Three state-owned gas production companies have signed three separate deals with Russia’s Gazprom to drill five onshore gas wells – at double what Bapex would have cost.
Gazprom will be the first foreign company to work with state-owned companies in such a drilling exercise without a production-sharing contract (PSC).
Gazprom’s drilling of the five wells will cost around Tk150 crore per well, whereas Bapex could do the same job for Tk70-80 crore per well, a Bapex official said, asking not to be named.
The job was awarded under the Speedy Supply of Power and Energy (Special Provision) (Amendment) Act, 2014 without going through a tender procedure.
The deal with Russia’s state-run gas exploration company was signed in Dhaka on September 1.
In a bid to raise gas output by up to 150 million cubic feet per day (mmcfd), the local gas production companies opted for the costlier Russian alternative over state-owned gas and oil exploration company Bapex.
Previously in 2012-14, Gazprom failed to extract the amount of gas that it had expected to add to the national grid.
The company was signed by the Bangladesh government to drill 10 wells and extract around 300 million cubic feet per day (mmcfd) of natural gas, but managed to extract only around 146mmcfd, said sources at Bangladesh Oil, Gas and Mineral Corporation, commonly known as Petrobangla.
The Russian company will work as a contractor for the turnkey scheme. Local gas companies will pay Gazprom upon the completion of the drilling of each well, officials said.
Gazprom must complete drilling the wells within 15 months, officials said.
The five gas wells to be drilled under the contract – Bakhrabad 10, Rashidpur 9, 10 and 12, Srikail 4 – are owned by three different state-owned companies.
Under the contract, Gazprom will drill one well in Bakhrabad field which belongs to Bangladesh Gas Fields Company Limited (BGFCL), three in Rashidpur field which is owned by Sylhet Gas Fields Ltd (SGFL) and one in the Srikail field of Bangladesh Petroleum Exploration and Production Company Limited (Bapex).
“We signed a deal with Gazprom to drill five onshore wells including three SGFL wells,” Md Mostafizur Rahman, managing director of SGFL, told the Dhaka Tribune yesterday.
“Gazprom will start drilling 10 months from now. We hope they finish the work on time,” Md Atiquzzaman, managing director of Bapex, told the Dhaka Tribune yesterday.
According to the proposal, Gazprom’s average drilling cost per well will increase to $19.64m (around Tk150 crore) from $19.35m in 2012 – a 1.47% rise, officials said.
Gazprom International Investment BV will spend Tk22.05 crore to construct a new road and for the development of Rashidpur wells 9, 10 and 12.
Civil work will be carried out by Gazprom instead of Sylhet Gas Fields Ltd, the state-owned company that owns the wells.