stations. All thevehicals, which are [possible to convert, have been converted to CNG & new vehicles are

being purchase with CNG conversion kit. Tk. 1.53 crore has been spent as fuel cost

during the year. 2005-06 which was Tk. 1 .63 crore in the previous year.

3.3.TYPES OF GAS CONNECTION IN TITAS GAS TRANSMISSION AND

DISTRIBUTION COMPANY LIMITED:

Titas Gas Transmission and Distribution classifies its customers into following types.

a. Domestic: House/Buildings used as residence, flats/colonies of various govt/semi-govt/autonomous organizations, and on-trading students

hostels/laboratories/canteen/hospital/mess/orphanage/ many other charitable

organizations belong to this class.b. Commercial: Various trading organizations, small and cottage industries, which

are not mechanized and many other service organization.c. Industrial: Mechanized small and cottage industries located in BSCIC industrial

area, mechanized producers of brick , ceramic refratories, sanitaries, electricalgoods and many other goods , mechanized service industries and large industrial

enterprises.

d. Seasonal: Organization that does not use gas all the year round but use gasseasonally (less than six month). Seasonal brickfields (not mechanized), the

process of tobacco leaves, and processing industries of sugar, fruit and fruit juice.

e. Captive power: The customers, whatever class they belong to, that use gas forgenerating electricity for their own purpose.

f. Power (Govt): State-owned power stations using natural gas as fuel.

g. Power(Private): Private power stations that uses natural gas as fuel.h. Fertilizer: State-owned and private fertilizer industries that use natural gas asfeedstock.

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CNG

CAPTIVE

DOMESTIC

COMMERCIAL

INDUSTRIAL

FERTILIZER

POWER

SEASONAL

CATEGORY-WISE GAS CONSUMPTION DURING 2005-2006(IN MMCM)

CATEGORY CONSUMPTION %

CNG 154.5 1.52

CAPTIVE 1150.43 11.32

DOMESTIC 1122.07 11.03

COMMERCIAL 93.96 0.93

INDUSTRIAL 1509.67 14.85

FERTILIZER 1379.17 13.57

POWER 4754.7 46.78

SEASONAL 0 0

TOTAL 10164.52

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MARKET SHARE OF 4 COMPANIES UNDER PETROBANGLA IN

2005-2006 ON THE BASIS OF GAS SALES(MMCM)

Name of the company

Gas

salesTITAS GAS TRANSMISSION AND DISTRIBUTION CO.LTD.(TGTDCL) 10164.52

BAKRABAD GAS SYSTEM LIMITED.(BGSL) 2650

PASHCHIMANCHAL GAS COMPANY LIMITED.(PGCL) 504.139

JALALABAD GAS TRANSMISSION AND DISTRIBUTION SYSTEMLTD.(PGCL) 697.982

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CHAPTER 05

TIME SERIES ANALYSIS AND FORECASTING

5.1.TIME SERIES AND FORCASTING:Forecasting or predicting is an essential tool in any decision making process. Its uses vary

from determining inventory requirements for a local shoe store to estimating the annualsales of video games. The quality of the Forecasts management can make is stronglyrelated to the information that can be extracted and used from past data. Time-seriesanalysisis one quantitative method we use to determine patterns in data collected overtime. Time-series analysis is used to detect patterns of change in statistical information

over regular intervals of time. We projectthese patterns to arrive at an estimate for thefuture. Thus, time-series analysis helps us cope with uncertainty about the future.

Variations in Time Series: We use the term time series to refer to any groupof statistical information accumulated at regular internals. There are four

kinds of change, or variation. involved in time-series analysis:

a. Secular trendb. Cyclical fluctuation

c. Seasonal variation.

d. Irregular variation

Secular trend: With the first type of change, secular trend, the value of thevariable tends to increase or decrease over a long period of time. The steady

increase in the cost of living recorded by the Consumer Price Index is an

example of secular trend. From year to individual year, the cost of living

varies a great deal, but if we examine a long-term period, we see that thetrend is toward a steady increase.

Cyclical fluctuation: The second type of variation seen in a time series is cyclical

fluctuation. The most common example of cyclical. fluctuation is the

business cycle. Over time, there are years when the business cycle hits apeak above the trend line. At other times, business activity is likely to

slump, hitting a low point below the trend line. The time between hitting

peaks or falling to low points is at least 1 year, and it can be as many as 15or 20 years.

