Bangladesh begins drilling for gas in Bay 29 Sept

Bangladesh is going to start gas exploration drilling in its maritime areas on 29 September. 

Under Production Sharing Contracts (PSCs), Indian state-owned ONGC Videsh Ltd, jointly with Oil India Ltd and Bangladesh Petroleum Exploration and Production Company Limited (Bapex), will drill at the SS-4 or Shallow Sea-4 block located offshore in the Bay of Bengal.

The drilling could bring some relief for the country, which has suffered from severe gas shortages due to low production at existing onshore gas fields.

Confirming the development, Md Anisur Rahman, senior secretary of the energy division in the Ministry of Energy, Power and Mineral Resources, told The Business Standard that discovering gas would increase domestic production, leading to less dependence on expensive Liquefied Natural Gas (LNG).  

He said, "The drilling was delayed by a year due to the worldwide pandemic. Now, the IOCs [international oil companies] will be able to look for oil and gas in the shallow sea."

Some officials of the Bangladesh Oil, Gas & Mineral Corporation (Petrobangla) said ONGC will drill 4,000 metres underneath the block.

The company will conduct another drilling on this block in the middle of next year, sources said.

Under the Bangladesh Offshore Bidding Round, 2012, two PSCs were signed with ONGC Videsh Ltd (OVL) and Oil India Ltd (OIL) for drilling at blocks SS-4 and SS-9. The Bangladesh government has nominated Bapex as a stakeholder, carrying 10% interest for these blocks.

As per the PSC contract obligation, contractors will survey and drill the block at their own cost, and they will meet 55% of their expenses each year from gas sales.

Petrobangla will own a minimum of 60% and a maximum of 85% of the recoverable gas, and a minimum of 70% and maximum 90% of the recoverable oil from the block.

Since the signing of the contract, the ONGC consortium has conducted a 5,500-line-km two-dimension or 2D seismic survey in the block.

It found 25 shallow and deep-sea blocks in Bangladesh's sea boundary. Out of that, only three blocks have been awarded for gas and oil exploration.

This is not the first time an international company has been awarded the right to explore gas and oil.

Under the "Quick Enhancement of Electricity and Energy Supply (Special Provisions) Act, 2010", a PSC was signed for deep-sea block DS-12 with South Korean oil and gas company POSCO DAEWOO Corporation in March 2017.

The company, however, left Bangladesh without completing the work due to a dispute over gas prices.

Meanwhile, on land, the country discovered has 28 gas fields, 22 of which are in operation and supply two-thirds of the country's total gas consumption.

At present, the country consumes 3,034mmcf gas per day, while the demand is more than 4,000mmcf. Apart from 600mmcf LNG, the rest of the gas comes from local fields.