Gas
relief for Bangladesh By Syed
Tashfin Chowdhury
DHAKA - Bangladesh won
slight relief from crippling power shortages and a
growing trade deficit this month when Australian
gas and oil company Santos International made the
South Asian country's second-biggest offshore gas
discovery at the Bay of Bengal Sangu-11 well.
The find will ease an energy squeeze in
nearby Chittagong, an important port in the
southeast and an industrial center where
fertilizer factories and gas-based power plants
are struggling to
survive with supplies that
barely meet half the daily demand for gas.
"Tests that will determine the total
capacity of gas in the well will be complete by
next week," A B S Siraj-ud-Doula, vice president
of Santos Bangladesh, told Asia Times Online on
February 20. "We are hopeful that we will be able
to supply around 20 millions of cubic feet per day
[mmcfd] to 30 mmcf per day of gas at market price
to industries in Chittagong by April of this
year."
Bangladesh, desperate to improve
power supplies to industry, has in the past year
opened up its energy sector to allow overseas well
operators to supply gas direct to customers,
bypassing state-owned Petrobangla. At present, gas
supplies come to only around 2,073 mmcfd against
demand of 2,500 mmcfd. So dire are the energy
shortages that the government has provided no new
gas connections since July 2009.
The need
for imported fuel also adds to the trade deficit,
particularly with international oil prices rising.
The trade deficit surged to US$3.65 billion in the
first five months of this fiscal year through
November, from $2.75 billion in the same period a
year earlier. In January, the central bank asked
commercial banks to discourage opening letters of
credit for non-essential and luxury products in a
bid to hold back imports.
The Santos find,
made after the company abandoned drilling of two
other wells at the Sangu offshore block 16, is the
biggest offshore gas discovery in Bangladesh since
British company Cairn Energy discovered gas in the
same zone in 1996. The reserve was found after
drilling some 4,200 meters, part of a $126 million
investment by Santos. Distribution agreements have
yet to be reached with "customers and Karnaphuli
Gas Distribution Co Ltd", (KGDCL), which will be
distributing the gas, said Siraj-ud-Doula.
Last May, Santos secured a breakthrough
agreement to sell gas in Bangladesh to parties
other than Petrobangla, a move seen as helping to
liberate industrialists from power shortages,
although they will have to pay higher prices for
their gas.
The gains from the present find
are likely to be limited. "We may be able to
supply 20 to 30 mmcfd to Chittagong for the next
two to three years steadily. After this, the
supply is likely to fall again," said
Siraj-ud-Doula.
Still, it will fill a gap
as the government presses ahead in seeking more
sources of energy, both offshore and inland, where
last June, ConocoPhillips of the United States won
the right to explore for oil and gas in two
deep-sea blocks about 280 kilometers from
Chittagong. A larger exploration may be possible,
depending on the outcome of boundary disputes with
India and Myanmar that at present are undergoing
arbitration.
On shore, 15 of 23 recognized
gas fields are at present being exploited, mostly
in the east of the country, some newly coming into
production others being reworked. "We are working
on production of gas from five rigs of
[state-owned] Bangladesh Petroleum Exploration
& Production Co Ltd [BAPEX]," Petrobangla
chairman Dr Hossain Mansur told Asia Times Online
last week. "Two of these will be workover rigs at
Salda-1 and Kailashtila-4, while three exploratory
rigs will be at Kapasia, Srikail and Sunetra
fields."
Production began at the
Fenchuganj-4 well at around 20-25 mmcfd of gas
from February 20. "We are hopeful of another 10
mmcfd from Salda and at least 10 to 12 mmcfd from
Sundalpur soon," said Mansur.
Ten wells
are to be drilled by Gazprom, five of them under
Bangladesh Gas Field and five under BAPEX, and
likely to produce around 250 to 300 mmcfd gas.
BAPEX, which discovered a gas field with capacity
of 1.0 trillion cubic feet in Rashidpur in October
2011, will start work on wells in Titas, Rashidpur
and Srikail and is to explore new wells in
Bayezidpur and Mobarakpur.
Supply
infrastructure is also being upgraded, with
Petrobangla this year due to select one of four
short-listed firms to build a $1 billion-worth
liquefied natural gas (LNG) import terminal at
Moheshkhali island in the Bay of Bengal. "The LNG
terminal will add another 500 mmcfd to national
supply by August 2013," said Mansur.
Final
bids are due by April 15 from Bermuda-based Golar
LNG Energy; a consortium of USA's Astra Oil and
Excelerate Energy; South Korea's Samsung C&T
Corp; and India's Hiranandani Electricity.
A $196.4 million, 137-kilometer pipeline
is also coming to completion linking Sylhet to
Dhanua and the Chevron Bangladesh compression
project at Muchai, which is likely to supply at
least 30 mmcfd from two wells drilled by US-based
Chevron in Moulavibazar.
"We are hopeful
that most of these projects will be implemented by
the time Sangu-11 dries up, around 2014 or 2015,"
said Mansur.
Santos entered the Bangladesh
energy arena by buying a 37.5% interest in the
Sangu gas field and a 50% interest in block 16
exploration acreage from UK-based Cairn Energy PLC
for $50 million in October 2007. After being
operational in Bangladesh for over 16 years and
investing over $1 billion, Cairn was struggling
with its investments.
Santos acquired the
entire issued share capital of Cairn Energy Sangu
Field Ltd in late 2010, to become the sole
operator of Sangu, Bangladesh's only offshore
block. Santos has a 75% stake in Sangu, the
remainder belonging to Halliburton Energy. Santos
also owns 100% of the Magnama and Hatiya structure
of block 16.
Syed Tashfin
Chowdhury is the Editor of Xtra, the weekend
magazine of New Age, in Bangladesh.
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