Joint venture with Gazprom

Gas, oil exploration proposal by Petrobangla

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Staff Reporter :
The state-owned Petrobangla has offered Russian oil and gas major Gazprom to create a joint venture (JV) with the country’s sole oil and gas exploration company, a top official said.
“We have placed a proposal formally to the Russian firm for establishing the JV, which is pending with them,” Petrobangla Chairman Hussain Monsur said.
Officials said that Petrobangla’s proposal to create a JV with the Russian firm had link to the visit of the Chief Executive Officier of Gazprom International Valery Gulev in July.
The Gazprom CEO expressed his interest to work with the Bangladesh Petroleum Exploration and Production Company Ltd (Bapex) during a talk with Bangladesh Prime Minister Sheikh Hasina in Dhaka on July 10.
Gazprom has proposed to work with Bapex for exploration of gas in the country’s plain lands, hill tracts and offshore areas, he said after the meeting. The high official of the Russian company also proposed a joint exploration of hydr-ocarbon in Myanmar under the proposed JV, energy division sources said.
Officials said the visit of the Chief Executive Officer of Gazprom for joint exploration in oil and gas sector was sequel to series of meetings
and visits by delegations of both the countries. Bangladesh in September last year sought US$2 billion loan from Russia at an interest rate of less than 2.0 per cent to fund development of its onshore gas fields.
The country formally requested for the funds when a delegation led by the then Energy and Mineral Resources Division Secretary Md Mozammel Haque Khan visited Russia for talks with Gazprom officials in September last.
Bangladesh sought the funds to drill 41 wells, comprising 13 development, 8 appraisal, 13 workover and 7 exploratory wells, in the Titas, Bankhrabad, Kamta, Bhola, Horipur, Koilashtila, Biani Bazar, Chittagong and Rashidpur gas fields.
It also wanted to build 12 gas processing plants at the fields, and 45 gas compression stations and generators, comprising 33 wellhead gas compressors, 10 gas generators, a fractionation plant and a gas compressor at fields operated by state-owned Bangladesh Gas Fields Company Ltd.
Bangladesh aimed at carrying out 2,570 km 2D and 3D seismic surveys in several onshore areas and to build 511 kilometers (317 miles) of natural gas pipelines to link fields to domestic markets.
It expected the work to increase natural gas output by 1,060 million cubic feet per day on completion of the jobs, said officials.
Gazprom also expressed interest in drilling four new wells at the time, two in Shahbazpur gas field and one each in the Haripur and Jaldi gas fields, said officials.
It also showed interested in building a natural gas pipeline from Shahbazpur to Khulna in the south, where no gas is currently available, they added.
Gazprom is currently carrying out a 10-well drilling programme costing around $193.5 million in state-run gas fields owned by three gas subsidiaries of Petrobangla as a drilling contractor.
It produced its first gas in Bangladesh on May 21, 2013 while testing the Srikail-3 onshore well in the Comilla field, and is the first foreign company to operate in Bangladesh on a contract basis.
Other international oil companies active in Bangladesh operate under production- sharing contracts or in joint ventures with Bapex.
Gazprom has completed drilling of seven wells-Srikail-3, Titas-19, Titas-20, Titas-21, Titas-22, Begumganj-3 and Semutang-6. Drilling work is underway on Shahbazpur-3.
Some of these wells are already supplying natural gas to Bangladesh’s national gas grid.
Gas production from Gazprom-drilled Titas-21 well, however, stopped suddenly last week, within seven months of the start of production, due to technical fault in drilling, said an official.
The country is currently grappling with an acute gas crisis, with supply hovering around 2,310 mmcfd against demand for around 3,000 mmcfd.
The state-owned Bapex currently has JV only with Canadian Niko Resources, which was inked on the basis of negotiation without floating any tender.
Production from Niko-operated gas fields, however, remained suspended for the past several years following disputes over payment against gas sales and two consecutive gas field blowouts in Niko-operated Tengratila gas field. Petrobangla in September last year, however, turned down an ongoing negotiation with the consortium of Chinese Sinopec-Shengli and US’s Longwood Resources to establish a JV to develop four onshore fields in
Bangladesh’s Chittagong region. The consortium was the only firm that came up and submitted a concrete proposal to establish a JV with Bapex following invitation.
The invited pool of international oil companies to develop four onshore fields under JV included-Russia’s Gazprom, Thailand’s PTTEP, Malaysia’s Petronas, India’s ONGC, China’s CNPC, Sinopec Shengli and CNOOC.
Bapex’s share in the proposed JV was not adequate, Petrobangla Chairman then cited, to scrap the negotiation with the consortium of Chinese Sinopec-Shengli and US’s Longwood Resources for the JV.
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