Russian state-owned gas exploration company Gazprom has failed to extract the expected amount of gas to be added to the national grid by drilling wells in different gas fields across the country.
The company was signed by Bangladesh government to drill 10 wells and extract around 300 million cubic feet per day (mmcfd) of natural gas, but it only managed to extract around 146mmcfd, said sources at Bangladesh Oil, Gas and Mineral Corporation (Petrobangla).
Furthermore, the country has incurred a loss of around Tk200 crore due to faulty extraction procedure by Gazprom in two wells of Titas gas field, said an official at Bangladesh Gas Fields Company Limited (BGFCL).
Gazprom, which finished drilling the 10 wells on November 15, signed two drilling contracts – at an estimated cost of $193.55mn – with the government in April 2012, without tendering for them, under the Power and Energy Fast Supply Enhancement (Special Provision) Act, a Petrobangla director told the Dhaka Tribune, requesting anonymity.
The aim of the deals was to ensure quick gas extraction in order to meet the nationwide demand for natural gas, which Gazprom failed to achieve as well. It was supposed to finish drilling all 10 wells by the end of last year, but took an additional 11 months to complete the job, the Petrobangla director said.
Pricey procedure, unimpressive result
According to the agreement, four wells were to be drilled in Titas gas field under the BGCFL, one in Rashidpur gas field under Sylhet Gas Fields Limited (SGFL), two in Shahbazpur, and one each in Semutang, Begumganj and Shrikail under Bangladesh Petroleum Exploration and Production Company Limited (Bapex).
Bapex will pay $18.64m each for drilling each of the four gas wells in its gas fields, while the BGFCL and the SGFL will pay $20.06m for drilling each of the other six wells.
Gazprom’s drilling cost around Tk150 crore for each of the 10 wells, whereas Bapex could do the same for Tk 70-80 crore per well, sources said.
Several problems occurred during the drilling phase of the gas wells.
Gazprom suspended drilling Well No 20 in Titas gas field as its rig got stuck between 2,200m and 2,350m below the surface. The drilling had to be resumed by sidetracking, which incurred an additional cost of Tk150 crore.
On the other hand, production at Well No 21 had to be suspended when fault was found after drilling and water filled up the well. Now Bapex will do the workover of the well at the cost of Tk45 crore. It has yet to be determined as to when the workover will start.
Production at Semutang well was also suspended recently due to the increase in water pressure. Resumption of production there is unlikely, sources said.
Experts unhappy with govt move Ijaz Hossain, professor at Buet, expressed frustration over giving Gazprom the contracts, saying Bapex could do the job well.
“The work was easy because the wells in question were development wells, and there was no risk involved. I do not understand why Gazprom was given this job when Bapex could do it,” he told the Dhaka Tribune.
“It would be understandable if those were exploratory wells, as there would be certain risks. It would also be understandable if Gazprom was loaning us the extraction expense,” he said.
Another expert, Badrul Imam, teacher at Dhaka University’s geology department, told the Dhaka Tribune that contracting Gazprom for this job was unnecessary and the government must ensure this did not happen again.
He also said: “The government is about to sign a deal with Chinese oil and gas company Sinopec Limted to extract gas from four other Titas wells, a project funded by the Asian Development Bank. This will be an unnecessary move too.”
The Dhaka Tribune contacted Istiaque Ahmad, chairman of Petrobangla, in this regard, who said: “I have recently joined here, so I cannot say anything on this.”
However, a former managing director of Bapex, who sought anonymity, said there were several reasons behind Gazprom’s failure.
“Petrobanla was supposed to form a monitoring cell after the deals with Gazprom was signed. But it did not, and the drilling went without proper supervision,” he told the Dhaka Tribune yesterday.
“In addition, after the deals were signed, work started much later than was scheduled due to delay in rig mobilisation,” he said. “Gazprom sub-contracted a third party, a Russian company named Ariel Corporation – which was allowed in the agreement – but Gazprom itself did not monitor Ariel’s work either.
“Proper drilling technique was not followed, and the same goes for the remedial work, which is a big reason behind Gazprom’s failure in reaching the agreement target,” the former Bapex MD told the Dhaka Tribune.
Out of the 10 gas wells, the Titas 19, 20 and 22, Shrikail 3 and Rashid pur 8 gas wells are currently in production. Drilling in Begumganj 3, and Shahbazpur 3 and 4 is complete and production will take a few months to start as the pipelines are still under construction. Production at Titas 21 well is suspended.
