Russia’s Gazprom gets priority over BAPEX

Russia’s Gazprom gets priority over BAPEX

Md Arifuzzaman . Dhaka |Prothom Alo  Oct 02, 2019

A Prothom Alo InfographBangladesh Petroleum Exploration and Production Company Limited (BAPEX) has been extracting gas from Shahbazpur field in Bhola for the last 10 years. The state-owned company also discovered another gas field in Bhola last year. The government, however, is contemplating on taking help from Russia’s Gazprom to assess the gas reserves in Bhola.

BAPEX has already finalised a Memorandum of Understanding (MoU) to be signed with Gazprom, for joint survey in the island district in southern parts of the country.

Oil and gas experts have raised questions as to why the government is signing the MoU when BAPEX has already shown success in extracting gas without any outside assistance.

They said this will restrain the authority of BAPEX. The government will incur huge losses by including Gazprom, the international concern of Russia’s Gazprom PJSC, in gas extraction.

They said that Gazprom was given the responsibility to drill 10 wells to extract gas in 2012 but their performance was not up to the mark..

According to a 2016 report of Petrobangla (Bangladesh’s state-owned oil, gas and mineral corporation), of the 10 gas wells drilled by Gazprom, five (Titas-20, Titas-21, Semutang-6, Begumganj-3 and Shahbazpur-4) were filled up with sand and water. It was BAPEX that had to take the responsibility to renovate those wells.

The signing of the MoU with Gazprom is likely to be discussed in a BAPEX board meeting this month. The date of the meeting, however, is yet to be fixed.

Badrul Imam, professor of the geology department at Dhaka University, told Prothom Alo that the joint survey is an excuse. Realising that there’s a good reserve of gas in Bhola, Gazprom has been proposing a joint survey with BAPEX for the last few years. The company is looking for a way to join in the gas extraction to make a huge profit.

The first step of oil, gas or any hydrocarbon exploration is two-dimensional and three-dimensional survey. Finalising the right place to drill the well depends on the survey results. The next step is drilling an exploration well to ensure the reserve. Commercial extraction is the last step.

BAPEX discovered the Shahbazpur gas field in Bhola through a two-dimensional survey in 1995. It has been extracting gas commercially from the field since 2009.

The company also carried out three-dimensional seismic survey in search of oil-gas in Bhola, Noakhali, Shariatpur, Barishal, Patuakhali and Barguna between 2013 and 2015. Based on the findings, BAPEX selected two spots to drill wells in Bhola gas field in 2016. They found gas in both wells in 2018. That was the 27th field of the country.

Several engineers of BAPEX said the southern districts have potential of huge gas reserve.

A high-official of Petrobangla said the gas reserve in two newly discovered fields in Bhola could be two trillion CFT. Gazprom is interested to extract gas from both the fields jointly with BAPEX. That is why they have proposed joint assessment of the reserves at Shahbazpur and Bhola (north) fields. The Russian company has shown interest in drilling 12 new wells in Bhola as well.

In response to a question of the necessity of an MoU with Gazprom, BAPEX managing director Mir Md. Abdul Hannan told Prothom Alo, as a continuity of Russia-Bangladesh ties, this MoU is going to be signed as per the directives from a high level in the government.

Entry of Gazprom

The heads of Bangladesh and Russia governments reached a consensus on energy security on 23 November 2010. Later in 2012, Gazprom was appointed as a contractor company to drill 10 wells. They got the work without any tender under the ‘Quick Enhancement of Electricity and Energy Supply (Special Provisions) Act, 2010’.

Gazprom was paid Tk 1.55 billion for each of the wells on average. BAPEX high officials, however, said the expenditure for every well would have been Tk 800 million at best on average if they drilled those. Besides, the government buys every 1000 cft gas from BAPEX at Tk 85 only but Tk 250 is required for the same amount of gas from foreign companies.

In spite of the bad experience with Gazprom in drilling those 10 wells, the Russian company was given responsibility to dig seven more wells, at a cost of Tk 1.30-1.54 billion each.