Seasonal variation: The third kind of change in time-series data is seasonal variation.As we might expect form the name, seasonal variation involves patterns of

change within a year that tend to be repeated from year to year. Forexample, a physician can expect a substantial increase in the number of

flu cases every winter and of poison ivy every summer. Because these are

regular patterns, they are useful in forecasting the future.

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Irregular variation: Irregular variation is the fourth type of change in time-series

analysis. In many situations, the value of a variable may be completely unpredictable,

changing in a random manner. Irregular variations describe such movements. Theeffects of the Middle East conflict in 1973, the Iranian situation in 1979-1981,the

collapse of OPEC in l986, end the Iraqi situation in 1990 on gasoline prices in the

United States are examples of irregular variation.

Time-series variations: Thus far, we have referred to a time series exhibitingone or another of these four types of variation. In most instances, however, a time

series will contain several of these components. Thus, we can describe the overall

variation in a single time series in terms of these four different kinds of variation. In

the following sections, the four components and the ways in which we measure eachare examined.

Trend Analysis

Two methods of fitting a trend line: Of the four components of a time series, secular

represents the long-term direction of the series. One way to describe the trend componentis to fit a line visually to a set of points on a graph. Any given graph, however, is subjectto slightly different interpretations by different individuals. We can also fit a trend line by

the least squares. Here emphasis will be given on the method of least squares because

visually fitting a line to a time series is not a completely dependable process.

Reasons for Studying Trends

There arc three reasons why it is useful to study secular trends:

a. The study of secular trends allows us to describe a historical Pattern. There are

many instances when we can use a past trend to evaluate the success of a previouspolicy. For example, a university may evaluate the effectiveness of a recruiting

program by examining its past enrollment trends.

b. Studying secular trends permits us to project past patterns, or trends, into thefuture. Knowledge of the past can tell us a great deal about the future. Examining the

growth rate of the worlds population, for example, can help us estimate the

population for some future time.c.In many situations, studying the secular trend of a time series allows us to

eliminate the trend component from the series. This makes it easier for us to study

the other three components of the time series. If we want to determine the seasonal

variation in ski sales, for example, eliminating the trend component gives us a moreaccurate idea of the seasonal component.

Trend Lines Take Different Forms:Trends can be linear or curvilinear. Before we examine the linear, or straight-line,

method of describing trends, we should remember that some relationships do not take that

form. A common example of a curvilinear relationship is the life cycle of a new businessproduct. When a new product is introduced, its sales volume is low. As the product gains

recognition and success, unit sales grow at an increasingly rapid rate. After the product is

firmly established, its unit sales grow at a stable rate. Finally, as the product reaches the

end of its life cycle, unit sales begin to decrease.

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Trend by the Least-Squares MethodBesides trends that can be described by a curved line, there are others that are describedby a straight line. These are called linear trends. Before developing theequation foralineartrend, it is necessary to review the general equation for estimating a straight line .

Equation for estimating a straight line Y =a + bXWhere Y estimated value of the dependent variable

X = independent variable (Time in trend analysis) a = Y-intercept (the value of Y when X=0) b = slopeofthe trend line

Finding the Best-fitting Trend Line : We can describe the general trendof many time series using a straight line. But we are faced with the

problem of finding the best-fitting line. we can use the least-squares

method to calculate the best-fitting line, or equation. In this method Best-fitting Trend Line is determined as follows:

Slope of the Best-Fitting Regression Line,b=(XY-nXY)/(X2-nX2)

Y-Intercept of the Best-Fitting Regression Line

a=Y- bxwhere,

Y=values of the dependent variable

X= values of the independent variable

Y= mean of the values of the dependent variable X= mean of the values of the independent variable

n = number of data points in the time series

a = Y-intercept b = slope

Use of a Second-Degree Trend in a Time Series :Handling time series that are described by curvesSo far, we have described the method of fitting a straight line to a time series. But many

time series are best described by curves, not straight lines. In these instances, thelinear trend model does not adequately describe the change in the variable as timechanges. To overcome this problem, we often use a parabolic curve, which is describedmathematicallyby a second-degree equation.The general form for an estimated Second-degree equation is:

Y=a+b.x+cx2 100

Where, Y= estimate of the dependent variable a, b, and c = numerical constants

x = Coded values of the time variable

Finding the values for a, b, and c: again we use the least-squares method to determine the

second-degree equation to describe the best fit.

