Cairn seeks free market rights for gas exploration in block 10
Friday, 20 March 2009
M Azizur Rahman
British Cairn Energy has sought free market rights to sell gas to third party other than Petrobangla for its planned exploration works in onshore block no 10, officials said Tuesday.
The company also wanted the entire Companiganj structure under its exploration rights to conduct further works in the block that spreads over 8,702 square kilometres covering Laxmipur, Noakhali, Bhola and parts of the Bay of Bengal.
According to the current block area only one-third of Companiganj gas structure is located inside block 10 zone and the remaining is in block 15.
Block 15 is now an open structure and not yet allocated to any company for exploration.
In return for the rights, Cairn has offered to double the stakes of the state-owned Bangladesh Petroleum Exploration and Production Company Ltd (BAPEX) to 20 per cent from the existing carried over interest of 10 per cent.
This is, however, Cairn's second such proposal to obtain free market rights for oil and gas exploration in Bangladesh blocks.
The company several months ago sought an upward adjustment of gas prices or permission to sell its gas to third party for its planned exploration works in Magnama and Hatiya structures under block 16, which is still pending a decision.
"We got the Cairn proposals regarding development of block 10. But yet to decide on it," Petrobangla Director for PSC Muqtadir Ali told the FE.
He said the company has recently been asked to sign an extension agreement of the existing production-sharing contract (PSC) for this block.
Cairn has so far conducted 1653 line kilometer seismic survey and invested around US$20 million in this structure, a Cairn official said.
The company says Companiganj and Noakhali are the prospective structures under this block.
Selling gas to Petrobangla from block 10 structure under the existing PSC terms would not be commercially viable, the company official said.
He said under the existing PSC gas price for this structure would be US$2.30 per 1,000 cubic feet (1Mcf), which is much less than the current market price.
But he believes the company would get much higher prices if sold to third party.
Once production commences, the company would be able to dispense gas from this structure by connecting pipes to the main Bakhrabad-Chittagong trunk line, he said.
It would be a good option for supplying gas to the energy-starved port city Chittagong quickly, the Cairn official claimed.
The PSC for block 10 was signed in July 2001 following the country's second round bidding in 1997.
British Cairn Energy has sought free market rights to sell gas to third party other than Petrobangla for its planned exploration works in onshore block no 10, officials said Tuesday.
The company also wanted the entire Companiganj structure under its exploration rights to conduct further works in the block that spreads over 8,702 square kilometres covering Laxmipur, Noakhali, Bhola and parts of the Bay of Bengal.
According to the current block area only one-third of Companiganj gas structure is located inside block 10 zone and the remaining is in block 15.
Block 15 is now an open structure and not yet allocated to any company for exploration.
In return for the rights, Cairn has offered to double the stakes of the state-owned Bangladesh Petroleum Exploration and Production Company Ltd (BAPEX) to 20 per cent from the existing carried over interest of 10 per cent.
This is, however, Cairn's second such proposal to obtain free market rights for oil and gas exploration in Bangladesh blocks.
The company several months ago sought an upward adjustment of gas prices or permission to sell its gas to third party for its planned exploration works in Magnama and Hatiya structures under block 16, which is still pending a decision.
"We got the Cairn proposals regarding development of block 10. But yet to decide on it," Petrobangla Director for PSC Muqtadir Ali told the FE.
He said the company has recently been asked to sign an extension agreement of the existing production-sharing contract (PSC) for this block.
Cairn has so far conducted 1653 line kilometer seismic survey and invested around US$20 million in this structure, a Cairn official said.
The company says Companiganj and Noakhali are the prospective structures under this block.
Selling gas to Petrobangla from block 10 structure under the existing PSC terms would not be commercially viable, the company official said.
He said under the existing PSC gas price for this structure would be US$2.30 per 1,000 cubic feet (1Mcf), which is much less than the current market price.
But he believes the company would get much higher prices if sold to third party.
Once production commences, the company would be able to dispense gas from this structure by connecting pipes to the main Bakhrabad-Chittagong trunk line, he said.
It would be a good option for supplying gas to the energy-starved port city Chittagong quickly, the Cairn official claimed.
The PSC for block 10 was signed in July 2001 following the country's second round bidding in 1997.