Delay in handing over Tullow's stakes affects KrisEnergy's operation in Bangladesh

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M Azizur Rahman The government's 'unusual' delay in handing over Irish oil and gas company Tullow Oil's stakes is affecting operational activity of Singapore's KrisEnergy in the country, a top official said. The Energy Division under the Ministry of Power, Energy and Mineral Resources has not approved Tullow's plea for selling its Bangladesh stakes including operatorship to KrisEnergy for over the last six months, he said. "This delay is unprecedented," a senior Petrobangla official said. He said on several occasions in the past the energy ministry gave approval of stake handover from one international oil company (IOC) to another IOC within a month. The energy ministry took less than one month to approve handover of stakes from Scottish Cairn Energy to Australian Santos, said the state-owned Petrobangla official. It also approved the change of ownership from Unocal to Chevron within several weeks, he said. Industry insiders said the energy ministry should decide on this issue quickly to ensure smooth operation of Tullow-operated Bangora gas field in Comilla district. If it does not approve the sale of Tullow's stakes to KrisEnergy, that decision should also be taken immediately, they said. Tullow Oil earlier submitted its plea to Petrobangla to get its nod for the sale of its Bangladesh stakes to Singapore-based KrisEnergy in April last within two weeks of the announcement of the sale of stakes. Petrobangla subsequently endorsed the stakes handover and sent it to the energy ministry for final approval. Tullow on April 9 last agreed to sell its entire Bangladesh stakes for US$ 42.35 million to KrisEnergy and signed a sales and purchase agreement. Tullow Oil through its subsidiary, Tullow Oil International Limited, signed an agreement with KrisEnergy Asia Holdings BV, a subsidiary of KrisEnergy Asia Limited, for the sale of 100 per cent share-capital of Tullow Bangladesh Limited (TBL). The price was fixed at $42.35 million with effect from January 01 last. The sale is conditional upon receiving approval and consent of the Government of Bangladesh and Petrobangla. Tullow has a 30 per cent interest in Block-9 and operates it on behalf of partners Canadian Niko Resources (60 per cent) and Bangladesh Petroleum Exploration and Production Company (BAPEX) at 10 per cent. The 1,770 sq km block includes the Bangora gas producing facility in Comilla and the Lalmai 'discovery', which is located at some 50km east of Dhaka. During 2012, gross production from the Bangora field averaged around 100 million cubic feet (mmcfd) and also 300 barrels of condensate per day. Tullow's lone in-production Bangora gas field is currently producing around 84 mmcfd of gas, according to Petrobangla. In March 2012, Tullow Oil announced its plan to divest all of its Asian assets in order to focus on its highly prospective discovery offshore Ghana and explorations in South America and Africa. In Asia, Tullow operates in Bangladesh and Pakistan. In Pakistan, Tullow has exploration, development and production interests in an area spanning over 13,171 sq km (4,215 sq miles). In Bangladesh, Tullow initially secured a shallow-water offshore block, SS-08-05, following a competitive bidding in February 2008. But it was not able to ink a production-sharing contract with Petrobangla for oil and gas explorations in the block due to maritime boundary dispute with neighbouring India. KrisEnergy holds interests against 14 licences in Cambodia, Indonesia, Thailand and Vietnam covering a gross acreage of more than 61,400 sq km. It operates in six of the contract areas.