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Govt picks Gazprom, 2 others over BAPEX to drill onshore wells

  • Published at 02:22 am May 28th, 2017
Govt picks Gazprom, 2 others over BAPEX to drill onshore wells
The government has selected Russian energy giant Gazprom and two other foreign oil companies for drilling 13 exploratory onshore gas wells in the country, even though state-owned exploration company Bapex has the capacity to implement the project. The companies were selected under the Speedy Supply of Power and Energy (Special Provision) Act, 2010 after they submitted Expression of Interest (EoI) letters for the project, sources told the Dhaka Tribune. The other two companies are Azerbaijan-based SOCAR AQS LLC and China-based Sinopec International Petroleum Service Corporation. The project is expected to extract around 250 million cubic feet of gas every day within a year. Bangladesh Petroleum Exploration and Production Company Ltd (Bapex) has already finished negotiating with the companies and is set to sign the deals, said a Bapex official. This move has come to the dismay of Bapex officials who believe hiring foreign companies to do a job that Bapex can do itself will cost the government heavily. “Bapex’s cost of exploring gas is less than most international oil companies. This decision will cost us financial loss,” said the Bapex official, requesting anonymity. Bapex needs only Tk80 crore to drill a well, but it costs as much as Tk200 crore per well a foreign company does the job, he added. Bapex currently has no plans to drill any wells despite owning five rigs, although high-ups at the company keep saying that they will have work in future, the Bapex official told the Dhaka Tribune. “The reality is, after this project is implemented, there will be no work prospects for Bapex. Many Bapex officials are discontent about giving foreign companies well drilling projects, but the company management has hardly taken that into regard,” he said. He claimed there are local agents of these foreign companies working in Bangladesh, some of whom are high officials in the Energy and Mineral Resources Division, which is why this decision was made. However, Bapex Managing Director Md Nowshad Islam said exploration of some onshore gas wells was on the cards for the company, but did not give any specifics. Badrul Imam, geology professor at Dhaka University and an energy expert, believes this project is too ambitious. “Bangladesh has never drilled so many wells at a time before,” he told the Dhaka Tribune. “It is not clear why 13 wells were selected. Many of these wells do not have much prospect of gas, like Patharia West-1.” He said Bapex should involve experienced consultants or geologists in the process of selecting exploratory wells for drilling. Bapex, a Petrobangla subsidiary, has a record of success in gas exploration, which Gazprom does not in Bangladesh. In a previous drilling job, which Gazprom received without having to go through the tender process, the company failed to extract the target amount of gas when it drilled 15 wells in 2012-16. Gazprom is currently employed in another project to drill two onshore wells – Shahbazpur North and Shahbazpur East – at nearly double the cost of what Bapex would have spent, according to sources. In the new project, Gazprom will drill five wells – Mubarakpur-2, Srikail North-1, Shrikail East-1, Sunetra-2 and Madan-1 – targeting a depth of 5,000-5,500 metres. SOCAR, which will be working for the first time in Bangladesh if the deal is finalised, will drill four wells – Begumganj-4, Semutang South-1, Madarganj-1 and Shariatpur-1 – targeting a depth of 3,000-4,000 metres. Sinopec will drill four wells – Hararganj-1, Batchia-1, Patharia West-1 and Dupitila-1 – targeting a depth of 3,500 metres. Sinopec has worked in Bangladesh before. The Chinese company has successfully finished the drilling of four onshore gas wells in the state-owned Titas Gas Field – a project they won through a tender process.