Govt to hire oil giants to drill, develop gas from under-explored fields

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M Azizur Rahman
The government has decided to hire foreign oil giants to develop and produce gas from several of the country's under-explored hydrocarbon-rich fields to boost output in the wake of acute energy crisis, officials said Wednesday.
A top energy ministry official told the FE the government would float international tender by end of this month to assign international oil companies (IOCs) to develop the fields on a "fast-track" basis.
The Prime Minister has given "the go-ahead order in inviting the bids as early as possible" so that the companies can be selected fast and they can start developing at least eight wells in the under-explored fields in the next dry season, he added.
The official said the foreign companies would hand over the fields back to the state-owned companies once gas production begins from the wells.
"There would be no sharing of the proceeds of gas sales with the foreign companies like the Petrobangla has done in all previous PSCs," the official said.
"This time we are not leasing out the fields. The foreign companies would be hired on specific job basis and would be paid accordingly."
Officials said this is the first move by the country to hire foreign companies just for the development of gas fields.
The extraordinary move is taken due to a severe capacity constraint of the state-owned lone gas exploration and development company, Bapex, which has two old drilling rigs with a very busy workload.
Chairman of the state-owned oil giant Petrobangla Muqtadir Ali confirmed the development to the FE. "We are now preparing tender documents," Ali said on Wednesday.
He said several hydrocarbon-rich fields, owned by Petrobangla subsidiaries Bangladesh Gas Fields Company Ltd (BGFCL) and Sylhet Gas Fields Company Ltd (SGFCL) would be rented out in the latest move.
Currently both the BGFCL and the SGFCL have five gas fields each but their gas output is around 710 million cubic feet (mmcf) and 145 mmcf per day. Experts said the two fields they operate are gas-rich but under-explored.
"We expect that each of the eight new wells would produce gas of around 25 mmcfd, boosting supply at this time of crisis" said Mr. Ali.
Ali said they first thought of engaging Bapex in the "fast-track" development work but has now decided to hire foreign firms as the state-owned exploration company lacks capacity and its rigs won't be available anytime soon.
The Petrobangla Chairman said the outsourcing of the local gas fields would not contradict the existing leasing agreements of the country's hydrocarbon blocks.
The government still is keen to continue signing PSCs with the potential foreign firms to develop both onshore and offshore reserves, Mr. Ali said.
The latest "crisis-management" move comes in the wake severe energy crunch in the country, as gas production now hovers around 1900 mmcf against the daily demand for around 2200mmcf.
Scores of industrial units remained shut and power plants went out of commission due to gas crisis. The government had to close three fertiliser factories recently to divert gas to power plants.
According to a projection prepared by the Petrobangla last year, the country would need a further 24 trillion cubic feet (TCF) of gas and investment worth $7.7 billion in the next 16 years to spur economic growth to 7.0 per cent a year.
The government forecasts that the country's current gas reserves will run out by 2014-2015 at current consumption rates. Unless new gas fields are discovered, the supply of gas will start diminishing from 2011.
At present, the country's proven gas reserve is 7.3 Tcf, while there are high chances the amount could augments by another 5.5 Tcf.