The government also constituted a committee in 2016 to find out where to conduct explorations jointly with Gazprom for oil and gas. On 1 November that year, the committee submitted a report proposing to conduct explorations in Chittagong Hill Tracts and offshore and increase extraction from fields that are waning on reserve. The committee also rejected a proposal Gazprom presented to BAPEX before 2016 to drill 13 more wells.

After seven years of reaching an agreement to work jointly over ensuring Bangladesh’s energy security, Bangladesh and Russia signed a MoU on 1 June 2017. A draft timetable was made then for joint work plan. The list included signing of a MoU for evaluation of Bhola gas field, drilling wells in Bhola, Chhatak and Chittagong Hill Tracts and carrying out of seismic survey offshore.

Bangladesh and Russia signed a protocol towards the end of last year, dealing with commerce, economy, science and technology. The instrument supported the proposals and plans mentioned above. The protocol also stressed the role of Gazprom. There is, however, no legal obligation to follow the protocol.

Gazprom has been sending proposals to the Bangladesh government for drilling wells jointly for long, the last one being on 18 April for drilling 12 wells in Bhola and for laying a gas transmission pipeline.

Senior officials of the energy and mineral resources division of power, energy and mineral resources ministry, said Gazprom, Petrobangla and BAPEX exchanged several letters.

Proposed survey

The area of two Bhola gas fields is around 8,000 square kilometres. The joint survey of BAPEX and Gazprom there will evaluate the reserves, fix the site to drill wells for gas extraction and develop a strategy for further exploration and development of gas fields. The final report of the survey would contain risk analysis of the whole process.

Both the parties will jointly take decision about exploration in the survey area. Gazprom will carry out the geological survey and analyse BAPEX’s seismic survey and other relevant data. BAPEX will provide all the data required to carry out the survey. Gazprom could carry out some tasks employing a third party, if necessary. The Russian company will bear the survey expenditure and risk but BAPEX will be the owner of all information. Gazprom will have to maintain confidentiality.

Regarding the survey, former special assistant to chief adviser of the caretaker government, M Tamim told Prothom Alo, there is no need for a new evaluation of Bhola gas field. Gazprom is actually looking for a share of gas extraction from there.

Current pro-vice chancellor of BRAC University, Tamim thinks BAPEX has the capacity to extract gas from the fields it discovered. If there’s any necessity, BAPEX could employ contractors for drilling wells or sign production sharing contract (PSC) with the most capable company through an international tender. Joint initiative without any tender will never protect the country’s interests.

Agents of Gazprom

The local agent of Gazprom in Bangladesh is RMM Power and Energy Ltd. The owners of the company are Aniruddha Kumar Roy and Shashwati Roy.

Known as a close associate of former chief justice SK Sinha, Aniruddha went missing from Gulshan, Dhaka on 27 August 2017. Returning after 81 days, he wrote a letter to media claiming that he was a victim of vengeance for his business. Aniruddha claimed his business partner Mohiuddin Ahmed was responsible for his “enforced disappearance”.

Aniruddha Kumar Roy, however, did not reply to phone calls or text messages from this correspondent since 6 August.

At the outset, 50 per cent ownership of RMM Power and Energy Ltd belonged to Md. Hedayet Ullah and Sefayet Ullah, two sons of Dhaka-10 MP AKM Rahmatullah. The remaining 50 per cent belonged to Mohiuddin Ahmed and Aniruddha Kumar Roy. The first three people left the company by 2016.

AKM Rahmatullah told Prothom Alo that his sons are no longer local agents of Gazprom.

Interests of the country

In response to a question over the understanding with Gazprom, state minister for power, energy and mineral affairs Nasrul Hamid told Prothom Alo, they would do everything considering the interests of the country. There are strong disagreements about joint evaluation survey and gas extraction.

According to the proposed MoU of joint evaluation survey of Bhola gas field, Gazprom could come up with more proposals for joint initiative to extract gas if the final report of the survey is accepted. Depending on the approval of the government, the two parties could sign agreement to extract gas.

Former MD of BAPEX Mortuza Ahmad said BAPEX has discovered the two gas fields in Bhola. Now BAPEX should be given permission to drill more wells so that they could extract gas at low costs. There is no need to add Gazprom with the fields in the name of evaluation, he said.

*The report, published in Prothom Alo print edition, has been rewritten in English by Shameem Reza


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