Officials at the Economic Relations Division (ERD) said the response from the major donor came when its IDA (International Development Association) follow-up mission visited Bangladesh last week to hold a series of meetings with the government functionaries.

The assurance of assistance came after Petrobangla had explained that the country has been facing gas shortage lately on account of insufficient investment in the sector in recent years.

The state-run oil and gas corporation informed the mission from IDA, the World Bank's soft-lending window, that the demand for gas was growing fast, at 7-8 per cent a year.

The gas demand presently stands at 1.25 billion cubic feet per day (BCFD) and is expected to rise to 1.6 BCFD by 2007, said the Petrobangla officials.

According to a draft aide-memoire, the WB-assisted investment programme covers 3-D (dimensional) seismic survey to delineate producing fields and reservoir studies to improve output.

It also includes appraisal and development of wells to increase production, fractionation plants for LPG and natural gasoline and pipelines from producing fields to consumers for optimum usage of gas.

Petrobangla proposed to have three fractionation plants, each costing $ 25 million, built by the private sector, and the plants would operate on the basis of a processing fee.

With respect to the petroleum downstream market (PDM), consideration has also been given to building a white-product pipeline from Chittagong to capital Dhaka.

"Such a project, subject to further analysis, could have significant merits from an economic and environmental standpoint," says the aide-memoire, adding, "it could be designed as a private-public sector partnership".

Both for the potential gas and PDM projects, the mission asked the authorities to provide the preparatory studies currently available, said the officials at the ERD.

The mission stated that should the World Bank favourably consider financing these projects, a full feasibility study would be required, besides environmental and social impact assessments, as deemed appropriate.