Gazprom team due in city next month

M Azizur Rahman A high-powered delegation from Russian energy giant Gazprom will visit Dhaka early next month to finalise a deal to drill 10 onshore gas-wells in the country, the top official of Petrobangla said Tuesday. "The Gazprom delegation will arrive in the city on January 9 to round off negotiation and finalise deal for drilling the gas-wells," Petrobangla Chairman Dr Hussain Monsur told the FE Tuesday. A deal between Petrobangla and Gazprom will be inked shortly, after resolving the outstanding issues, including structuring of a framework for compensation in case of any blow-out and payment of insurance premiums, Petrobangla sources said. The cabinet committee on public purchase approved awarding of contracts for drilling 10 onshore gas-wells to Gazprom a couple of weeks ago. Gazprom in late October made an offer to drill 10 onshore gas-wells at a total cost of $193.55 million to raise the country's overall gas output, with the assurance of completing the drilling within 18 months of getting approval. It also agreed to pay 5.0 per cent of the total cost as performance guarantee. Gazprom and Petrobangla top officials held several discussions to reach a consensus on these issues during the previous two years of negotiations over the Russian firm's involvement in oil and gas exploration in Bangladesh. The energy ministry plans an increase in gas output by around 220 million cubic feet per day (mmcfd) once the drilling of the gas-wells is successfully completed. Gazprom will be the first foreign company to tie up with Petrobangla for oil and gas exploration without signing a production-sharing contract. Under the work plan, Gazprom will drill five development wells in Titas and Rashidpur gas-fields along with five exploration wells in four gas structures. Titas, owned by Petrobangla's subsidiary Bangladesh Gas Fields, is the country's second largest gas-field, producing around 444 mmcfd of gas. Rashidpur, owned by Sylhet Gas Fields, produces around 48 mmcfd. Gazprom will drill five exploration wells in Begumganj, Shahbazpur, Semutang and Sundalpur gas structures, owned by Bangladesh Petroleum Exploration and Production Company Ltd (Bapex). Petrobangla offered the development work of the wells to Gazprom without inviting any tender, after Polish oil and gas explorer Krakow, selected through a competitive tender last year, backed out. The government has recently passed a new law to ensure quick implementation of the power and energy projects, bypassing the tender process. The law has allowed the government to negotiate directly with Gazprom and award contracts to drill the gas-wells without going through any tender process. The country's natural gas production is now hovering around 2,030 mmcfd against the demand for over 2,500 mmcfd.