Govt likely to finalise deal with Russian co to drill five gas wells

The government eyes finalising a deal with Russian company Gazprom this month on drilling gas wells in the state-owned fields and installation of compression stations in gas transmission pipeline. "We want to award the Gazprom five gas wells and two compression stations, when a high-powered delegation of the company will visit the country," Petrobangla Chairman Hussain Monsur told the FE Friday. The Gazprom has already agreed to drill those wells and construct two compression stations, following a series of meetings among the officials of Bangladesh government, Petrobangla and Gazprom during the last one year, he said. Prime Minister Sheikh Hasina also held discussion with her Russian counterpart Vladimir Putin over the issue. Once the deal is inked, the Gazprom will be the first foreign company to drill gas wells in the state-owned gas-fields under state-to-state deal. The Gazprom delegation, led by its chairman, will be visiting Bangladesh during April 19-22. Discussion on technical and financial issues as well as mode of payments of the planned projects will be on the top of the agenda. The Petrobangla wants to sign deal with the Gazprom over the drilling programmes and installation of compression stations during the visit of its top brass. A memorandum of understanding (MoU) for bilateral cooperation in energy sector will also be signed. The Gazprom will start operation in Bangladesh with the drilling of five gas wells. The company will mobilise necessary equipment in Bangladesh for the drilling. Earlier, Krakow, a Polish company, expressed its reluctance to drill those wells, despite being selected for the project work, following a competitive bidding. Four of the wells are located at Titas gas-field, owned by Bangladesh Gas Fields Company (BGFC), a subsidiary company of Petrobangla. The remaining field is located at Rashidpur gas-field of Sylhet Gas Fields Company (SGFC), another subsidiary of Petrobangla. Russia is likely to provide soft loan to Bangladesh, or suppliers' credit which might also be applicable to carry out the projects, the Petrobangla chairman said. A total of around 100 million cubic feet per day (mmcfd) gas output is expected from the five wells, to be drilled by Gazprom. Officials said the country's lone hydrocarbon exploration company - Bangladesh Petroleum Exploration and Production Company Ltd (BAPEX) - had suggested hiring of foreign companies due to its busy work schedule. Severe capacity constraint of BAPEX had pushed the government to hire foreign firms to drill wells in the state-owned gas-fields two years ago, to augment gas supply and ease the mounting gas demand. The country's overall gas supply is now around 1,980 mmcfd, against the demand for over 2,500 mmcfd.