Gazprom, Sinopec vying for drilling four onshore wells

Russian Gazprom and Chinese Sinopec are vying for drilling four onshore gas wells in state-owned Titas gas field to raise the country's overall natural gas output, a top official said Tuesday.
Gazprom EP International BV, registered in the Netherlands and the Chinese Sinopec International Petroleum Services Corporation submitted bids to drill these wells in the Titas gas field owned by state-owned Petrobangla's subsidiary Bangladesh Gas Fields Company Ltd (BGFCL) as the contractor, Petrobangla Chairman Hussain Monsur told the FE Tuesday.
The wells to be drilled by the bid winner are Titas-23, Titas-24, Titas-25 and Titas-26.
The BGFCL floated the tender to appoint an international contractor to carry out the four-well drilling programme in October last year.
The Titas gas field, located some 100 km off the capital, is Bangladesh's second largest producing gas field after the US's Chevron-operated Bibiyana gas field.
The Titas is currently producing around 500 million cubic feet per day (mmcfd) of gas from 20 producing wells against the overall production capacity of 503 mmcfd, Petrobangla data reveals.
The Chevron's Bibiyana, located in Bangladesh's north-eastern region, is currently producing around 820 mmcfd of gas.
Apart from drilling the four wells, the bid winning firm would also be responsible for third party engineering services regarding drilling of the wells.
The third party engineering services include cementation, mud logging wire-line logging, supplying of explosive, detonator core analysis, drill stem testing wire-line or slick-line operation, supply of drill bits and nozzles, supplying of mud and completion chemicals etc.
The Asian Development Bank will provide majority portion of the costs to drill the onshore gas wells in the Titas gas field in Brahmanbaria district.
Currently, Russian Gazprom is the lone international oil and gas company that is engaged in drilling of wells on contract basis in Bangladesh.
The Russian company inked deals with Petrobangla subsidiaries the BGFCL, the Sylhet Gas Fields Ltd (SGFL), and the Bangladesh Petroleum Exploration and Production Company Ltd (Bapex), on April 26, 2012 to drill 10 development wells across six gas fields at a total cost of $193.5 million. Gazprom's contracts cover construction of the drilling pad, camp warehouse and site preparation, rig shifting and commissioning, procurement of drilling materials, engagement of third party services, drilling, testing and commissioning and insurance.
Gazprom tapped first gas in Bangladesh in May 21, 2013 when it was testing the Srikail-3 onshore well, located in Comilla, some 86km southeast from the capital.
The Russian firm has so far completed drilling of four wells - Srikail-3, Titas-20, Titas-21 and Begumganj-3 and has been supplying natural gas from three wells except Begumganj-3.
Natural gas production from Begumganj-3 well will start soon on completion of installation of necessary gas transmission pipeline and processing plant.
The Petrobangla awarded Gazprom the contract to develop the wells after Polish oil and gas explorer Poszukiwania Nastyi Gazu Krakow backed out after being selected in a similar competitive tender a couple of years ago.
The country has passed a law that bypasses the tender process and prevents deals inked under the new law from being challenged in court.
Other international oil companies active in Bangladesh operate under production-sharing contracts or in joint ventures with the Petrobangla's subsidiary the Bangladesh Petroleum Exploration and Production Company Ltd, or Bapex.
If awarded the contract, it would be Sinopec's first-ever involvement in Bangladesh's oil and gas exploration activities. A consortium of Chinese Sinopec-Shengli and US Longwood Resources was, however, in talks with the Bapex to develop four onshore fields in Bangladesh's Chittagong region under joint venture.
But the government scrapped the negotiation and decided not to award the planned work to the consortium in September last year.
The Bapex held several rounds of negotiations with the JV partners and its board of directors also had approved the negotiation last year before scrapping it, a senior Bapex official said.
The consortium was seeking sales rights to third party for its gas to be produced after developing four onshore fields in Bangladesh's southeastern hilly region, he said.
The consortium and the Bapex had agreed to develop four onshore fields in the Chittagong region under a 70:30 joint venture with the Bapex.
The JV had agreed to sell natural gas at $2.70/Mcf after initially seeking $3.60/Mcf to the Petrobangla.
The four fields planned for development were Potia, Joldi, Kafalong and Shitapahar-all located in block 22, which spans 13,900 sq km of the restive Chittagong Hill Tracts region, where insurgency has killed 2,500 since the 1980s.
The block 22, where all the four gas structures are located, had been awarded to US-based United Meridian Corp. in February 1997 after Bangladesh's first international bidding round for oil and gas exploration, was then passed to Houston-based Ocean Energy when it bought the UMC.
The government took back the block in 2006 after the Ocean failed to drill any well in seven years, as required in the contract.
Bangladesh is currently reeling under acute gas crisis with production hovering around 2,300 mmcfd against the demand of over 2,700 mmcfd.