However, we can determine the value ofthe numerical constants (a, b. arid C) from

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the following three equations:

Least-squares coefficient for a Second degree Trend

Y=an+cx2.ix2Y=a+cx4 ii

b=xY/x2.iii

When we find the values of a, b, and c by solving Equations i, ii and iii and si-multaneously, we substitute these values intothe second-degree equation, Equation 100.

As in describing a linear relationship, we transform the independent variable, time (X),

into a coded form (x) to simplify the calculation.

Time-Series Analysis in ForecastingWe have already examined all four components of a time series.We have described the

process of projecting past trend and seasonal variation into the future, while taking intoconsideration the inherent inaccuracies of this analysis. In addition, we noted thatalthough the irregular and cyclical components do affect the future, they are erratic and

difficult to use in forecasting.

Limitations of Time-Series analysis: We must realize that the mechanical approach of

time-series analysis is subject to considerable error and change. It is necessary formanagement to combine these simple procedures with knowledge of other factors, inorder to develop workable forecasts, Analysts arc constantly revising, updating. and

discarding their forecasts. If we wish to cope successfully with the future we must do thesame. When using the procedures of Time Series analysis, we should pay particularattention to two problems:

1. In forecasting, we project past trend and seasonal variation into the future. We mustask, How regular and lasting were the past trends? What are the chances that these

patterns are changing?

2. How accurate are the historical data we use in time series analysis? If a company haschanged from a FIFO (first-in, first out) to a LIFO (last-in, first-out) inventory

accounting system in a period during the time underconsideration, the data (such asquarterly profits) before and after the change are not comparable and not very useful forforecasting.

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CHAPTER 06FINDINGS AND ANALYSIS OF THE STUDY.CONCLUSION AND POLICY

IMPLICATION

6.1. FINDINGS:Present recoverable gas reserve of Bangladesh is 13.952(as

of November/2005) TCF. It is worth mentioning that in US unit 1(one) TCF =1000000000000 cubic feet. So this gas reserve stands to 13.952x1000000000000 cubic

feet. Using time series analysis ( by means of Least Square Method of curve fitting ofmodel Y= a +bx t model) we find that total forecasted gas demand for 15(fifteen) years

in various category of gas use within Titas Gas T & D franchise area is 7839530.124

million cubic feet (MMCF), which is 56.189% of the entire gas reserve. This indicatesthat the remaining reserve will cater to the growing gas demand within Titas Franchise

area for than 15(fifteen) years. It may be up to approximately 30(thirty) years. This also

indicates that production of gas is to be enhanced to the extent of 40.92%. Using time

series analysis ( by means of Least Square method of curve fitting of model Y= a +bxt +cxt2 model) we find that total forecasted gas demand for 15(fifteen) years in various

category of gas use within Titas Gas T & D franchise area is 23424129.83 million cubic

feet(MMCF) which is 167% of the entire gas reserve. This also indicates that the

production of gas is to be increased at an average rate of 262.135%.

System loss is measured as the percentage of the difference between gas purchase and gassales. Mention-worthy that for 1% of system loss the company incurs revenue loss of

Tk.2 crore per month i.e. 24 crore per year. Employing time series analysis ( by means of

Least Square method of curve fitting of model Y= a +bx t model) we find that forecastedsystem loss would be arrested from 7.03%(December/2006) to 4.54%(December/2015),

preventing revenue of about 2 crore per month. Using time series analysis ( by means of

Least Square method of curve fitting of model Y= a +bx t + cx t 2 model), we find that

forecasted system loss would be enhanced from 7.03%(December/2006) to 21.59%(December/2015), enhancing revenue loss of about 0.0945 crore per month.

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6.2. ANALYSIS:

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CHAPTER 07

CONCLUSION AND POLICY IMPLICATION

According to our findings there might be a significant gap between forecasted

gas demand and our production capacity, it is imperative to explore and discovermore gas resources so that more recoverable gas reserve is added to the remaining

reserve. Production of gas is to be enhanced. This would not be enough. The

government of Bangladesh should employ more resources in research andexploration of natural gas. The government of Bangladesh should promote

adequate skills and expertise among the personnel employed in the entire gas

sector to ensure efficiency and farsightedness in the management of the gassector. All-out endeavors should be undertaken to combat system loss by all the

people concerned, chalking out appropriate plans and course of action. As this

fossil fuel is not endless, there should be vigorous research for non-renewablesource of energy.

Mba Sadiqul

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