Santos acquires all stakes of Cairn Energy in Bangladesh

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M Azizur Rahman
Australian oil major Santos has acquired all stakes and liabilities of Scottish Cairn Energy in Bangladesh for an undisclosed sum of money.
Both the companies informed the energy ministry and the state-owned Petrobangla Thursday of the acquisition which would in turn make Santos the operator of the gasfield where Cairn has been working.
The take over means that Santos will have one hundred per cent ownership over offshore Magnama and Hatiya structures under block 16 in the Bay of Bengal.
In Sangu gas field Santos will have 75 per cent stake, while Halliburton Energy of the USA will have 25 per cent stake.
Prior to acquisition Santos held 50 per cent stake in offshore Magnama and Hatiya structures and 37.5 per cent stake in Sangu gas field. Cairn had similar shares of stakes in the gas structures along with the operatorship.
Sangu is now producing gas of around 24 million cubic feet (mmcfd), while exploration in Magnama and Hatiya structures is yet to start.
Cairn earlier announced that it had encountered gas in Magnama and Hatiya but did not declare the size of reserve.
The result of seismic interpretation would come shortly, said an official of the company.
"Cairn believes that now is the right time to transfer the full management of CESFL to its current partner, Santos, subject to certain conditions," Simon Thomson, commercial and legal director of Cairn Energy, said about the acquisition.
"Over the last 16 years, Cairn has been a strong supporter of international investment in Bangladesh and with its partners has invested more than US $1.0 billion in Bangladesh helping to provide Bangladesh and its people with energy security."
Cairn is proud of its achievements in Bangladesh, and believes that now is an appropriate time for Santos to take over the management and ownership of CESFL," he said.
Santos first invested in Bangladesh in 2007 with the purchase of Cairn Energy Bangladesh Limited.
Santos is committed to ongoing investment in Bangladesh and plans to drill three wells in the Sangu area in 2011 after acquiring seismic surveys this year.
Martyn Eames, vice president of Asia Pacific, Santos Ltd, said the acquisition of Cairn in Bangladesh is consistent with Santos' strategy of building sustainable businesses in Asia to meet growing domestic energy needs.
Prior to acquisition Cairn obtained Bangladesh government's approval of right to sell gas from new structures Magnama, Hatiya and South Sangu to private buyers.
It has also signed an amendment to the production sharing contract (PSC) under which the operator would be able to negotiate with buyers besides Petrobangla for sale of gas, a company official said
The amendment has allowed Cairn as the first foreign company operating in Bangladesh to sell gas directly to private sector.