Sangu resumes, but gas output falls by 65pc

FE Team | Published: January 11, 2012 00:00:00 | Updated: February 01, 2018 00:00:00

M Azizur Rahman
Production in country's lone offshore Sangu gas field resumes after three weeks' suspension but the output falls drastically by 65 per cent dealing a major blow to the industries in Chittagong city port.
Australian gas exploration firm Santos-operated Sangu field is now supplying only 5.0 million cubic feet per day (mmcfd), Petrobangla Director for PSC Muhammad Imaduddin told the FE Tuesday.
Sangu field in the Bay of Bengal supplied around 14 mmcfd of gas to the national gas grid until December 20, 2011 when gas production in the field was suspended, he said.
"Gas production in Sangu was kept under a planned shutdown for three weeks to carry out some maintenance works," Santos' vice president for Planning in Bangladesh operation Ajay Nambiar told the FE.
Production in Sangu fell as only one well out of three producing wells there is now in operation, he said.
Production in two remaining wells are suspended as water entered there.
Water unloading activities in the two remaining wells are now being carried out, he said.
Nambiar expressed the hope that gas output in the remaining two wells will begin soon.
Sangu once produced gas as high as 220 mmcfd in 2006 when oil major Anglo-Dutch Shell was its operator.
Santos has been incurring losses in operating the Sangu field over the past year as gas output has fallen sharply, company sources said.
The Sangu field will be economically viable only when the output exceeds 20 mmcfd, he said.
Despite incurring losses, Santos has been producing gas from Sangu in the hope that its overall block 16 operations will be profitable if it can supply gas from new wells to private buyers at market prices, the source said.
Santos has been drilling new offshore gas wells in block 16 in the Bay of
Bengal, located near the existing producing Sangu gas field, since October 2011.
It has failed to discover any commercially viable gas reserves in the first two wells it has drilled, said a company official.
The Australian firm is now drilling third new well, Sangu-11, from the existing Sangu platform, some 60 kilometers (37.2 miles) offshore Chittagong.
Santos is optimistic that drilling in Sangu-11will produce better results.
Results from Sangu-11 drilling will be available by the end of January 2012, said an official.
Santos is the only international oil company in Bangladesh that has been allowed to sell natural gas directly to private buyers at market price, from its new offshore fields in block 16.
All other international oil companies have to sell their gas to state-owned Petrobangla first, which then sells it to state-owned gas distribution companies to reach end-users.
Santos will first offer Petrobangla the option to buy gas produced from its new offshore structures at market price.
If Petrobangla refuses, the Australian company will then sell the gas to private buyers.
Santos has set US$4.50 per unit (1,000 cubic feet) as the baseline price for its gas from block 16, which is 55 per cent higher than the previous price of $2.90 per unit.
Santos has already received expression of interest (EoI) from over a dozen large privately owned companies in Chittagong that are willing to buy gas at market price due to a growing gas shortage in the country.
The company last month began talks with Karnaphuli Gas Distribution Company Ltd., a subsidiary of state-owned Petrobangla, to distribute gas from its new offshore fields in Bangladesh directly to private companies.
Santos acquired Cairn Energy's interests in Bangladesh in November, 2010.
Following the acquisition, Santos became the operator of Bangladesh's only offshore producing gas field, Sangu.
Santos has a 75 per cent stake in Sangu, while Halliburton Energy owns 25 per cent.