Bapex wants early deal with Sinopec

Jasim Uddin Haroon The state-owned Bapex wants an agreement with Sinopec-led consortium of China as early as possible to start gas exploration activities in the Chittagong Hill Tracts (CHT), official sources said. Earlier, the consortium -- Sinopec Shengli Longwood -- submitted a proposal to drill wells in the CHT under a joint venture with Bangladesh Petroleum Exploration and Production Company (Bapex). The Chinese consortium wants to invest around 100 million US dollars to develop four onshore gas structures in the CHT. Managing director of Bapex Mortuza Ahmad Faruque told the FE Wednesday that the consortium will require only four months to go into operation and speedy drilling is very important for Bangladesh. "We need quick drilling as we want to supply gas to Chittagong city and its adjoining areas which has been facing gas shortages over the past few years," the managing director added. He said the consortium has procured previous 2D3D survey reports on the block. "They need not conduct such survey any more and will be able to begin drilling quickly," Mr Faruque added. The Bapex has already invited the consortium to finalise negotiation. "We've already invited them to finalise negotiation," he added. However sources at the consortium said they might visit Bangladesh by the middle of next month. Sinopec needs approval of its government prior to visit another country, sources added. The Beijing-based Sinopec Group is a state-owned company functioning as an investment organisation in which the state holds the controlling share. Sinopec Group has a registered capital of RMB 182 billion. Sinopec will be the first Chinese oil and gas firm to be involved in Bangladesh's hydrocarbon exploration, he said. The Sinopec-led consortium concluded primary negotiations in September, 2011 and decided to form the JV with 70 per cent stakes to the consortium and 30 per cent to Bapex. The Bapex will have its 30 per cent stake in the proposed JV without any sort of its involvement in exploration activities or investment to develop the gas structures. The Chinese firm has expressed its intention about investing around $100 million initially under the JV to develop four gas structures -- Kotia, Joldi, Kafalong and Shitapara -- in Block 22 that covers around 13,900 square kilometres area, sources said. This prospective gas block was originally awarded to the US-based firm, United Meridian Corporation (UMC) in February 1997 after the country's first round of international bidding for oil and gas exploration. Then Houston-based Ocean Energy won the rights to explore gas in block 22, after taking over the UMC. But as the company did not drill wells within seven years of its contract, the government took over the block from Ocean Energy in 2006. Energy experts forecast that all the four gas fields have substantial gas reserves as gas was detected there during initial surveys.