Petrobangla's no to Santos offer to explore gas in Kutubdia field

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M Azizur Rahman
The state-owned Petrobangla has turned down the proposal of the Australian gas exploration company Santos for granting it rights to explore gas in the offshore Kutubdia field located in the Bay of Bengal.
A top official said Saturday that the state-run oil and gas company rejected the Santos proposal to explore and develop the discovered Kutubdia gas field.
"We will put the Kutubdia gas field on offer for exploration by international companies along with a dozen of other blocks in the next bidding round slated for October this year," a senior Petrobangla official said.
Kutubdia is a discovered gas field located in an island in the Bay of Bengal, within 20 km off the southern coast.
Santos was seeking to develop the Kutubdia gas field along with its planned drilling in the nearby Magnama structure also in the Bay of Bengal.
However, about two decades back, Petrobangla handed over the discovered Jalalabad gas field to Chevron's predecessor, Occidental, said an official.
The Scimitar Exploration had discovered the Jalabad gas field in late 1980s.
It is now the country's fourth largest gas producing field with the overall output of around 232 million cubic feet per day (mmcfd) from four gas wells, he mentioned.
A couple of years ago, the Petrobangla also allowed Chevron to explore gas in an extended area adjacent to the Jalabad gas field, the official said.
Petrobangla had also awarded three discovered but 'abandoned' gas fields -- Feni, Chhatak and Kamta - to the Canadian Niko Resources several years ago under a joint venture with the state-owned Bangladesh Petroleum Exploration and Production Company Ltd (Bapex) holding 20 per cent stake in it.
Meanwhile, Santos Bangladesh President John Chambers termed Petrobangla's rejection of the proposal 'disappointing.'
"State-owned Petrobangla has informed us of its decision of not granting us the exploration rights over Kutubdia," he said.
Santos has a plan to drill an appraisal well in the offshore Magnama structure in the Bay of Bengal in 2013, Mr. Chambers said.
The structure is within the block 16 where the Sangu-11 gas producing well is also located.
The Kutubdia gas field was owned by Santos and its predecessors until two years back.
Santos first acquired rights to the field in November 2010 when it acquired Cairn Energy's interests -- including block 16 -- in Bangladesh, but it later relinquished its rights to the field.
The field has a recoverable gas reserve of around 45.50 bcf. But the inadequate demand for gas at the time the field was discovered in 1977 might have prompted the now-defunct California-based Union Oil to leave the field undeveloped, a Petrobangla official said.
Santos is an operator of the country's only offshore gas field Sangu. Santos has 75 per cent stake in Sangu and Halliburton Energy 25 per cent.
It is also the first international oil company in Bangladesh that has negotiated directly with an end-user to sell gas at market prices.
Usually the companies sell gas to state-owned Petrobangla at a rate fixed in their production sharing contract, which then sells it to state-owned gas distribution companies.
Santos is now selling around 25 million cubic feet per day (mmcfd) of gas from Sangu-11 to the state-owned Bangladesh Power Development Board (BPDB), at $4.50 per mcf (1,000 cubic feet), up by 55 per cent from the previous rate of $2.90 per mcf from the older Sangu well.
Santos owns the 100 per cent stake in the Magnama and Hatiya structures in Block 16.