Anisul Islam Noor :
Bangladesh Petroleum Exploration Company (BAPEX) is going to invest $ 40.3 million for a risky joint venture with Australian oil company Santos.
Of them $17.5 million will have to invest in drilling a second gas well at Magnama field in the offshore.
Santos is luring BAPEX to joint extraction of gas from a complicated structure in an offshore block with realisation of $23.1 million the company already invested in the exploration since 2008.
In 2008, Santos’s predecessor Cairn Energy failed to explore gas following a failure in its first attempt to drill a well in Magnama structure in offshore block-16, a Petrobangla official said.
BAPEX will have to invest a total of $40.3 million to own a 49 per cent share in the proposed joint-venture with Santos Sangu Fields Limited, according to a proposal Santos submitted to the government on March 22.
In that case, Santos might not have to invest as the cost for drilling of the second well was estimated at $35 million, said a Petrobangla official.
Further investment would be required if the joint-venture goes for further development works, the proposal said.
Santos in a bid to make its proposal attractive said that it was expecting to sell the gas, if discovered, directly to a third party at more than $7 per thousand cubic feet.
Santos had managed to sell 20 billion cubic feet of gas from Sangu field at $4.5 per unit to the state-run Power Development Board under an amended Production Sharing Contract with the government.
State Minister for Power, Energy and Mineral Resources Nasrul Hamid told The New Nation that he had received the proposal and the government was considering it ‘positively.’
He said that the government was still examining the proposal.
Energy Expert Badrul Imam, also Dhaka University Geology Department professor, however, said that the Magnama was yet to be explored and BAPEX should not accept the liability of a failed exploration attempt.
Before the amendment, Santos or its predecessor Cairn used to sell gas from Sangu field under block 16 at $2.9 per unit to Petrobangla.
In 2012, the government accepted a proposal of Cairn to amend the Production Sharing Contract as the company threatened that it would not invest in increasing gas extraction from Sangu field unless it was allowed to sell gas directly to a third party at a negotiated rate.
No private firm was interested to buy the pricy gas from Cairn at that time. The government drew huge criticism as it asked the PDB to buy the gas at $4.5 per unit from Cairn although it got gas at $1 per unit from Petrobangla.
‘No private firm will be interested to buy the pricy gas and one or more government enterprise might buy the gas this time as well at $7 per unit,’ a Petrobangla official said.
Santos claimed that it had found a prospect of approximately 387 billion cubic feet natural gas at Magnama.
Santos, in its proposal, said that it had invested a $92.3 million in an effort to explore Magnama structure since 2007-08.
Of the total expenditure, $68.2 million was invested in drilling the first gas well in 2007-08, $14.3 million in conducting a three dimensional seismic survey in 2010 and $9.8 million in other exploration activities.
Bangladesh Petroleum Exploration Company (BAPEX) is going to invest $ 40.3 million for a risky joint venture with Australian oil company Santos.
Of them $17.5 million will have to invest in drilling a second gas well at Magnama field in the offshore.
Santos is luring BAPEX to joint extraction of gas from a complicated structure in an offshore block with realisation of $23.1 million the company already invested in the exploration since 2008.
In 2008, Santos’s predecessor Cairn Energy failed to explore gas following a failure in its first attempt to drill a well in Magnama structure in offshore block-16, a Petrobangla official said.
BAPEX will have to invest a total of $40.3 million to own a 49 per cent share in the proposed joint-venture with Santos Sangu Fields Limited, according to a proposal Santos submitted to the government on March 22.
In that case, Santos might not have to invest as the cost for drilling of the second well was estimated at $35 million, said a Petrobangla official.
Further investment would be required if the joint-venture goes for further development works, the proposal said.
Santos in a bid to make its proposal attractive said that it was expecting to sell the gas, if discovered, directly to a third party at more than $7 per thousand cubic feet.
Santos had managed to sell 20 billion cubic feet of gas from Sangu field at $4.5 per unit to the state-run Power Development Board under an amended Production Sharing Contract with the government.
State Minister for Power, Energy and Mineral Resources Nasrul Hamid told The New Nation that he had received the proposal and the government was considering it ‘positively.’
He said that the government was still examining the proposal.
Energy Expert Badrul Imam, also Dhaka University Geology Department professor, however, said that the Magnama was yet to be explored and BAPEX should not accept the liability of a failed exploration attempt.
Before the amendment, Santos or its predecessor Cairn used to sell gas from Sangu field under block 16 at $2.9 per unit to Petrobangla.
In 2012, the government accepted a proposal of Cairn to amend the Production Sharing Contract as the company threatened that it would not invest in increasing gas extraction from Sangu field unless it was allowed to sell gas directly to a third party at a negotiated rate.
No private firm was interested to buy the pricy gas from Cairn at that time. The government drew huge criticism as it asked the PDB to buy the gas at $4.5 per unit from Cairn although it got gas at $1 per unit from Petrobangla.
‘No private firm will be interested to buy the pricy gas and one or more government enterprise might buy the gas this time as well at $7 per unit,’ a Petrobangla official said.
Santos claimed that it had found a prospect of approximately 387 billion cubic feet natural gas at Magnama.
Santos, in its proposal, said that it had invested a $92.3 million in an effort to explore Magnama structure since 2007-08.
Of the total expenditure, $68.2 million was invested in drilling the first gas well in 2007-08, $14.3 million in conducting a three dimensional seismic survey in 2010 and $9.8 million in other exploration activities.
